Compensation TEAM 10: Panu Kurkela Jouko Kyrola Simo Nieminen Martijn Verbree

Compensation Objectives Match Organizational Goals Employee Motivation Retain most talented people Reward Past Performance Improve Productivity Maintain Competitiveness

Compensation Policies Competitive Base Salary Annual Merit Pay based on Excellent Performance Incentives Indirect Compensation

Government Regulations Mandatory - Minimum Wage - Occupational Health Service - Retirement Benefits - Maternity Benefits - Insurance (accidents, Unemployment) -These are laws and therefore not negotiable

Opportunities Changed Working Time Regulations Local Employee Agreements Allowed Voluntary Retirement Insurance Investment Funding Possibilities Local Authorities Agreements -All these have made it easier to bargain and get competitative agreements, with local communities, Labor Unions and employees. -Investment funding possibilities can be exploited in the rural areas of Finland. The Finnish government and EU development funds try to stimulate further investment and employment in these areas. -Local Authorities Agreements refer to local communities providing good infrastructure for companies ready to invest in these less populated areas, e.g. free land, water connections, heating pipes.

Factors Affecting Working Time Eight Hours per Day 37.5 Hours per Week Two First Overtime Hours +50% Following Overtime hours +100% Total Amount of Overtime Hours per year is limited Possibility for Local Agreements -A large proportion of the lower level managerial staff (FM’s and AFM’s) are also unionized, this would suggest that we need to address the point of local agreeing. -Today new agreements with Government, Labor Unions and employers have allowed for more of local agreeing, e.g. work for 10 hours per day for four days per week.

Base Salaries CEO 700.000 Vice Presidents 400.000 In FIM, $ 1 = FIM 5.5 CEO 700.000 Vice Presidents 400.000 Area Managers 300.000 Facility Managers 220.000 Assistant Facility Manager 150.000 Salary Range: (+/- 25%) -The 50% variable in the base salaries are due to the seniority, qualifications and willingness of mobility(rotation). -These figures are base salaries and therefore bonuses etc. are allocated on top of these. -Because of the wide pay ranges, (seniority) merits can be easily implemented.

Compensation Constraints CEO VP’s AM’s FM’s AFM’s -All employees get a yearly merit -Bonuses only apply to Area Managers and Functional Managers, because their performance can be easily measured. E.g. market growth/share, sales, profit. -Stock options are very popular in today’s business lives in Finland, for our purposes these would be decided in the Chicago, i.e Head Quarter. Base Merit Bonuses Stock Indirect Salary Options Compensation

Incentives Merits Allocation by Superior based on Performance Appraisal Bonuses -Max 20% of Base Salary -Goals and Bonus Set by Superior -Bonuses are Based on Yearly Budget Stock Options - Goals Set by Chicago HQ - Evaluation by Chicago HQ, Based on Appraisal -Extra compensation for people willing to move, thus being mobile. In this context especially considered are the people willing to move to the Baltics and Russia.

Management Goals Customer Satisfaction Productivity Growth Market Share Sales Volume Profit* -These goals apply to the Area Managers and Facility Managers. -Except customer satisfaction all goals are quantitative and easy to measure. -Customer satisfaction can be measured through survey’s. * The first year we probably don’t make any profit

Indirect Compensation Retirement Insurance Flexible Working Hours Company Car, Petrol, phone Self Development Program Relocation Assistance -Flexible working hours apply for the FM’s and the AFM’s. Agreements with the local communities offer this opportunity. E.g. 4 day workweek of 10 hours. -CEO, VP’s, AM’s get a company car + petrol + phone. Some Facility Managers might get one as well, but his depend upon the region they operate. Area Manager decides about his. -Relocation assistance consist of covering relocation costs, relocation salary bonuses. -Relocation assistance abroad also covers, housing, family expenses, schooling for kids, flight tickets for traveling back to home country monthly.

Thank you...