Press release, 16 May 2024 at 1.30 p.m. EEST
Mandatum’s Reward and Compensation in Finland 2024 survey shows that three out of four employees feel that pay has the greatest positive impact on an employer’s attractiveness. Employees know the criteria for determining their pay but feel that they have little influence over it. According to the survey, a large part of Finnish companies are still in the process of preparing for the Pay Transparency Directive.
Finnish employees are most motivated by monetary compensation, the meaningfulness of their work, and a permanent employment relationship, the Reward and Compensation in Finland 2024 survey reveals. Three out of four consider pay and compensation to be the most attractive factor when looking for a new job, which is clearly more than employers estimate.
“Monetary compensation is an important motivational factor and an essential component of workplace attractiveness. In addition to the base salary, this may include, for example, a performance bonus, a personnel fund, or even a share incentive plan. There is competition for the best talent in many industries, so employers should not neglect monetary compensation”, says Kiisa Hulkko-Nyman, Business Director, Compensation and Reward Services at Mandatum.
The survey results are based on the reward and compensation survey commissioned by Mandatum in early 2024 with the aim of charting the reward models used by Finnish companies, as well as how employees and management see these systems’ impact on motivation and performance. The survey was a follow-up to the reward and compensation studies commissioned by Mandatum in 2019 and 2022.
Clear and transparent systems are key
The majority of respondents said that they know the criteria for determining their pay but have little opportunity to affect it. According to the survey, almost three out of four employees feel that they are not able to influence their pay.
“It’s a shame that people have this experience, because an employee’s motivation and engagement have a direct impact on the employer’s success. The good news, however, is that this can be improved – companies should be more open about their reward and compensation criteria and link them to the daily work of their employees”, Hulkko-Nyman says.
In addition to the reward schemes themselves, there is also room for improvement in communicating them. Managers rated communications on reward and compensation schemes better than employees: one in four employees feels that their reward and compensation criteria have been communicated poorly, but only one in ten employer representatives agrees with this.
The Pay Transparency Directive entering into force in two years obliges companies and organisations to shed more light on their pay criteria and structures. Many of the companies that took the survey are still in the process of preparing for the Directive, and one in four are poorly prepared. More than half of the companies do not have a pay system based on the requirements of the work for Finnish personnel with no pay system specified in a collective agreement.
“Many businesses still have their work cut out for them in preparing for the Directive. It should give employees greater clarity into how they can influence their own salary development,” Hulkko-Nyman says.
Performance pay with a human face
According to the managers’ answers, performance-based pay is common: nearly three out of four companies have performance pay systems for their personnel. Almost half of the companies have performance-based pay on their development agenda for the near future. Based on the survey, the indicators for determining performance bonuses could be one area for development.
“Employees expressed a wish that at least some of the performance pay metrics would be more individual. They would like their rewards to be based on personal or team performance. The most common metrics for rewards are company profitability and growth, but this level is often felt to be too distant”, Hulkko-Nyman says.
Using sustainability metrics for rewards has become mainstream: 63 percent of the companies have included at least one sustainability metric in their reward schemes.
The company’s reward and compensation scheme should be designed to fit the industry and employee needs for it to motivate and engage employees and increase the employer’s attractiveness.
“Motivating compensation is so important to the company’s success that it is worth paying close attention to their development. In addition to performance-based pay, reward solutions can include spot bonuses, insurance benefits, incentive systems as well as personnel funds, which have rapidly become more popular. The most important thing is the reward scheme’s clarity and fairness, in addition to the personnel being familiar with the scheme and knowing how to influence on their remuneration – and at the same time on the company’s success”, Hulkko-Nyman says.
The reward and compensation survey was carried out for Mandatum by Innolink. The survey was taken by 200 employer representatives and 1,003 employees from the private sector. The survey was conducted as telephone interviews of the employer representatives and a panel data collection for employees in February and March 2024.
Further information:
Kiisa Hulkko-Nyman, Business Director, Reward and Compensation Services
kiisa.hulkko-nyman(a)mandatum.fi, +358 50 337 5482
Niina Riihelä, SVP, Communications, brand and sustainability
niina.riihela(a)mandatum.fi, +358 40 728 1548
Mandatum in brief
Mandatum is a major financial services provider that combines expertise in wealth management and life insurance. Mandatum offers clients a wide array of services covering asset and wealth management, savings and investment, compensation and rewards as well as pension plans and personal risk insurance. Mandatum offers services to corporate, retail, institutional and wealth management clients. At the centre of Mandatum's success are highly skilled personnel, a strong brand as well as a proven investment track record.
mandatum.fi/en/group
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