Toyota compensation Power point presentation for Compensation Management Subject S I SOBUJ Student of IUBAT UTTARA, DHAKA-1230

1. http://iubat.edu/

2. NAME OF THE MEMBERS
 MD S I SOBUJ
12102120
 MD SAKIBUL KARIM KHAN
12202104
 UMME MAHABUBA LINGKON
12202106

3. COMPENSATIO
N

4. TOYOTA OVERVIEW
 HQ (Head Quarter)
 Toyota, Japan
 Industry
 Auto Manufacturing
 Size
 5000+ Employees, $204B+ Revenue
 NYSE
 TM
 Competitors
 Ford Motor, General Motors, Honda
 Website
 www.toyota.co.jp

5.  Have a well defined group compensation system in
place before implementation.
 Pay system has to achieve behavioral changes that
impact bottom line business results.
 Manage new pay system.
 Include indirects in your compensation scheme.
 Set non-monetary reward systems as well.
AIM IS TO IMPLEMENT
LEAN – COMPENSATION

6. IT’S OLD SYSTEM - THE PRODUCTIVITY BONUS
BASED ON GROUP LEVEL
 Under toyota’s wage system, productivity bonuses
constitute half of a worker’s monthly salary, and although it
is called a “bonus” it is in reality part of the standard wages.
This bonus thus reflects an assessment of the worker’s
performance.
 Toyota calculates the productivity of each section every
month, and this becomes the raw data for the bonuses.
 The calculation are so complicated that even the managers
don’t understand these figures
 This system was very effective in forcing each other group
to compete against other
 An employee pay is depended on productivity of his section

7. CHANGING TO NEW PAY SYSTEM……..
INDIVIDUAL LEVEL
 Toyota changed its wage deal:
earlier the productivity bonus traditionally
accounted for 50% to 60% of total salary,
then
It reduced to 40% in 1990.
Again reduced to 20% in 1992.
As a result competition has begun to occur on
individual rather than group level.

8. HOW TOYOTA MOTIVATES ITS WORKERS
 i. Agreed to guarantee lifetime employment for employees
 ii. Developed a system of internal promotion
 iii. Provides a pay scale based on three components of company
profitability
 1. One bonus based on seniority - not job classification
 2. Another bonus payment related to team’s performance
 3. Additional bonus payment allocated to worker’s merit
 4. Wage would increase from 85% to 115% from amount allocated
 In return, Toyota employees are constantly committed to making
improvements rather than just responding to problem.

9.  Good relationship and team work resulted in
 increased efficiency and a higher level of
production
 Many employees hung out after hours
contributing ideas
 about reorganizing and improving production
 Of 860,000 ideas, 94% adopted

10. BY END OF 2006, TOYOTO WON ON GM BCOZ..
GM (General Motors) had:
 Excessive wage costs for its unionized workers.
 Pension crisis with salaried and unionized retirees.
 Uncompetitive factories with low-quality products.
Toyota had:
 Lower compensation costs due to young work force.
 A weak currency in Japan.
 A lucky break from high oil prices in those years.
As a result:
 Toyota won.

11. LET’S CHECK OUT PAY OF TOYOTA CANADA INC.

12. PAY SCALE BY CITY

13. SALARY CHANGES WITH
YEARS OF EXPERIENCE

14. HOURLY RATE BY JOB

15. AUTOMOTIVE ENGINEERS STATISTICS ON
OVERALL INDUSTRY
END YEAR BONUS RECVD JOB SATISFACTION


16. AUTOMOTIVE ENGINEERS OVERALL

17. 9-17
COMPENSATION CAN FOLLOW….
“Best Practices”
•Incentives not too large.
•pay based on individual performance.
• reduce seniority pay

18. OUR SUGGESTEDSTRUCTURE TOPAY EMPLOYEES
Common to all types of jobs
 Basic pay- depend on the class/grade where a employee
is positioned.
 Should be based on:nature of work
 Physical work involved.
 Mental work involved.
 Knowledge & technical skills involved.
 Volume of Duties & responsibilities.
 Nature & no of Task/activities contained.
 Level of Skills to be exhibited in the work
 Burden on employee & complexity of job to do it.
 on par with other Similar org’s pay structure for same job.
 On par with cost of living/money value in that area/country.
 As per latest pay commissions/govt guidelines.