The Gerdau Group encourages employees to face challenges and achieve outstanding results that add value to the business. This reflects Gerdau's belief that it is our people who drive the Company’s national and international growth (see box: Creative Problem-Solving).
For this reason, we believe that our main competitive edge is our people and we continuously invest in them. Training is provided for employees at all levels. At the same time, Gerdau actively seeks new talents and develops future leaders.
We offer benefits and compensation plans in line with best market practices together with a stimulating work environment.
Organizational Climate
Every year, the Gerdau Group carries out an opinion survey to evaluate whether our people management practices are meeting our employees’ expectations.
In early 2006, these positive results earned the award for the best organizational climate in Brazil, according to the global management consultancy Hay Group (see box: Best Organizational Climate in Brazil).
Staff
In 2005, 16,400 people worked for the Gerdau Group in Brazil, 2.4% more than in 2004. This increase was due do the hiring of employees to work at Gerdau’s new mill, Gerdau São Paulo, located in Araçariguama (state of São Paulo).
Employee retention is high, with 2,600 employees having worked for the Company for at least 20 years.
Staff Development
In 2005, the Company invested R$ 30.7 million in 1.6 million training hours for employees in Brazil, 18.9% more than in 2004. The average training investment per employee in 2005 was R$ 1,900.
The Gerdau Group provides specific training for different professional profiles. One example is the industrial training system (ITS), which targets the development of skills and attitudes required to improve the performance of employees involved in the production process. ITS is a self-training program in which employees create their own learning schedule from a set of study modules in modern educational centers based in every plant throughout Brazil, our Porto Alegre and São Paulo offices, and at some locations in other South American units. ITS provided 448,200 training hours in 2005.
For those working in sales, a commercial training system (CTS) was implemented in 2004 to develop customer service skills and boost efficiency. In 2005, the CTS provided 1,200 people with 15,800 training hours.
In 2005, 4,400 Brazilian employees participated in the leadership development program. This program helps individuals develop attitude and performance in line with world-class standards of excellence, and covers topics such as leadership, people management, change, and Gerdau culture and ethical guidelines. Full scholarships for MBA and Master’s programs at top institutions in Brazil and abroad are also available. Gerdau executives can also participate in exchange programs to work at Gerdau units in several countries.
To develop new leaders, a trainee program offers practical and theoretical training for young professionals. In 2005, 1,400 young people participated in the program in Brazil. The selection process seeks to identify individuals with entrepreneurial talent who show enthusiasm for the business and are qualified for the job.
In 2005, the number of applicants to the Gerdau trainee program increased 37% compared to 2004. Over 14,900 people applied for 149 positions in the states of Rio de Janeiro, São Paulo, Minas Gerais, Rio Grande do Sul, Paraná, Bahia, Ceará and Pernambuco.
Result-Based Compensation
Employee compensation at the Gerdau Group includes a fixed and a variable component. The fixed monthly salary is defined based on a technical assessment of the position and market parameters. The variable portion is dependent on the fulfillment of preestablished goals that are negotiated by both teams and managers. These goals include productivity targets, cost reduction, quality, workplace safety, customer services and training.
Benefits
The purpose of the Gerdau Group’s benefits packages is to promote the well-being of employees and their families. In 2005, 44,400 people were benefited.
Health investments reached R$ 59.6 million for the year, with over 842,000 medical consultations. A total of R$ 28.7 million was spent on loans: R$ 12.0 million for home purchase or renovation, R$ 10.2 million for school tuition, and R$ 6.5 million for other social activities.
The Group’s retirement and pension fund (which complements the official retirement and pension system), created in 1988, and available to all employees, has generated surpluses with return rates comparable to those of the best financial investments.
In 2005, the net assets of the Gerdau Group pension funds in Brazil (Gerdau Sociedade de Previdência Privada - GPrev and Fundação Açominas de Seguridade Social - Aços) reached R$ 1.5 billion, an increase of 253.9 million in relation to the previous year.
The return on investment for the GPrev fund was 18.17% in 2005, 96% above the 9.3% actuarial target (national consumer price index + 4% p.a.). For Fundação Aços, an 18.2% return was recorded in 2005, 59.8% more than the 11.4% actuarial target (national consumer price index + 6% p.a).
The surplus accrued by these funds in 2005 was R$ 191 million. The funds’ net assets cover both current and future benefit payments. In 17 years, 3,000 benefits have been granted, including retirement payments, pensions, health assistance, withdrawals and monthly income. Of this total, 262 benefits were awarded in 2005. In total, GPrev and Fundação Aços paid R$ 27.6 million in monthly income, a figure 13.1% higher than that of the previous year. In 2005, the companies of the Gerdau Group in Brazil contributed R$ 35.8 million to both private pension funds.
Safety
 The Gerdau Group’s safety goal is an accident-free workplace. The Gerdau total safety system (TSS) is a set of practices aimed at developing a safety culture among its employees and service providers, which guarantees that all tasks are carried out in a safe manner. As part of the TSS, continued investments are made in safety equipment and management, as well as in permanent training and awareness-raising activities for employees.
In 2005, the Group invested R$ 20.1 million in safety at its Brazilian units. In the second semester, the accident frequency rate (number of lost time accidents per one million man hours) in the Brazilian facilities fell in relation to the 2004 average of 2.50, to 1.10 in October, 1.57 in November, and 1.18 in December 2005. The yearly rate was 2.40 – better than the 6.6 average recorded by the world steel sector, according to the International Iron and Steel Institute (IISI).
Meals
In 2005, R$ 42.5 million were spent on meals, the equivalent to R$ 2,600 per employee (30.2% more than in 2004). Fifty-seven restaurants in Brazilian units all over the country served 4.7 million meals, 6.8% more than in 2004. Healthy and balanced menus are developed by a team of nutritionists. Low-calorie meals are also available.
Transportation
Gerdau provides special transportation using 208 hired buses and vans for employees who work in regions that are far from the major urban centers. All other employees receive transportation vouchers as required by law. In 2005, R$ 40.6 million, or about R$ 2,500 per employee, was spent on transportation, 24.8% more than in 2004.
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