COMPENSATION MANAGEMENT TEAM

Sami Kekalainen

Bettina Mühlböck

Chintana Siri Songkram

Agenda

• Compensation Objectives & Policies

• Factors Affecting Wage Mix

• Finnish Regulation

• Salary & Incentives Structures

• Benefits

• Conclusion

Compensation Objectives

• Pay market-competitive compensation• Achieve internal & external pay equity• Ensure fair employee treatment• Promote open & understandable pay

practices• Comply with all governmental

compensation regulations• Promote pay-for performance standards

Compensation Objectives

• Mesh employees’ future performance with organizational goals

• Control the compensation budget

• Attract new employees

• Reduce unnecessary turnover

Compensation Policies

• Pay-for performance standard • No pay secrecy – open policy• Different compensation options/plan for each level of

managerial employee• Competitive base salary (merit pay program)• Short-term incentives - bonuses• Long-term incentives – stock plans• Indirect compensation- general benefits• Nonfinancial compensation –perks eg: employee

recognition program, special relocation benefits, etc

Factors Affecting the Wage Mix

• Internal factors

• BPO’s compensation policy

• Worth of a job – job evaluation

• Employee’s relative worth in meeting job requirements

• BPO’s ability to pay

Factors Affecting the Wage Mix

• External Factors

• Labor market condition

• Area wage rates

• Collective bargaining

• cost of living

• legal requirements

•Equal rights law, child labor law, etc.•No legislated minimum wage•Paid vacation•Parents and family take-off•40h/week

–Over time salaries (138h/4 moth; 250/year)–Night- and shift work bonuses

Finnish Regulations

Base Salaries

• (Assistant Facility Manager) : € 3,000

• Facility Manager : € 4,500

• Regional Manager : € 6,000

• Functional Managers : € 7,500

• CEO : € 10,000

Profit-Sharing Plan• Profit-sharing plan is intended to give all

employees the opportunity to increase their earnings by contributing to the growth of organization

-can help to stimulate employees to think and feel more like partners and provide better service

-increases motivation

Weakness of Profit-sharing Plan

• Profits may be result of factors which employees have no control– Economic conditions – National emergencies– If program fails to pay for several years in a

row can cause adverse effect on productivity and employee morale

Profit-Sharing Plan (cont’)

• 5% of facility growth is shared between facility manager (and assistant facility managers)

• 1% of regional growth is given for regional managers

• Paid half yearly

Stock Option Plan

• Stock option plan grants to employee the right to purchase a specific number of shares of the company’s stock at a guaranteed price during a time of period

• Price of option: -10% market closing price 30.12.

• If the price rises then the option occurs

Stock Option Plan (cont’)

• Only for top management

• Option amount equal to year salary

-> €50,000 (base salary) + [€50,000 SOP*1,1 (growth of stock price)

- €40,000]=€65,000

Salary Curves

Assistant facility Manager

0500

100015002000250030003500400045005000

200000 500000 1000000 1500000 2000000

Assistant facilityManager

Salary Curves

Facility Manager

0

1000

2000

3000

4000

5000

6000

7000

200000 500000 1000000 1500000 2000000

Facility Manager

Salary Curves

Regional Manager

0

2000

4000

6000

8000

10000

12000

14000

200000 500000 1000000 1500000 2000000

Regional Manager

Benefits

• Core benefits are provided in all countries.

• Flexible benefits plans (cafeteria plans)– Benefit plans that enable individual employees

to choose the benefits that are best suited to their paricular needs.

– Additional benefits vary among the countries.

Benefits Objectives

• Improve employee work satisfaction

• Meet employee health and security requirements

• Attract and motivate employees

• Reduce turnover

• Maintain a favorable competitive position

Core Benefits• Health care

• Day care

• Cellular phone

• Food services

• Housing and moving expenses

Additional Benefits in Finland

• Company car

• Free time activities

• Discounts on goods and services purchased at the company’s store

Additional Benefits in Russia and the Baltics

• Education for children

• Additional health care services

• Free time activities

• Discounts on goods and services purchased at the company’s store

Conclusion

• General guidelines for compensation that are equal in every region

• Wages adjusted based on the economic conditions– labor market conditions – local wage rates– living costs– legal requirements– collective bargaining

• Bonus system• Flexible benefits package

Any Questions you’d like to ask?