While usually automakers pay their employees annual bonuses based on sales and the company’s financial results, two US automakers are now moving to introduce quality as a factor.
Ford and GM, both plagued in recent years with quality problems – just watch the ignition switch recall scandal – have moved to ask their salaried employees to improve quality or face diminished bonuses.
“Many of the companies are trying to do whatever it takes to increase their quality level,” said David Cole, of the Center for Automotive Research. “Companies have generally focused on profitability, but right now quality is a center-stage item. If you have better quality, you’ll likely have better financial performance.”
“Clearly, they both have issues but they’ve definitely improved their quality over the years,” said Michelle Krebs, an independent auto analyst. “It’s a good example of them trying to make the top people accountable for quality and not passing the buck on down the line.”
The two US automakers have both revised their bonuses calculation formula to put a bigger emphasis on quality – Ford targets 26,000 employees, from assistants to CEO Alan Mulally, while GM has involved all of its salaried employees worldwide.
At Ford, after in 2013 only 105 of the bonus was related to quality, the ratio will reach 20% for 2014, while GM is upping from the same 10% to 25% this year.