Downloaded 23 times
Uploaded byVikas Sonwane
Volkswagen Model
- Volkswagen was facing economic problems in the 1990s including high costs, excess capacity, and productivity issues. - Traditional methods to reduce labor costs, such as mass layoffs, would result in only a 6% reduction in costs. - Volkswagen introduced an unconventional model that included a 28.8 hour work week distributed over 4 days, qualification periods for employees, and part-time employment for older workers. - This model resulted in a 10% wage reduction but a 13% decrease in costs, showing it was a more effective solution than traditional mass dismissal approaches.
More Related Content
Volkswagen Model
- 2. • 19.2 %turnover • 25.2% sales • 55.9% investment • 46.3% annual results • Excess capacity and productivity problem, high labor costs fewer working hours • Cut down DM2 billion labor costs equivalent of making 30000 workers redundant Economic Situation of Volkswagen in 1990’s
- 3. Traditional Ways Production Planning Man Power Planning Alternative Arrangements Quantitative Work time Organization Indirect Manpower Reduction Qualitative WorkTime Organization Employee Development Direct Manpower Reduction Traditional Methods to Reduce Manpower
- 4. The Volkswagen Model Volkswagen Model 28.8Hour Work Week Qualification Period Part Time Employment
- 5.
- 6. The 28.8 hourWorking Week 36 0 5 10 15 20 25 30 35 40 Weekly NumberofHours Old Working Hours Workweek 28.8 7.2 0 5 10 15 20 25 30 35 40 Weekly NumbeofHours New Working hours Free Time Workweek 20% Reduction
- 7. • Basic Ideato cut 20% labor cuts • Key element was to distribute special payments over a 12 month period • Whole workforce including workers and management • Facilitate transfer from one plant to another
- 8. Special Payment Distribution 010 20 30 40 50 60 70 80 90 100 Basic Wage Basic Wage Annual Special Payment VK Special Payment Holiday Bonus 3.5% increase in pay Anticipation of increase in pay rate Total Salary Total Salary Basic Wage Annual Special Payment VK Special Payment Holiday Bonus 3.5% increase in pay
- 9. Implementation of 28.8Hour working week Monday Tuesday Wednesday Thursday Friday 1st Week 2nd Week Shift Patterns • Four day working week rhythm • No direct production • Daily working time 7.2 hours • Not directly involved in production OFF day Working day
- 10. Monday Tuesday WednesdayThursday Friday 1st Week 2nd Week 3rd Week 4th Week 5th Week OFF day Working day Free period Shift Patterns • Five day working week rhythm • Direct production time • Daily working time 7.2 hours • 5th Week fully off
- 11. Results Through 10% wagereduction they had a 13% decrease in costs as compared to 6% if they had chosen mass dismissal 1 % wage Reduction 13% cost reduction
- 12.
- 13. Young Generation Finish Apprenticeship startwith 20 hours per week After 2 years 24 hours per week After 18 months Full time employees Old Generation Full time working hours age = 56 24 hours per week age = 59 20 hours per week Part time employment
- 14.
- 15. Options for Employees •Fulfillmentof Private Plans •Gain Qualifications outside VW •Join training programme in VW
- 16. Vision: M4 employee-future employeeat VW to have following qualities: • Multi-skilled and multi-functional • Mobile • Creative • Human Income: • Paid 68% of last net income (Qualification time) • Allowance - 80%-90% of last monthly income
- 17. A unique andan unconventional Volkswagen model is a proof that problem solutions are possible in economically tough times if employers use personnel planning instruments in a creative way.
- 18.