Ford and GM Tell Employees: Forget Sales, Focus on Quality
In efforts to better address mounting product quality concerns, Michigan-based automotive giants Ford (NYSE:F) and General Motors (NYSE:GM) are now tying staff bonuses to the quality of its products, essentially making the number of units sold or produced irrelevant when it comes time to calculate how much to give the tens of thousands of employees working for the two companies. Now, instead of relying on volume or growth gains, bonuses will be factored on the improvement in quality in the vehicles using a combination of internal and external data as a measuring stick.
“Many of the companies are trying to do whatever it takes to increase their quality level,” David Cole, chair emeritus at the Center for Automotive Research, told The Detroit News. “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.”
About 26,000 salaried Ford employees around the world, from administrative assistants to engineers right on up to CEO Alan Mulally, could potentially earn smaller bonuses this year if the company fails to meet its own quality standards, the site said, adding that 20 percent of bonuses paid for 2014 (which are paid in early 2015) “will hinge on the company meeting quality standards, which include the number of what the industry calls “Things Gone Wrong” — a standard metric that measures problems in vehicles — as well as the costs of warranty claims and customer satisfaction.”
That’s up from just 10 percent from the bonuses paid for 2013, The Detroit News pointed out. “It shows how serious we are about improving quality at the company,” Ford spokesperson Todd Nissen told the publication.