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 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
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
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