• 19.2 % turnover

• 25.2% sales

• 55.9% investment

• 46.3% annual results 

• Excess capacity and productivity problem, high labor costs fewer working hours

• Cut down DM2 billion labor costs equivalent of making 30000 workers redundant

Economic Situation of Volkswagen in 1990’s

Traditional Ways

Production Planning

Man Power Planning

Alternative Arrangements

Quantitative

Work time Organization

Indirect Manpower Reduction

Qualitative

Work Time Organization

Employee Development

Direct Manpower Reduction

Traditional Methods to Reduce Manpower

The Volkswagen Model

Volkswagen Model

28.8 Hour Work Week

Qualification Period

Part Time Employment

Volkswagen Model

28.8 Hour Work Week

Qualification Period

Part Time Employment

The 28.8 hour Working Week

Weekly0

5

10

15

20

25

30

35

40

36

Old Working Hours

Workweek

Nu

mb

er o

f H

ou

rs

Weekly0

5

10

15

20

25

30

35

40

28.8

7.2

New Working hours

Free TimeWorkweek

Nu

mb

e o

f H

ou

rs

20% Reduction

• Basic Idea to cut 20% labor cuts• Key element was to distribute special

payments over a 12 month period• Whole workforce including workers and

management• Facilitate transfer from one plant to

another

Special Payment Distribution

Basic Wage

Basic Wage

Annual Special Payment

VK Special Payment

Holiday Bonus

3.5% increase in pay

Anticipation of increase in pay rate

Total Salary

0 10 20 30 40 50 60 70 80 90 100

Total Salary

Basic Wage

Annual Special Payment

VK Special Payment

Holiday Bonus

3.5% increase in pay

Implementation of 28.8 Hour working week

Monday Tuesday Wednesday Thursday Friday

1st Week

2nd Week

Shift Patterns• Four day working week rhythm• No direct production• Daily working time 7.2 hours• Not directly involved in production

OFF day

Working day

Monday Tuesday Wednesday Thursday Friday

1st Week

2nd Week

3rd Week

4th Week

5th Week

OFF day

Working day

Free period Shift Patterns• Five day working week rhythm• Direct production time• Daily working time 7.2 hours• 5th Week fully off

ResultsThrough 10% wage reduction they had a 13% decrease in costs as compared to 6% if they had chosen mass dismissal

1 % wage Reduction

13% cost reduction

Volkswagen Model

28.8 Hour Work Week

Qualification Period

Part Time Employment

Young Generation

Finish Apprenticeship

start with

20 hours per week

After 2 years

24 hours per week

After 18 months

Full time employees

Old Generation

Full time working hoursage = 56

24 hours per weekage = 59

20 hours per week

Part time employment

Volkswagen Model

28.8 Hour Work Week

Qualification Period

Part Time Employment

Options for Employees

•Fulfillment of Private Plans

•Gain Qualifications outside VW

•Join training programme in VW

Vision:

M4 employee-future employee at VW to have following qualities:

• Multi-skilled and multi-functional

• Mobile

• Creative

• Human Income:

• Paid 68% of last net income (Qualification time)

• Allowance - 80%-90% of last monthly income

A unique and an unconventional Volkswagen model is a proof that problem

solutions are possible in economically tough times if employers use personnel planning instruments in a creative way.

THANK YOU