Telus 2010 Annual Report Download - page 105

TELUS 2010 annual report . 101
MANAGEMENT’S DISCUSSION & ANALYSIS: 10
a 300 basis point increase in the measure of TELUS’ employee engage-
ment. Management believes the following were influencing factors:
.Increased communications with front-line team members
.A focus on the customer and additional support for those team
members performing in that capacity
.Winning in the marketplace due to innovative high-quality products
and services available to customers on TELUS’ enhanced wireline
and wireless networks.
TELUS will continue to focus on other non-monetary factors that have
a clear alignment with engagement including:
.Performance management
.Career opportunities
.Training and development
.Recognition
.Work styles (e.g. facilitating working remotely from home and
alternative work locations).
Collective bargaining
In August 2010, the membership of Syndicat québécois des employés
de TELUS (SQET) in the TELUS Québec region ratified a new collective
agreement that will expire on December 31, 2014. This agreement covers
approximately 1,000 trades, clerical and operator services team members.
The collective agreement with the Telecommunications Workers
Union (TWU) expired on November 19, 2010. Collective bargaining began
in July 2010 and continues as of the date of this MD&A. The TWU con-
tract applies to approximately 11,000 employees across Canada in TELUS’
wireline and wireless business segments.
In any set of labour negotiations, there can be no assurance that the
negotiated compensation expenses or changes to operating efficiency
will be as planned and may result in unanticipated increased costs and/
or reduced productivity. In addition, there can be no assurance that
reduced productivity and work disruptions will not occur during the
course of collective bargaining prior to settlement.
Risk mitigation: A governance model is in place to ensure the
financial and operating impact of any proposed terms of settlement are
assessed and determined to be aligned with TELUS’ strategic direction.
Any potential need to continue operations in response to work disrup-
tions has been addressed through extensive contingency planning and
emergency operations plans. Though the Company has built and vali-
dated emergency operations plans, there can be no assurance that all
potential issues have been planned for or that the contingencies planned
for will manifest in exactly the same fashion as tested. As a result, there
is risk that increased costs or disruptions may still occur.
10.5 Process risks
Systems and processes
TELUS has numerous complex systems and process change initiatives
underway. There can be no assurance that the full complement of the
Company’s various systems and process change initiatives will be
successfully implemented or that sufficiently skilled resources will be
available to complete all key initiatives planned for 2011 and beyond.
There is risk that certain projects may be deferred or cancelled and the
expected benefits of such projects may be deferred or unrealized.
Risk mitigation: In general, TELUS strives to ensure that system
development priorities are selected in an optimal manner. TELUS’ project
management approach includes extensive risk identification and con-
tingency planning, scope and change control, and resource and quality
management. The quality assurance of the solutions includes extensive
Risk mitigation for regulatory matters: TELUS generally advocates a
regulatory environment in telecommunications that relies, to the greatest
extent possible, on market forces rather than regulatory intervention,
while in the case of the distribution of broadcasting content, it supports
a symmetrical regime under the Broadcasting Act that ensures all
Canadian consumers continue to have equitable access to broadcast
content irrespective of the distributor or platform they choose. TELUS
believes that, as long as content is regulated to achieve cultural objectives,
this is in the best interest of all carriers and their customers. TELUS
does not oppose the removal of foreign ownership restrictions in
telecommunications, or on the distribution of content, provided that
liberalization is implemented on a fair and symmetrical basis for all
telecommunications carriers and broadcast distribution undertakings.
10.4 Human resources
Employee retention and engagement
The success of TELUS depends on the abilities, experience and
engage ment of its team members. Competition for highly skilled and
entrepreneurial management and front-line employees is intense in the
communications industry. The loss of key employees – or deterioration
in overall employee morale and engagement from organizational changes,
unresolved collective agreements or ongoing cost reduction – could have
an adverse impact upon TELUS’ growth, business and profitability. TELUS
continues its focus on efficiency initiatives that include an evolution of
the Company’s performance bonus program tying it directly to corporate
profitability. To help contain expenses, the Company and its employees
continue to share cost increases associated with the benefits program.
With expanding competition in the telecommunications industry,
employee retention risk is expected to remain elevated in 2011. TELUS
aims to attract and retain key employees through both monetary
and non-monetary approaches, striving to both protect and improve
engagement levels. However, there can be no assurance that such
approaches will be as successful as planned.
Risk mitigation: The compensation program at TELUS is designed
to support its high-performance culture and is both market-driven
and performance-based. This includes:
.Employee performance bonuses based on individual contributions
as well as a corporate component
.Share options for eligible employees
.Restricted stock units (RSUs) and performance stock units (PSUs)
for eligible employees
.TELUS Employee Share Purchase plan available to all domestic
full-time and part-time employees.
Medium-term and long-term performance incentives (RSUs, PSUs
and share options) for key personnel generally have three-year vesting
periods. The increased value of TELUS shares in 2010 has increased
the effectiveness of these retention incentives. Where required, TELUS
also continues to implement targeted retention solutions for employees
with talents that are scarce in the marketplace.
As well, a benefits program is offered that allows the tailoring of
personal health, wellness, lifestyle and retirement choices to suit individual
and family needs.
By striving to ensure TELUS’ compensation and benefits remain
com petitive, the Company seeks to maintain the ability to attract
and retain key employees. With respect to ongoing program cost man-
agement, the Company hopes to manage engagement levels through
direct and upfront communication to all employees as part of an
overall business ownership culture. A positive indicator in 2010 was