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UPM Annual Report 2014
UPM Annual Report 2014
41
42
CONTENTS
■
Response rate (%)
Employee Engagement Index (EEI)
Manager Effectiveness Index (MEI)
OHS Index
Employee Engagement Survey
(EES) results, Trend 2007–2014
10
14 13 12 11 10 09–
08 07
80
60
40
20
0
STAKEHOLDERS 31–44
PERSONNEL BY COUNTRY
31 Dec.
2014 2013 2012
Finland
7,855 8,110 8,636
Germany
4,586 4,609 4,714
United Kingdom 1,098 1,136 1,205
Russia
787
771
970
France
785
901 1,146
Austria
549
547
546
Poland
499
440
454
Estonia
204
206
217
Spain
109
194
212
Italy
61
62
65
Turkey
40
38
39
Sweden
27
26
29
Belgium
28
32
35
Other Europe
111
177
208
China
1)
1,424 1,412 1,430
United States
2)
1,087 1,116 1,129
Uruguay
565
562
576
Malaysia
175
174
185
Brazil
89
95
48
South Africa
67
66
72
Australia
61
77
86
India
39
41
36
Rest of the world
168
158
142
Total
20,414 20,950 22,180
1)
Incl. Hong Kong
2)
Incl. Madison 50%
In 2014 the main focus areas in UPM’s People Strategy were a safe and inspiring
workplace, sharp commercial ambition and sales capabilities, and change
readiness and agility in changing business environment. These focus areas have
been incorporated into the businesses’ strategy process.
Encouraging professional growth
UPM aims to provide a safe and inspiring
working environment where employees are
capable of achieving good results. UPM
encourages its employees to pursue professional
growth and supports them in learning and
developing their skills further.
The company uses the 70/20/10 model based
on the assumption that 70% of learning takes
place on the job, 20% comes from learning
from others, and 10% comes from development
programmes.
UPM systematically uses a performance
management process (PPR) to set individual
strategy-related targets and development plans
for all employees globally. The PPR provides an
opportunity, both for managers and employees,
to give and receive feedback on performance
and behaviour based on UPM values.
In past years UPM has developed its perfor-
mance appraisal process by emphasising man-
agers’ roles in leading performance and giving
feedback. Managers are expected to focus on
performance management and guiding their
team members to reach agreed targets. 86%
(85%) of all permanent UPM employees had a
personal performance review with their manag-
ers in 2014.
Developing the workplace together
The UPM Employee Engagement Survey
(EES) invites all employees across the company
to evaluate different aspects of the working
environment every year. The survey measures
development in three main indices; Employee
Engagement, Manager Effectiveness and Occu-
pational Health and Safety (OHS).
In 2014, 78% (78%) of UPM employees
responded to the survey which illustrates a high
level of willingness to participate in the devel-
opment of UPM as a place to work. The
Engagement index increased to 63% (60%)
while favourable scores in the OHS index
increased it to 78% (77%). Favourable scores in
the Manager Effectiveness index have steadily
improved over the years (from 74% in 2013 to
75% in 2014), and the score is now close to the
top quarter of the global norm.
The EES gives an opportunity for annual
monitoring of long term trends and the pro-
gress of agreed development activities. The
results and progress are evaluated in order to
define further improvements both at organisa-
tional and team level.
Building capabilities
for empowering leadership
The company aims to have inspiring leaders
who empower and engage employees at all
levels. To further develop its leadership capabili-
ties, UPM has a development programme
portfolio focusing on self-leadership, coaching
capabilities, innovation and leading in complex-
ity.
In 2014, UPM continued to support a
coaching leadership style and promoted the use
of various tools for feedback on behaviours and
performance. The target is to improve dialogue
and the feedback culture in the company. UPM
also continued its mentoring programme as a
valuable tool for developing leaders.
Rewarding and recognising
good performance
UPM offers reward and recognition with an
emphasis on high performance. UPM has a
total compensation approach consisting of base
salary, benefits and incentives, which are deter-
mined by UPM’s global rules, local legislation
and market practice.
Intangible recognition is included in the
total reward portfolio, which means that UPM
provides, for instance, a safe and healthy work-
ing environment, interesting and meaningful
work, and excellent leadership and career
opportunities. Individual, team and business
performance are criteria for compensation
planning and decisions.
Base salary is set with regard to general
agreements and local market practice, the level
of the particular position, and individual per-
formance. Through their own personal achieve-
ments and behaviour, employees have the pos-
sibility to influence their base salary.
All UPM’s employees belong to a unified
annual Short Term Incentive (STI) scheme. The
plan includes company- and business-level
targets, safety targets and personal and/or team
performance targets. EBITDA is one of the key
financial indicators for the company- and busi-
ness-level targets. The annual incentives paid in
2014 for the 2013 STI plan were EUR 50 mil-
lion and the estimated amount of annual incen-
tives for the 2014 STI plan is EUR 51 million.
For significant individual or team successes,
there is a separate Achievement Award system
in place.
UPM has two long term incentive plans: a
Performance Share Plan (PSP) for senior execu-
tives and a Deferred Bonus Plan (DBP) for
other key employees. Approximately 600
employees are covered by the plans launched in
2011 and run on an annual basis. Under both
plans, shares can be earned based on either
group or business area level performance. The
PSP and DBP have replaced the Stock Option
Programme 2007 which expired during 2014.
More information about long term incentives
can be found in the Remuneration Statement on
www.upm.comin the Investors section under
Governance.
UPM promotes active participation
At the end of 2014, UPM had 20,414 employ-
ees working in 45 countries. As a multinational
company, UPM complies with international,
national and local laws and regulations and
respects international agreements concerning
human and labour rights and freedom of asso-
ciation.
UPM abides by legally binding collective
agreements. UPM does not collect information
on or report on its employees’ union member-
ship at a global level due to differences in
national legislation in the various countries.
The estimated percentage of active employees
covered by collective agreement mechanisms
was 73% (65%) in 2014.
UPM promotes active employee participa-
tion and consultation, organised in accordance
with international and national rules and regu-
lations. UPM respects the privacy of employees
and promotes equal opportunities and objectiv-
ity in employment and career development.
To enhance open international dialogue,
UPM has a co-operative body, The UPM Euro-
pean Forum, that focuses on issues related to
changes within the company and the business
environment in general. The forum organises
regular meetings for employee representatives
from business units operating in Europe.
People enable company
transformation
UPM is placing particular
emphasis on performance
orientation and employee
engagement.
UPM’s personnel by business area 2014
UPM Biorefining 12%
Other operations 3%
UPM Plywood
12%
UPM Paper
ENA 51%
UPM Energy 0%
UPM Raflatac
14%
UPM Paper
Asia 8%