Traditionally, auto workers receive profit sharing bonuses based upon their employer’s fiscal performance, but the Detroit 3 is apparently looking to have future bonuses — especially for their hourly workers — tied to personal performance.
Chrysler, Ford, and General Motors are all scheduled to hash out new four-year contracts for their hourly employees with the United Auto Workers over the course of 2011. Bloomberg believes each company may push to avoid giving hourly workers traditional annual raises, opting instead to provide a so-called bonus if an employee meets goals tied to both productivity and quality.
The idea isn’t exactly radical or unprecedented, but it does break from the traditional pay arrangement typically sought by the UAW. That said, there’s a fair chance it could actually come to fruition. Bloomberg suggests UAW president Bob King is open to new forms of profit sharing, including incentive-based pay scales for employees represented by the union.
It’s unknown, however, how much of an employee’s salary will be tied to this variable metric. Roughly 40 percent of a Japanese autoworker’s salary is based upon performance-based incentives. In the U.S., bonuses represent only 10-15 percent of their wages.
King may be interested in discussing incentive-based wages as a means to share in the successes of domestic automakers, but he may have some difficulty selling his members on the idea of scrapping the traditional (and predictable) annual bonuses. Many employees are also seeking some sort of reparation for the sizable (i.e. $7000-$30,000) concessions made to automakers over the past several years.
All this remains to be seen. King, top UAW officials, and nearly 1100 delegates are expected to hash out further details at the union’s official bargaining session in Detroit beginning March 22.