Human Capital

In line with business development and the growing challenges, the Company is committed to support the sustainable improvement of sustainable competitive advantage through strategies related to organization and employee management. The approach is taken in order to create sustainable competitive advantage through excellence in human capital and organizational capabilities. This approach is implemented Currently, the approach is implemented gradually and sustainably while focusing on the following continuously through phases and stages with the emphasize on:

  1. Effective Executive Team
  2. High Performance Team Leader/Excellence in Leadership Performance
  3. Key Person Excellence at Key Position
  4. Structure, System and Innovation Culture
  5. Execution, focus on business results achievement
  6. Improved effectiveness in execution, alignment and integration for all Human Capital Programs

The Number of Employees, Age and Educational Background

With the number of employee that reached 4,690 personnel in 2015, the Company is confident of having employees with high capabilities in their duties. Efforts to improve these capabilities and their contribution to the achievement of Company’s target and objectives continue to be undertaken. Following is the composition of active employees based on level, education and age group.

The Composition of Employee Based on Level

Career level within the Company is divided into six levels. They are General Manager, Manager, Superintendent, Supervisor, Foremen and Operators.

Employee Demography Based on Level

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The Composition of Employee Based on Education In its current condition, the Company continues to place high emphasis towards the capacity and capability of employees. This could be seen in the increasing number of employees with higher education level within the period of 2014-2015.

Employee Demography Based on Education

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The Composition of Employee Based on Age Group

In 2015, employee demography was largely occupied with employees aged 50 and above. Thus, transfer knowledge program should be should be intensified to ensure that the new generation of the Company employees are equipped with adequate knowledge.

Employee Demography Based on Age

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Employee Training and Competency Development

For the year of 2015, the Company had allocated 0.4% of the Company’s overhead for trainings and development. The Training and development programs conducted by the company were aimed for improving competency which covers knowledge, skill and attitude. The training held by the company covered competency based training and certification.

Training for New Employees

During 2015 the company has organized on-boarding programs for the new hire. For the operator level, the company has organized a program which consisted of mental switching program, a 148 hour per employee induction program and basic operator training for over 320 hour per employee. It was then followed by on the job training and probation period.

For new hire from diploma and undergraduate degree, the company conducted a one month long mental switching program, induction course for 136 hour per employee and followed by an on the job and probation period. The total program is an around 1 year long program of management trainee.

Competency-Based Training Employee

competency management is conducted with a system, which is continuously improved over times. Competency is divided into two major groups, which consisted of hard competency and soft competency.Soft competency use basic competencies, which were generic competencies refers to Basic Competency which is known as standard competency, and Managerial Competency, which is a competency model customized for the company needs. refers to the competency which is defined according to Corporate needs. Hard competency is reviewed and updated over time according to the needs of the Company.

To increase employee competency, the Company organized creates development programs, including which includes training programs. In addition to external training, which is conducted in external organization, the Company also organized internal and in-house trainings. The realization of training in the Company for the year 2015 was 95 hour/person/year, excluding training for strategic projects.

Training for strategic project is intensive training programs for construction and operational. Trainings were focused in closing the employee competency gap and to develop employee competency in order to execute company strategic projects.

For operator-level employee and foreman level employees,the Company also conducted organized certification programs in Company’s core areas by utilizing the available company owned LSP facility.

Throughout the year 2015, the matching competency level between employee competencies and what were required by their positions was at 80.1%. This number will fluctuate with the changing in the organizational structure, promotion and rotation of employees, and the hiring of new employees.

In addition, the Company also organized tiered training programs consisted of competence development programs for each employee level. In 2015, there were 47 leader from Company and Group leaders who have participated in Leadership Development Program, 75 employees participated in Supervisor Development Program, and 90 employees participated in Foremen Development Program.


The Company has 4 certification categories, which include: Production Equipment Certification, Product Certification, System & Management Certification, and Professional Certification. Whereby, professional certification divided into 2 categories of external and internal. External professional certification related to compliance with regulation and standards, while and internal certification related to Professional Certification Organization (LSP).

Since 2012, the Company has established the Professional Certification Organization (LSP) with the authority which is authorized to conduct assessment and issue nationally accredited professional certifications, which are nationally accredited. Competency standards, measuring tools and methodology were continuously developed and renewed in accordance to the real current condition and nationally recognized standards. This certification were focused on the specific company hard competencies related to the iron and steel manufacturing.

The certification process consists of evaluation, test, and assessment. Employee will be undergoing competency measurement in written, practice, oral, and observation in order to be able to be assessed on how competent they are and then to be recorded into employee qualification database. This qualification database, along with the requirement profile of positions, regulation and standard required certification requirement and requirement of strategic project, was the input to the training needs analysis for the Company development program.

In 2015, the LSP has issued 95 Certificates for operator-level and foreman. In addition, there were 21 certification schemes, which have been developed and listed to Indonesia Professional Certification Authority (BNSP).

The Company developed talent management program to be able to create a development program for expert and leader potential employees, both for current and future needs. This program will identify and develop employees who have been identified as showing high potential and high performance.

For the Leadership Development Program, Employee will undergo the Identification and Selection processes. Subsequently, participants will be equipped with substantial knowledge on business management and steel industry as part of future business leader development. Next, after being positioned and monitored for a certain period of time, talents are entitled for a retention program based on their performance.

The program is continuously implemented in stages. gradually and sustainably. It is expected that talent management implementation will increase the effectiveness of employee management.

Career and Succession Planning

Career and Succession Planning is implemented based on the principle “the right man on the right place” thus putting the entire plan based on profile conformity match between employee individual competency qualification and position requirement. In this matter, Moreover, the Company has also set career paths, particularly for vital key and critical positions for the Company. Not only being used for succession plang, career path is also used to give direction on employee development which should be in line with the need of the corporation and employees interest and potency.

Succession Planning is conducted through the formulation of Replacement Table Chart (RTC) particularly for key positions within the Company. The RTC should consider filling a position both through promotion and rotation. The Company should ensure the existence availability of talents who have the necessary capacity to fill key positions in order for the Company to maintain its performance. One example of the individual development program conducted by the company it to assign employees to its subsidiaries. In 2015 there were 21 employees who had been assign to the subsidiaries. With individual development, the Company shall be able to build high quality employee in a sustainable manner.

Knowledge Management

In this challenging business environment, the Company recognizes the importance of improving employees’ knowledge and skill to improve Company’s competitiveness. Responding to the situation, the Company continuously mapping, exploring, maintaining and developing knowledge, particularly those which are related to steel production process to ensure that the Company’s performance will be maintained and developed. In addition, the Company continuously encourages the utilization of this knowledge to increase employees’ competence and performance.

The Company takes advantage of the use of information technology by creating Web Knowledge Management to provide ease in maintaining and utilizing the knowledge. Web Knowledge Management activities for the year 2015 consist of the following:

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The Achievement of Employees’ Knowledge Collection Target

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In 2015, there were 155 materials uploaded into the Web Knowledge Management. It demonstrates that each year, employees’ knowledge collection target continues to increase beyond the target. Each employee’s knowledge management effort is the responsibility of the entire Krakatau Steel human capital. One example of prograrm by the Company, in addition to Web Knowledge Management, is transfer of knowledge program related to employees entering the retirement period and new employees. For this reason, the Management should be able to identify the key person and new employee for the transfer of knowledge. Transfer of Knowledge is implemented based on individual competence in each unit, thus the program can be conducted optimally.

Remuneration and Performance

The Company implements performance management system to control and measure the achievement of Work Plan Target (SRK). Work Plan Target is the elaboration of Company’s strategy (LTDP, RJPP and RKAP). The elaboration of this operational target is conducted from Company-level, Work unit, and Employee Individual level (SKI). For the assessment of employee’s performance, the Company conducted an evaluation towards two major categories: performance and behavioral aspects that refer to the Company’s values of CIRI (Competence, Integrity, Reliable, Innovative). The Company also provides incentive and motivational support, both to the related work unit and to the employees by rewarding an award through an assessment process that is regularly conducted each year.

Quality Circle Activities

To encourage the increase of performance and productivity, the Company actively continuous to support innovation culture. For this reason, the Company has been targeting initiatives and programs, which will in turn improve the Company’s performance. Throughout the year 2015, there were 45 Quality Control Projects, 142 Quality Control Circle and 201 Suggestion Systems. The entire work units in the Company are targeting a 5% minimum of the number of employees to be actively involved in this action.

Quality Circle Activities

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The entire result of the Circle has been contributed to the efforts of efficiency, improvement of result quality and operational process. Quality Circle with the highest rank will be presented in the IQ Day event in each Directorate. They will have the chance to compete in the national and international Quality Convention. The importance of human capital as an asset of workforce has been receiving special attention from the Company. The Company highlights the importance of welfare, work safety, the creation of working environments that are healthy and conducive for productivity, as well as equality of opportunities for Krakatau Steel human capital in conducting their activities and in synergizing.

In addition, the Company obliged the entire Krakatau Steel employees to behave according to the Company’s Code of Ethics and Culture. Gratification Control is also implemented by the Company to prevent the involvement of KS employees in legal matters, which will inflict a loss for the Company and for themselves.

Industrial Relation and Freedom of Organization

Through a vigorous industrial relation between the Company, management and the entire employees, the Company respects the freedom of association and forgathering of Krakatau Steel employees, which demonstrated under the existence of a Labor Union. Since 1999, Krakatau Steel Labor Union (SKKS) has been established, serving as a forum to capture the aspiration of employees and to defend their interest.

SKKS is positioned as a partner for the Company, aimed at building synergy in achieving Company’s objectives, under the slogan “Victorious Company, Prosperous Employee.” The Company’s management and SKKS are conducting negotiation once every two years. The result of the meeting is stated in the Joint Working Agreement (PKB), which also serves as the basis of employment regulation.