Strategic Objective: Excellent Employer
Seeking to be an attractive employer is not an end in itself. We will only be able to sustain the enduring commitment and motivation of our employees if we keep the promises we have made about the working conditions in our company. And only if we can make these promises visible, credible and transparent to the outside world will we be perceived as attractive in an increasingly competitive talent market and consequently be able to attract the best people to the company.
The “We empower to perform” strategy fuses these two perspectives by seamlessly integrating our consistent promise as an employer with the employee experience, i.e. how our quality as an employer is actually experienced on a day-to-day basis.
We may not always succeed in uniting these different perspectives in everyday life, but we are evidently succeeding more and more often – despite the diesel crisis, in 2016 we received a number of awards for being an attractive employer and topped various employer rankings. For instance, the Volkswagen Group ranked third among engineering, IT and business graduates in the trendence institute’s survey of the most attractive employers in Europe. And, as in the previous year, trendence’s poll of over 300,000 engineering, IT and business graduates from a total of 24 European countries voted the Volkswagen Group the most popular employer in the automotive sector.
In 2016, trendence’s Young Professionals Barometer, which measures the career aspirations and expectations of some 10,000 young professionals with up to eight years’ work experience from across all sectors, ranked our Audi brand third and our sports car maker Porsche sixth. In the wake of the diesel scandal, the Volkswagen brand saw a drop in its popularity from 16th to 31st. In a similar survey carried out by the Universum market research institute in which experienced engineers were asked to state their ideal employer, Audi took second place while Porsche came third. The Volkswagen brand ranked seventh.
Among Czech graduates, trendence found ŠKODA Auto to be the most popular employer. In a number of other countries, including the United Kingdom, Spain, Mexico, South Africa and China, Volkswagen and its 12 brands rank among the most respected employers.
Alongside the external impression that graduates and young professionals have of us, there is of course also an internal perspective – how our own employees view their workplace and working environment. Personnel management at the Volkswagen Group is therefore endeavoring to create conditions at all levels that will deliver a positive experience of Volkswagen as an employer. Along with providing interesting jobs and attractive working conditions, our guiding principles are designed to underline the status of employees as confident, entrepreneurial, creative people who are involved in decision-making. In particular, we would like to highlight three aspects:
- the codification of Group-wide employment rights in guidelines and charters
- the involvement of employees through their elected representatives
- the entitlement of our workforce to a share in profits.
Employment Rights in the Volkswagen Group
The foundations underpinning the provision of attractive, long-term working conditions are a raft of charters and declarations agreed with our Group European Works Council (GEWC) and Global Group Works Council (GGWC) which govern the collective rights of our employees in the workplace and the organization of their work. These include:
- The Declaration on Social Rights and Industrial Relations at Volkswagen (the Volkswagen Social Charter). Volkswagen set out the fundamental social rights of employees in this declaration in 2002. These are based on the relevant conventions of the International Labour Organization. A revised version of the Social Charter was signed in 2012.
- The Charter on Labor Relations. This charter came into force in autumn 2009 and combines greater rights to consultation with shared responsibilities. It defines the rights to information, consultation and co-determination enjoyed by employee representatives from brands, companies and sites represented on the GEWC and the GGWC.
- The Charter on Temporary Work. In November 2012, Volkswagen’s executive management, the GEWC and GGWC signed a charter setting out the principles governing temporary work. These included, for example, a guide ratio of temporary employees to core workforce, stipulations on equal pay, equal treatment and qualification programs, plus a time limit of 36 months before the offer of a permanent position must be considered.
- The Charter on Vocational Education and Training. As well as a high standard of education, the Group is seeking to offer attractive training opportunities at its various locations. Approved in 2015, this charter recognizes vocational training as a core aspect of labor relations. To comply with the charter, the social partners must jointly define certain aspects such as the trainee selection process, the duration and quality of vocational training, plus the conditions for subsequently hiring trainees following an apprenticeship.
These policy foundations underpin the rights of elected employee representatives at the Group level in the European and Global Works Councils. They provide a binding framework for developing existing local labor relations in a responsible manner using cooperative conflict resolution approaches.
Employee Participation through Elected Representatives and Collective Bargaining
Volkswagen has an internationally recognized culture of co-determination. At many sites, employees are represented in two ways: firstly, by a trade union, and secondly, by representatives elected to a works council. Many companies in the Group also have a supervisory board on which the workforce is represented. The International Charter on Labor Relations allows employee representatives around the world to conclude agreements with local management on specific rights to information, consultation and co-determination.
This widespread form of participation has proved highly successful over many decades. When major changes are expected, such as in the case of the pact negotiated in 2016 regarding the future of the Volkswagen brand for example, employee representatives are involved in the planning process from an early stage. This ensures that such processes of change are tackled jointly and have the support of all employees. These co-determination structures are by no means static, however. Our international employee representative bodies are constantly being adapted in line with the ongoing development of the Group. In addition to the Group European Works Council and the Group Global Works Council (set up in 1990 and 1999 respectively), in recent years a number of committees have also been established to reflect the increasing complexity of the Group (such as committees specifically concerned with commercial vehicles, financial services and sales companies, mechanical engineering and so forth). In 2016, the decision was taken to set up a separate committee for the Volkswagen brand itself, due to start work in 2017. The committees of the European Works Council and the Global Works Council meet at least once a year. In addition, all members of these two works councils attend a joint session every year. As well as exchanging information internally and discussing the current situation at the various sites, the respective HR managers and Group executive management also share information about future product and workforce plans and consult each other on social welfare and personnel standards.
Remuneration, Rewarding Performance, Profit-Sharing and Retirement Provision
As stated in our Social Charter, all remuneration and benefits paid for a normal working week should at the very least correspond to the respective statutory minimums – and this applies not only to our employees, but to all our suppliers too. Because they are collectively agreed with trade unions, however, nearly everywhere our rates of pay are considerably higher than the prevailing minimum levels. When setting pay, we make no gender distinctions: people are recruited, hired and promoted solely on the basis of their qualifications and skills. Remuneration is based strictly on the job performed.
A total of nine new collective agreements were concluded at international car production plants in 2016. In some cases, these involved industrial action: strikes were held at Lamborghini, Ducati and Italdesign during national pay negotiations within the Italian metalworking and electrical engineering industry. There was also a stoppage at Scania in São Bernardo do Campo, Brazil during collective bargaining talks. Group sites in Brazil and Belgium were affected by politically motivated strikes. A regional strike against planned cost-cutting measures and government reforms triggered a one-day strike at Volkswagen do Brasil’s Anchieta plant. Workers at Audi’s factory in Brussels also took part in protests as part of national strike action against actual and planned government cutbacks and reforms. As a company, we respect the right of our employees to take part in lawful strikes.
Together with remuneration packages that include a profit-related element so employees can share in the company’s success, the systematic encouragement and rewarding of good performance are key qualities of an excellent employer. Since 2010, Volkswagen AG has consistently applied standard criteria for skills development and performance assessment across its entire workforce, from apprentices to top managers, which are underpinned by concrete incentive programs within the pay structure.
Salaried employees at Volkswagen AG are paid according to a three-tier system:
- basic pay in the form of a competitive monthly salary,
- a performance-related component which additionally rewards individual performance and
- an entitlement to profit-sharing, which is laid down in the collective agreement.
This three-tier system has proved to be an expedient way of enabling employees to share in the company’s success.
Employees of Group companies in Germany and around the world also enjoy further company benefits.
Along with an attractive remuneration package for our active employees, we are also concerned to make provision for those embarking on the next stage of their life. By offering occupational pension schemes, Volkswagen AG, its brands and subsidiaries make an important contribution to ensuring that retirees still have an income in later life. In addition to employer contributions, employees can convert part of their pre-tax salary into pension contributions. They can also opt to defer a further proportion of their compensation in the form of a direct retirement insurance contract.
Volkswagen AG’s Time Asset Bond is a scheme for reducing the length of an employee’s working life. Since 1998, employees have had the option to contribute to the bond out of their gross pay and working time credits. They can then use the time assets accumulated to take paid time off in the run-up to retirement. Such benefits also help boost our attractiveness as an employer in the long term.
Depending on location, benefits may also include subsidized transport and meals, low-cost accommodation, monthly childcare allowances and discounts on selected leisure activities. Additional healthcare or supplementary pension benefits round off the range of company benefits offered.
The extensive social rights enjoyed by employees, strong workforce representation, participation in decision-making processes, performance-related remuneration and good retirement provision form the building blocks of our attractiveness as an employer, which together constitute the bedrock of our human resources policy. These aspects are further augmented by numerous initiatives, agreements and programs which aim to develop our workforce and create versatile first-rate teams.