TOYOTA OVERVIEW HQ Toyota, Japan Industry Auto Manufacturing Size 5000+ Employees, $204B+ Revenue NYSE TM Competitors Ford Motor, General Motors, Honda Website www.toyota.co.jp
AIM IS TO IMPLEMENT LEAN – COMPENSATION Have a well defined group compensation system in place before implementation. Pay system has to achieve behavioral changes that impact bottom line business results. Manage new pay system. Include indirects in your compensation scheme. Set non-monetary reward systems as well.
Toyota Integrated Medical Management Toyota’s Health/ Wellness Vision: Integration, Occupational Health & BenefitOld Vision Occupational Health Personal Health *Safety/Medical *Benefits Group GroupNew Vision Total Health/Wellness Care *Health/Wellness Group
IT’S OLD SYSTEM - THE PRODUCTIVITY BONUS BASED ON GROUP LEVEL Under toyota’s wage system, productivity bonuses constitute half of a worker’s monthly salary, and although it is called a “bonus” it is in reality part of the standard wages. This bonus thus reflects an assessment of the worker’s performance. Toyota calculates the productivity of each section every month, and this becomes the raw data for the bonuses. The calculation are so complicated that even the managers don’t understand these figures This system was very effective in forcing each other group to compete against other An employee pay is depended on productivity of his section
HOW DID THEY CALCULATE PRODUCTIVITY OF WHITE COLLAR WORKERS? The productivity rate is broken down all the way to the shop-floor level. i.e. each team is forced into competition to raise its rate. That’s the secret of toyota’s rising productivity. The important factor in rising productivity is: two separate teams share one assemblyline, one during the day & other at night. Productivity of these 2 groups differ despite fact they use the same equipment.this reflects an assessment of work supervisors. The manager with a high rate can show these numbers to supervisors,who then condemn the
CHANGING TO NEW PAY SYSTEM…….. INDIVIDUAL LEVEL Toyota changed its wage deal:earlier the productivity bonus traditionally accounted for 50% to 60% of total salary, thenIt reduced to 40% in 1990.Again reduced to 20% in 1992.As a result competition has begun to occur on individual rather than group level. Its new personal merit system served to widen the gaps between the individuals.
CHANGING TOYOTA’S OLD SYSTEM TO NEW WAGE SYSTEM
HOW TOYOTA MOTIVATES ITS WORKERS i. Agreed to guarantee lifetime employment for employees ii. Developed a system of internal promotion 1. enabled workers to rise within the hierarchy a. casual workers could receive permanent contracts b. could go on to become team leaders, foremen and even managers. 2. worker can become a sort of minor manager iii. Provides a pay scale based on three components of company profitability 1. One bonus based on seniority - not job classification 2. Another bonus payment related to team’s performance 3. Additional bonus payment allocated to worker’s merit 4. Wage would increase from 85% to 115% from amount allocated In return, Toyota employees are constantly committed to making improvements rather than just responding to problem
Good relationship and team work resulted in increased efficiency and a higher level of production a. Many employees hung out after hours contributing ideas about reorganizing and improving production Of 860,000 ideas, 94% adopted
BY END OF 2006, TOYOTO WON ON GM BCOZ.. GM had: Excessive wage costs for its unionized workers. Pension crisis with salaried and unionized retirees. Uncompetitive factories with low-quality products. Toyota had: Lower compensation costs due to young work force. A weak currency in Japan. A lucky break from high oil prices in those years. As a result: Toyota won.
PUBLIC MOTOR TRANSPORT- Andhrapradesh Minimum Wages and VDA payable from 01-10-2010 to 31-03-2011 VDA payableSl.No. Category of Employment Basic Wage Total Wage for 298 points 1 Accountant 4822.00 1564.50 6386.50 2 Heavy Vehicle Driver 4319.00 1564.50 5883.50 3 Checking Inspector 4160.00 1564.50 5724.50 4 Typist/ Contractor/ Clerk 3829.00 1564.50 5393.50 5 Time Keeper 3658.00 1564.50 5222.50 6 Light Vehicle Driver 3435.00 1564.50 4999.50 7 Conductor 3435.00 1564.50 4999.50 8 Computer Operator 3168.00 1564.50 4732.50 9 Cleaner/Security Guard 2645.00 1564.50 4209.50 10 Mazdoor 2645.00 1564.50 4209.50
COMPENSATION CAN FOLLOW…. “Best Practices” •Incentives not too large. •pay based on individual performance. • reduce seniority pay 9-23
OUR SUGGESTED STRUCTURE TO PAY EMPLOYEES Common to all types of jobs Basic pay- depend on the class/grade where a employee is positioned. Should be based on:nature of work Physical work involved. Mental work involved. Knowledge & technical skills involved. Volume of Duties & responsibilities. Nature & no of Task/activities contained. Level of Skills to be exhibited in the work Burden on employee & complexity of job to do it. on par with other Similar org’s pay structure for same job. On par with cost of living/money value in that area/country. As per latest pay commissions/govt guidelines.