COMPENSATION MANAGEMENT TEAM

Sami Kekalainen Bettina Mhlbck 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 BPOs compensation policy Worth of a job job evaluation Employees relative worth in meeting job requirements BPOs ability to pay

Factors Affecting the Wage Mix

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
(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 companys 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 200000 500000 1000000 1500000

Assistant facility Manager

2000000

Salary Curves
Facility Manager 7000 6000 5000 4000 3000 2000 1000 0 200000 500000 1000000 1500000 2000000 Facility Manager

Salary Curves
Regional Manager 14000 12000 10000 8000 6000 4000 2000 0 200000 500000 1000000 1500000 2000000 Regional Manager

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 companys 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 companys 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

Any Questions youd like to ask?