Well-planned incentive systems combined with sound compensation policies are an efficient way of improving the company’s competitiveness, productivity and quality of working life. The issue at hand is knowledgeable leadership and the tools enabling it. This is a task for the companies, and according to many, among the most demanding and challenging ones at that.

The chemical industry has agreed to use systems that are current and up to date. The new, industry-specific pay systems for employees were taken into use in stages during 1996-1999. At first the systems regarding the so-called technical employees were taken into use, followed by systems for clerical employees. Starting from 1999 the two systems were combined into one pay system covering the white collar employees in the chemical industry. The renewal was first of its kind within national industries. Moreover, pay systems in the collective labour agreements for employees in the basic chemical industry, plastics products industry and the chemicals products industry have been renewed and implemented in 2000.

Generally the basis of pay is the requirements of the job. With the help of the above systems it is possible to define in the fairest way possible the requirements for tasks and job descriptions and to place them into categories of demand level. The collective labour agreements include categories of payment, which correspond with job descriptions with different requirements. This way each task and function receives a job-specific pay based on its requirements.

Part of the compensation is based on the person’s qualifications (qualifications = competencies or potential+work performance). This refers to the person-based pay component. To a large degree the definition of such a pay component in terms of amount and other practical matters is based on the company’s decision. The systems covered by the collective labour agreements have guidelines for assessing the individual’s own competence. At the same time the systems provide insights into how the results of such an evaluation should guide the development of the individual’s compensation.

Results-based pay components mostly refer to methods of compensation complementing the pay systems defined in the labour agreements. The basis for results-based pay components may involve the results obtained by an organization, unit, group or individual – in other words something that the people involved have made happen. With this in mind the result may be something else besides a measurable financial outcome. In the collective labour agreements of the chemical industry there are no regulations regarding results-based pay. The systems are created based on the individual company’s objectives.

The usage of various results-based pay components has considerably increased. Results and profit-sharing-based compensaton increase the flexibility of pay systems and work in their part as company-specific buffers in the EMU environment. Strengthening the role of results-based compensation and developing the systems used in it continue to be central goals in the chemical industry.

All in all, the challenge is to link the scaling of wages and the individual’s pay development with those factors that improve the companies’ competitiveness and productivity. This would lead to a more functional total system of compensation in more and more work places.