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COMPENSATION MANAGEMENT TEAM
Sami Kekalainen
Bettina Mühlböck
Chintana Siri Songkram
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Agenda
• Compensation Objectives & Policies
• Factors Affecting Wage Mix
• Finnish Regulation
• Salary & Incentives Structures
• Benefits
• Conclusion
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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
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Compensation Objectives
• Mesh employees’ future performance with organizational goals
• Control the compensation budget
• Attract new employees
• Reduce unnecessary turnover
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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
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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
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Factors Affecting the Wage Mix
• External Factors
• Labor market condition
• Area wage rates
• Collective bargaining
• cost of living
• legal requirements
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•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
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Base Salaries
• (Assistant Facility Manager) : € 3,000
• Facility Manager : € 4,500
• Regional Manager : € 6,000
• Functional Managers : € 7,500
• CEO : € 10,000
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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
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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
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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
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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
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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
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Salary Curves
Assistant facility Manager
0500
100015002000250030003500400045005000
200000 500000 1000000 1500000 2000000
Assistant facilityManager
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Salary Curves
Facility Manager
0
1000
2000
3000
4000
5000
6000
7000
200000 500000 1000000 1500000 2000000
Facility Manager
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Salary Curves
Regional Manager
0
2000
4000
6000
8000
10000
12000
14000
200000 500000 1000000 1500000 2000000
Regional Manager
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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.
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Benefits Objectives
• Improve employee work satisfaction
• Meet employee health and security requirements
• Attract and motivate employees
• Reduce turnover
• Maintain a favorable competitive position
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Core Benefits• Health care
• Day care
• Cellular phone
• Food services
• Housing and moving expenses
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Additional Benefits in Finland
• Company car
• Free time activities
• Discounts on goods and services purchased at the company’s store
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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
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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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Any Questions you’d like to ask?