Pinnacle West’s number one asset is its employees. The company offers a wide array of career opportunities in leadership, professional, technical, administrative and internship positions, as well as union and non-union positions. At Pinnacle West, our goal is to treat every employee equitably, professionally and with respect. We have a highly-skilled human resources group dedicated to ensure that labor and employment issues are addressed. We also have internal policies that spell out employees’ rights, and an established code of conduct that all employees are expected to follow (See our ethics policy in the Governance Section of this report). The company also offers an Employee Concerns Program (ECP) through which employees can anonymously report any suspected wrongdoing.

Attracting Employees
Our company’s Web site connects potential job seekers with employment opportunities as well as information about our family of companies. 
The company’s School-To-Work (STW) internship program and scholarships introduce students to virtually every part of our business from engineering to trades and crafts to information systems. Students are recruited for positions throughout the Pinnacle West family of companies. STW targets students who are attending community colleges or universities, or who are enrolled in vocational programs tailored for the utility industry.

Total Rewards
Our company offers competitive compensation and rewards for outstanding performance. APS offers competitive salaries, comprehensive benefits and a sound work environment. All of our full-time employees are covered by a defined benefit plan and approximately 80 percent of our employees participate in our defined contribution pension. As of January 1, 2006, our projected benefit obligation for the defined benefit plan is at a funded percentage of 71percent.

About 3.5 percent of the outstanding shares of Pinnacle West stock are held by employees. Pinnacle West's compensation and benefits plan are discussed in more detail on the Pinnacle West Web site. 

Family-Friendly Benefits

• The company offers unpaid sabbaticals to employees who have been employed for five years. General leaves of absence are also available
• Time off for mothers after giving birth falls under the company's Short-Term Disability policy. No additional paid maternity leave is available
• We have a listing of child care centers that provide a discount to Pinnacle West employees
• We have a Healthcare flexible spending account and a dependent care flexible spending account for our employees
• Where appropriate, flextime/job share schedules are used in the company
• Based on business needs, part-time work is available upon return in certain circumstances
• The company provides adoption aid reimbursement up to certain limits of qualified adoption expenses

Union Representation
The Company has Collective Bargaining Agreements (CBAs) with three Unions: The International Brotherhood of Electrical Workers Local #387 (IBEW 387), the Security, Police, Fire Professionals of America (SPFPA), and the United Brotherhood of Carpenters and Affiliated Local Union #408 International. Nearly 30 percent of the company’s employees are represented by one of these Unions.

In each case there is a negotiated Labor agreement that establishes the working rules and other terms and conditions of employment. The company’s philosophy is to work cooperatively with unions where they are in effect and to honor the agreements we have made in our negotiations.

Pinnacle West and APS enjoy a healthy mutual respect with IBEW Local 387, the largest union representing employees within the company. Through this partnership with IBEW, several initiatives have been implemented, including a multi-skill-training program, a process to hire supplemental workers, a drug-free workplace program, an apprenticeship program, a driver qualification program and numerous safety projects. The union and the company often join in community-minded causes such as the Valley of the Sun United Way's Community Service Fund campaign and a baseball field building program with Major League Baseball’s Arizona Diamondbacks.

As far as the company’s relationship with its union employees, Human Resources Manager Kevin Salcido outlines the company’s philosophy as follows: “We respect the rights of our union employees to bargain collectively. We strive to retain positive labor relations and we always try to resolve issues internally and at the lowest level possible to ensure positive outcomes for the employee and for the company.”

The company also has a positive discipline program in which leaders work in conjunction with employees and human resources representatives to achieve positive resolution.

Workforce Succession Planning
As our workforce gets older, the company faces the daunting task of replacing many years of experience as employees plan their retirements. The company has taken steps to ensure that not only are key positions filled when experienced employees leave; but also they are filled with employees who are ready and well trained.

“It’s been said there’s no substitute for experience,” Ray Gonzales, Vice President Human Resources, said. “The difficulty lies in the transferring of the nuances of a particular job or discipline. It’s that type of detail and familiarity and experience that has to be passed down to the employees who are stepping into positions.”

Gonzales added that although our workforce is aging, our turnover rate including retirements remains low, which gives the company the time needed to accelerate our training, development and recruitment efforts.

“It is a positive affirmation that APS is a good place to work, with low turnover and where employees feel like they have a stake in the company. Working for a company with an aging workforce is a sign of stability,” he said. “The challenge is in filling the pipeline and making sure that new people are trained and that knowledge gets transferred,” Gonzales said.

Pinnacle West has had a formal succession planning processes for years, which includes all key leaders throughout the enterprise. This means the company has identified potential successors for key positions and has a strong focus on their development.

So while the company stands to lose half of its current employee population to retirement in the next ten years, Gonzales said “we’re putting together tools to look at the entire organization to ensure we fill those positions and maintain a transfer of that knowledge.”

One of the tools is the “dashboard,” a matrix (resembling the layout of a car’s dashboard) that can be tailored for any business unit in the company. It provides a snapshot of an individual business unit’s workforce, taking into account turnover statistics and more. The dashboard allows each unit to better plan which positions require backup and knowledge transfer.

Another key way to help business units understand their potential staffing and training needs is the “Knowledge Management Tool,” which ensures that business units plan for positions that are either “critical” or “unique.”

Gonzales said succession planning really is a multi-pronged approach which includes:

• Developing and preparing current employees with a focus placed on succession planning
• Transferring knowledge 
• Attracting new talent
• Process improvement for succession planning

“We have to look at the work to see what it is we need,” said Gonzales. “We not only have to look ten years out but we also have to focus on the next three to five years. By taking a short- and long-term approach to filling positions that are either critical or unique, we can be proactive in making sure we train people to ascend into open positions by training or hiring them ahead of time, before retirements occur.”

And, APS’ succession-planning efforts aren’t confined to the company. For many years APS has recruited interns and employees from the community as well.

The company sponsors several apprentice programs through local high schools and colleges aimed at recruiting, training and retaining talented students into the workforce.