According to employees, monetary rewards are the best motivator for high performance. Employees value all forms of financial reward systems more than employers estimated. In addition, as much as 36 per cent of employees would be willing to accept a smaller basic salary if performance bonuses would help them achieve higher overall earnings.
These were the findings of a remuneration survey carried out by Mandatum Life in 2020. A total of 302 employer representatives and 1,007 employees from Finnish companies responded to the survey. The objective of the survey was to identify both the remuneration systems that are in place in Finnish companies and employers’ and employees’ views on how motivating and effective these systems are.
“There has been a lot of discussion lately about the meaningfulness of work and employee engagement. When employees were asked to place different motivators in order of importance according to how well they motivate them to high performance, monetary rewards came out on top. Monetary rewards and meaningful work go hand in hand, however. This is yet another survey that indicates that for work to motivate employees, both of these matters must be in order,” says Mandatum Life’s Business Director of Reward Services Kiisa Hulkko-Nyman.
According to her, 33 per cent of employees chose monetary rewards as the most important factor motivating them to high performance, whereas 28 per cent chose the meaningfulness of work as the biggest motivator.
On top of basic salary, employers use personnel funds, supplementary pension, insurance benefits, share-based rewards and performance and lump-sum bonuses as financial remuneration for their employees. In Finland, performance bonuses are paid to slightly more than a third of employees paid monthly in the private sector and those paid hourly in the industrial sector*. The number of personnel funds has been growing significantly in recent years. Whereas in 2010, there were 54 personnel funds, at the end of last year, that number already reached more than 170.
“Other forms of remuneration besides basic salary are becoming increasingly common in Finnish companies. It is very interesting to note that as much as 36 per cent of Finnish employees would be willing to accept a smaller basic salary if performance bonuses would help them achieve higher overall earnings,” Hulkko-Nyman points out.
For employees, lump-sum bonuses, performance pay and personnel funds have the greatest impact on their work performance, whereas employers believe most strongly in performance pay. The biggest difference of opinion between employers and employees concerns personnel funds. Employees assessed personnel funds as having a much greater impact than employers did, as 50 per cent of employees felt they are highly motivating, whereas only 23 per cent of employers felt the same.
Employers overestimated their success in rewarding employees
Employees’ and employers’ views on the effectiveness of the company’s remuneration differed in the survey. The survey clearly revealed that employees who considered their remuneration to be motivating and who felt more positive about it also felt that the system was fairer and that communication was better than more critical employees.
“Another advantage of a motivating remuneration system is that personnel can influence the implementation of their own remuneration. The importance of these factors has now been clearly substantiated,” stresses Hulkko-Nyman.
In the survey, employers gave much more optimistic answers than employees to questions concerning the transparency of management’s communication on remuneration, the fairness of the remuneration systems and employees’ opportunities to influence.
In Hulkko-Nyman’s view, well-planned and well-communicated remuneration can help any organisation to improve their personnel’s work motivation and productivity. This requires efforts from the organisation and management, however, for instance in the form of supervisor training.
“The survey also indicated that rewards linked to individual and team targets are the clearest and easiest for employees to understand. Rewards for company-level success can also be brought close to those who contribute to it, as long as there is clear communication and supervisors are able to link the significance and impact of employees’ own work to the achievement of the company’s success,” Hulkko-Nyman concludes.
* Confederation of Finnish Industries EK’s monthly salary statistics from September 2018 and hourly wage statistics from the 4th quarter of 2018.
More information about the survey:
Mandatum Life’s employee remuneration survey was conducted by Innolink. A total of 302 employer representatives and 1,007 employees from Finnish companies responded to the survey. The survey of employees was conducted as a panel survey in December 2019, and employers were surveyed in phone interviews in December 2019 and January 2020.
Kiisa Hulkko-Nyman, Business Director, Reward Services, firstname.lastname@example.org, tel. +358 (0) 50 337 5482
Niina Riihelä, Vice President, Marketing and Communications: email@example.com, tel. +358 (0) 40 728 1548