Performance and Participation

Fair pay and a share in the Company’s success underpin the motivation and performance of our employees but also help to protect jobs and keep us competitive. Employee participation and codetermination rights for employee representatives are key factors in the Volkswagen Group’s success, so we engage in dialogue with our employees to set standards for good work.

Promoting Performance and Sharing Profits

The systematic fostering and recognition of good performance is another vital element in our PM strategy, along with redesigning our pay system to ensure that employees have a sustainable share in the success and profits of the Company.
Since 2010, Volkswagen AG has had detailed standard criteria for skills development and performance assessment. These criteria cover the entire workforce, from apprentices to top managers, and are underpinned by concrete incentive systems within the pay structure.
The pay system for Volkswagen AG employees covered by collective agreement comprises three main components:

  • basic pay in the form of a competitive monthly salary
  • a performancerelated component, which rewards individual performance
  • an entitlement to profit-sharing, which is laid down by collective agreement.

This three-tier remuneration system has proven its worth within Volkswagen AG as a tool enabling the workforce to participate in the Company’s success. At the same time, it helps recognize individual achievements while maintaining competitiveness.
The system is, therefore, increasingly being implemented as standard throughout the Group, including at Audi, ŠKODA and Volkswagen Slovakia. In 2013, employees at more than 30 Group sites benefited from profit-sharing.

Sustainable pay components for members of the Board of Management and management.

As part of the introduction of a performance-related pay component, it was agreed that each employee should have an annual appraisal with his or her line manager.

Collective Agreements in 2013

Long Term Incentive (LTI) for Long-Term Success

The pay for management employees across the Group includes three variable components: the personal performance bonus; the Company bonus; and the Long Term Incentive (LTI), introduced in 2010. The LTI is calculated over a four-year period, making it the component that reflects sustainable development by the Company. Components of this kind were required by the 2009 legislation on remuneration of Board of Management members, but the LTI is applied more widely at the Volkswagen Group to the whole of its management. The Long Term Incentive is linked directly to the goals set out in the Group’s Strategy 2018: top employer status and top ratings for customer satisfaction, sales and profitability.

Annual Appraisal

As part of the introduction of a performance-related pay component, it was agreed that each employee should have an annual appraisal with his or her line manager. This appraisal has two components, performance assessment and development planning. Each employee is given specific feedback on his or her performance and clear guidance on career prospects. Recognizing and valuing good performance is just as important in this context as identifying individual potential or specific further training needs. Appraisals using the same criteria were also carried out within Volkswagen Financial Services AG and Volkswagen Immobilien Service GmbH.
The system of appraisals linked in part to a performance-related pay component is being rolled out across Group brands and companies. Over the reporting year, for example, appraisals in line with Group standards were introduced for all employees covered by collective bargaining at VW Group Rus in Kaluga (Russia). Individual appraisal was also introduced for all management staff in 2010. As well as performance assessment and development planning, these appraisals include target-setting and assessment of target achievement.
Since 2013, all temporary external personnel employed at Volkswagen AG also benefit from a performance-related pay component from their second year with Volkswagen. The process by which this component is determined is similar to the individual annual appraisal process at Volkswagen AG.

Employment Security

We use a wide range of flexibility tools to help maintain competitiveness and protect jobs. In 2013, we again responded flexibly to changes in the business environment. For example, we were able to protect jobs at Volkswagen Autoeuropa by relocating around 200 Portuguese production staff to Volkswagen AG in Wolfsburg for several months, enhancing value at the German plant.
Under the collective agreement on sustainable site retention and employment protection, all Volkswagen AG employees enjoy employment security until at least the end of 2014. The Innovation Funds set up at the initiative of the General Works Council and governed by the same collective agreement represent a major contribution to safeguarding employment. There are two Funds:

  • Innovation Fund I, set up in 2007, helps to further develop existing skills areas at the various Volkswagen sites.
  • Innovation Fund II, set up in 2011, develops new areas of business closely related to the automotive value production chain.

Until at least the end of 2014, Volkswagen AG is committed to recruiting apprentices and, subject to specific performance criteria, giving them permanent employment on completion of their training. Former apprentices who do not meet these criteria are initially offered a two-year fixed-term contract. After two years, the performance assessment that forms part of their individual annual appraisal constitutes the basis for the decision as to whether to take them on permanently.

Recruiting Local Personnel

Participation and Co-Determination

The International Charter on Labour Relations first came into force in 2009 and links increased participation rights with shared responsibility. The Charter applies internationally and provides for phased rights to information, consultation and codetermination for employee representatives of the brands, companies and sites represented on the Group Global Works Council. The rights it guarantees employee representatives relate, among other areas, to PM and industrial relations provisions, work organization, remuneration systems, information and communications, initial and in-service training, occupational health and safety, process controlling, and social and environmental sustainability.
Since 2009, management and employee representatives at many sites outside Germany have negotiated declarations of intent and outline implementation arrangements. Further site agreements on local implementation of the Charter were concluded in 2013, including at Porsche Holding Gesellschaft m. b. H. in Salzburg and the Volkswagen Group United Kingdom Ltd. 2013 also saw plant-level co-determination being extended at a number of sites in line with the Charter: the Indian plant at Pune, for example, was one of several to hold inaugural townhall meetings or symposia. At many sites, the work of local employee representatives is now being coordinated or developed within special committees.

Qualification workshops for local implementation of the Charter on Labour Relations.

The Group Global Works Council and Company management regularly monitor implementation of the Charter on Labour Relations in individual Group companies. At meetings of the European Group Works Council and the Group Global Works Council, representatives from the various sites report back on how local bodies and working structures are being set up and developed and how the tools contained in the Charter are being applied, sharing examples of best practice. In 2013, a number of qualification workshops were held to help employee representatives implement the Charter locally: these workshops were held at cross-company level (for the Central and Eastern Europe region) as well as for specific sites, such as Volkswagen in Poznan (Poland), for production companies such as Volkswagen India, and for the sales and financial services sector (Volkswagen Group Sverige).
To improve the situation of workers, working conditions, participation rights and job security in the Group’s Chinese joint ventures, a Liaison and Coordinating Committee was set up back in 2008, bringing together the General Secretary of the Group Global Works Council, the Presidents of the trade unions within the Chinese joint venture companies, and representatives of the Company itself. Chinese joint venture companies that were not previously represented joined the Committee in 2013, most notably the components plants.
In September 2012, the Group Global Works Council set up a Commercial Vehicles Committee, bringing together employee representatives from the Scania, MAN and Volkswagen Commercial Vehicles brands. This Committee supports the integration of commercial vehicle brands in the Volkswagen Group and also has extensive information and co-determination rights.
Since 2008, the Group Global Works Council has also had a Sales and Financial Services Committee. One of the roles of this Committee is to review and develop the co-determination rights of the companies represented on it in line with the International Charter on Labour Relations.

The Employee Opinion Survey – Worldwide

The employee opinion survey, or “Stimmungsbarometer”, is a tool that involves employees actively in what is going on in the Company. This standardized Group-wide survey measures employee satisfaction annually, and once the survey is complete, the findings are jointly discussed by supervisors and employees, a process that highlights problems on the one hand and suggestions for improvements to work processes on the other. Improvements agreed on are then implemented before the following year’s survey.
The employee opinion survey was conducted for the sixth time in 2013, and during the reporting year, a twelfth statement was added to the survey, seeking employees’ views on provision for in-service training. The survey covered 121 corporate sites and companies in 40 countries, and over 400,000 employees took part out of a possible total of around 450,000 – a response rate of 89%. The reporting year saw employees of Porsche, MAN, Volkswagen Group Retail Deutschland GmbH and Volkswagen Group Polska Sp. z. o. o take part for the first time.
Alongside the employee response rate, the key indicator generated by the employee opinion survey is the employee satisfaction index. During the reporting year, the score on this indicator was 79 out of 100. 32

412,795 ideas from employees saved more than €312.5 million.

The employee opinion survey enables employees to take an active part in what is going on in the Company. It measures employee satisfaction annually and, once the survey is complete, the findings are jointly discussed by supervisors and employees.

Continuous Improvement and Ideas Management

Employees use their creativity, knowledge and initiative to take responsibility for process and product improvement under the Ideas Management program. Ideas management is a vital management and motivational tool for line managers across the Company and has been an integral part of Volkswagen’s culture of improvement for many years. The ideas management process also helps to make working at Volkswagen both safer and healthier. The challenges of demographic change are given a high priority, with special consideration given to suggestions for ergonomic improvements.

The “Volkswagen Way”

Company Benefits

The Volkswagen Group offers all its employees the opportunity to acquire a vehicle from at least one Group brand on favorable terms. The terms of this benefit must be affordable for the employee and commercially viable for the Company. Apprentices at Volkswagen AG, for example, enjoy special concessions on the purchase or leasing of a vehicle.
Volkswagen AG contributes to the benefits provided by social insurance schemes, such as sick pay, and supports dependents when an employee dies. The Company also has a collective accident insurance policy that covers all employees against accidents resulting in death or invalidity. In exceptional cases of economic hardship, the Company grants employees a short-term loan. Employees of Group companies around the world also enjoy further company benefits. These may include:

  • subsidized transport and meals
  • low-cost accommodation
  • monthly childcare allowances
  • discounts on selected leisure activities.

Health care benefits or additional pension insurance round off the range of company benefits.

The Company Pension Plan