Question: BMW - the case continues - changes to reward structures
The company states that it depends on motivated staff - high performers for whom the commitment to their work and the willingness to perform are a matter of course. The design of the pay system is based on fairly rewarding an individual's performance and the performance of the entire team. BMW implements this philosophy of performance and reward consistently across all markets and all hierarchical levels. The performance-based element in pay increases with a person's level in the hierarchy. The components of salary are:
· Fixed salary Each employee receives a fixed pay of 12 monthly salaries, with no difference between male and female employees. This is assessed and adapted once a year.
· Company bonus The company supplements the fixed pay with a share in company profit - in 2008, for example, this meant that the total pay of most employees amounted to 15 monthly salaries.
· Individual bonus The company also rewards individual performance, the amount depending on an evaluation by their immediate boss.
Case questions 11.5
· What external factors may have prompted this review of the payment system at BMW?
· How would it affect the management of the appraisal system?
· What demands would it make on the management information system?