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Responding to increased criticism of executive compensation rates, German automaker BMW plans to tie managers' salaries to those of assembly-line workers.
BMW says its employees don't need extra incentives
BMW plans to develop a new pay structure that links the salaries of its top executives to the wages of regular workers, the Frankfurter Allgemeine Sonntagszeitung newspaper reported on Sunday. It would be the first German manufacturer to do so.
Currently, the average salary of a worker on BMW's assembly line is around 40,000 euros a year ($60,100) while an executive board member's salary is around one million euros. In a proposal being developed by BMW, this ratio, approximately 25 to one, will remain at that level.
BMW's human resources director, Harald Krueger, speaking to the newspaper, said that one of the reasons for keeping that ratio is to prevent the salary gap from getting any wider. Thus, if profits drop for the carmaker, it will be the executives who will suffer higher pay losses rather than the workers.
BMW assembly line workers make 40,000 euros a year
Krueger was critical of the business culture of paying large bonuses. He said that using bonuses as motivation created a harmful environment in the company. He said that BMW employees were by nature self-motivated and didn't need to have a carrot dangled in front of their nose to get them to work.
BMW said that it is also working with the unions to negotiate the basic details of how maintaining the ratio will work.
Editor: Nancy Isenson