COMPENSATION
MANAGEMENT TEAM
Sami Kekalainen
Bettina Mühlböck
Chintana Siri Songkram
Agenda
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Compensation Objectives & Policies
Factors Affecting Wage Mix
Finnish Regulation
Salary & Incentives Structures
Benefits
Conclusion
Compensation Objectives
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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
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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
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External Factors
Labor market condition
Area wage rates
Collective bargaining
cost of living
legal requirements
Finnish Regulations
•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
Base Salaries
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(Assistant Facility Manager)
Facility Manager
Regional Manager
Functional Managers
CEO
: € 3,000
: € 4,500
: € 6,000
: € 7,500
: € 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
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Assistant facility
Manager
200000
500000
1000000
1500000
2000000
Salary Curves
Facility Manager
7000
6000
5000
4000
Facility Manager
3000
2000
1000
0
200000
500000
1000000
1500000
2000000
Salary Curves
Regional Manager
14000
12000
10000
Regional Manager
8000
6000
4000
2000
0
200000
500000
1000000
1500000
2000000
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
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labor market conditions
local wage rates
living costs
legal requirements
collective bargaining
• Bonus system
• Flexible benefits package
Any Questions you’d like
to ask?