1. Compensation Team 9 Pia Virta Svetlana Velikanova

2. Compensation Objectives Serve organizational goals Reward BPC employees past and future enhanced performance Be the first choice for ambitious, talented and qualified employees Maintain equity among employees Stay within a reasonable budget Maintain high retention rates

3. Implementing Compensation Objectives Apply strategic compensation planning approach –Go beyond determining what market rates pay to be able to hire and retain the best talent Link compensation to organizational objectives –Value-added compensation program Pay-for-Performance standard –Wide range of compensation options Develop compensation system that is fair and commensurate with employees needs and expectations –Give pay a major consideration Establish open compensation policy standard

4. Indirect compensation policy Nonfinancial compensation – Rewarding jobs and work environment Employee recognition (seniority, job status, competencies) Supportive culture (supervisors pursue enabler roles) Flexible working hours, autonomy, empowerment, task significance –Addressed personal needs Day care Health care

5. Direct Compensation 90% Indirect Compensation 10% Total Compensation Base Pay Salary Incentives Commissions Bonuses Stock Options Gainsharing Pay for Time Not Worked Vacations Holidays Sick Days Insurance Plans Medical Hospital Dental Security Plans Pension Social Security Disability Insurance Employee Services Educational Assistance

6. Linking Compensation to Organizational Objectives Pay-for-performance standard –Compensation is equal to the value of the work performed. Goal: instantaneous increase in performance Merit pay, cash bonuses, incentive pay Base for compensation –Monthly + year –end bonuses

7. Components of the Wage Mix Internal factors –Worth of job –Employees merits – BPCs ability to pay External factors –Supply and demand of qualified labor –Wage rates in area –Cost of living –Government regulations

8. Compensation Structure Conduct an evaluation procedure using Hay Profile Method (HPM). Emphasize ”Comparable Worth”. –Knowledge, mental activity and accountability Establish geographical area standards Assign a wage rate and benefits with help of wage survey Build in incentives pay programs that reward higher performance –Bonuses, team incentives, perquisities

9. Compensation policy for top executives Base salary Stock options Bonuses Expense accounts Car + phone + apartment (expatriates) Gain sharing

10. Compensation policy for middle range managers Base salary with “built in” progression Quarterly bonus Gain sharing Phone

11. Geographical considerations Quality of life does not vary, salary does vary –Establish mechanism to reflect accuretly the cost of living –Pay accroding to the set of accepted standards of living not salaries Rewards are given when most needed –New Year in Russia versus Christmast in Europe