Hayes Lemmerz Autokola, Czech Republic: Wage policy
Hayes Lemmerz Autokola a.s. produces steel-fabricated discs and aluminium wheels for passenger cars, industrial trucks and forklifts. The company has been using its current name since 1997, but was originally established by Nova Hut a.s. in 1993. Autokola’s production programme builds on the tradition of steel-fabricated wheel manufacturing, which was established in the city of Ostrava in the northeast of the Czech Republic in the 1930s.
Today, the company has about 400 employees, whose average age is 43 years. The average age of the workforce is rising each year due to the low fluctuation rates and labour force turnover. Some 51% of the employees are aged 39 years or lower, 27% are aged between 40 and 49 years, 19% are aged between 50 and 59 years, while 3% are over 60 years of age. Due to the specificity of the sector, only 17% of the workforce are women, the majority of whom are employed in administrative positions. Women are rarely involved in production activities requiring heavier physical work.
All new employees are informed about a number of key documents when they start work at the company: the collective agreement, the employer and employee statutes, and the skills matrix. The company’s collective agreement deals with wage policy, as well as rewards and benefits. Autokola maintains high-quality social dialogue, as well as granting social benefits.
Good practice today
Fabricated disc wheels are part of the safety features of passenger cars. Therefore, the skill and precision required for manufacturing this product is high. Like many other companies in the industry, Hayes Lemmerz Autokola was, and in some areas still is, struggling with problems concerning an ageing workforce and an insufficient number of specialised craftspeople – in particular, turners, welders and grinders. The company’s social benefits for workers and its wage policy enables it to retain quality and skilled workers, while making maximum use of their talents.
Around 2002, the management was confronted with the problem of employees’ increasing dissatisfaction with wage distribution, which was regarded as unjust and discriminatory. In particular, the traditional system of pay scales based mainly on seniority was heavily criticised. This system also defined how many workers within a given pay scale could be employed in one working area, thus restricting the use of workers’ knowledge and experience. The company was also highly motivated to change the culture of ‘an employee receiving their pay just by walking through the doors of the company’. At a result, Hayes Lemmerz Autokola decided to develop a new method for wage calculation and job rewards. The method was analysed and presented, and adopted by Hayes Lemmerz Autokola shortly afterwards. The central feature of the initiative is the replacement of pay scales with ‘wage bands’. Wage bands more closely group together the different professions, while respecting the individuality of each worker. They eliminate the rigid system based on seniority, which could be viewed as discriminatory. Instead, wage bands continuously take into account the individual achievements and personal, work-related development of the particular worker. Most importantly, it represents an ‘age-friendly’ initiative, rewarding workers on the basis of their experience and knowledge rather than their seniority.
Five basic wage bands now exist within the company, in addition to a sixth wage band for managerial positions, all of which are defined in the wage section of the collective agreement. Each wage band has a defined minimum and maximum basic monthly salary threshold. These thresholds are calculated on the basis of averages of the typical wage levels in the industry, in line with special annual surveys. When a new employee joins the company, they receive a basic wage level for the first three months. After this, their salary is reviewed for a percentage rise based on their work achievements. Thus, only after the three months’ probation period are the employee’s practical skills and work achievements assessed according to a skills matrix developed for each working position. About 20 types of skills are assessed for each worker, with up to a maximum of 40 skills assessed for more skilled, technical positions. Basic features may include the level of education and computer literacy, progressing to more complex features such as language skills, ability to communicate with customers and representation of the company, which bring higher reward benefits than the basic ones. Additional education and training are available to all workers who are interested, regardless of their age; these are also counted as an added advantage in the skills evaluation matrix. Older and more skilled workers are therefore not only rewarded for their existing knowledge and experience, but are also given the opportunity to further their development in the course of their career.
Each item assessed on the skills evaluation matrix is then rewarded by an additional payment added to the employee’s basic monthly salary. Workers are individually reassessed each year and, on the basis of their evaluation, are granted a salary increase accordingly. In line with this logic, open career planning is available, without any age restrictions. According to the company’s human resources (HR) manager, this system of evaluation and reward has been greatly welcomed by all of the employees. Although it is not an explicit part of the policy, the initiative was designed to help retain the much-needed skilled workforce, in the context of an ageing population. The system has proven successful, since staff turnover is lower than 1%. It is also very favourable for older workers, removing any element of age discrimination in wage policy, but explicitly rewarding their experience on the basis of actual performance, which may also be tested or proven – for example, by certificate.
The employees’ total wage thus comprises this basic assessment bonus, along with additional bonuses provided for in the collective agreement. Moreover, efforts made to improve the company’s production process are rewarded through what is referred to as ‘the Kaizen method’. Under this scheme, all employees are invited to contribute suggestions for improving the production process; the employee may then be rewarded based on the calculated savings that their improvement, if implemented, would bring about for the company. This initiative has had a major social impact on the motivation and sense of work satisfaction among the company’s employees. According to the HR manager, it is clear that the improvements suggested by the older workers are based on their extensive experience, since long-term experience and trial-and-error can eventually be translated into improvements.
This approach is also used in the intergenerational sharing of knowledge and experience at the workplace, enabled by the mixed age structure of the workforce. Older workers are valued not only for their experience, but also for their skilfulls, craftsmanship and overall approach, which tends to be more wide-ranging and well-advised. In addition, their social skills, number of contacts and relationships in different fields are deemed highly beneficial, and may be used for the benefit of the unit or even the whole company.
Hayes Lemmerz Autokola has applied for the ‘safe company’ certificate issued by the Ministry of Labour and Social Affairs, as well as other certificates which the company already holds. This is regarded as a necessary prerequisite in the eyes of its customers.
Work-related injuries are almost non-existent in the company, since each worker is well trained in workplace safety and has a good knowledge of their workplace. The company has adopted a policy to equip each worker with as many specialised skills as possible, so that they can easily be transferred to another job within the company; this helps to prevent a one-sided workload and prolongs the working life.
All of these measures aim to retain the company’s skilled workforce, while indirectly ensuring a balanced age structure. The success of these measures has been widely acknowledged. As well as helping to encourage the workers, particularly manual workers, to remain in the workplace for longer, they have improved the motivation for continuous work and encouraged the active contribution of older workers in the company’s goal to increase modernisation and to recognise the growing role of new technologies.
Contact: Jaroslav Skoumal, HR Manager, email: email@example.com