toyota lean compensation, compensation plan of toyota,salary

1. COMPENSATIO
N

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

3. AIM IS TO IMPLEMENT
LEAN – COMPENSATION
 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.

4. Toyota Integrated Medical Management
Toyota’s Health/ Wellness Vision:
Integration, Occupational Health & Benefit
Old Vision
Occupational
Health Personal Health
*Safety/Medical *Benefits Group
Group
New Vision
Total
Health/Wellness
Care
*Health/Wellness
Group

5. 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

6. HOW DID THEY CALCULATE PRODUCTIVITY OF
WHITE COLLAR WORKERS?
 The productivity rate is broken down all the way
to the shop-floor level.
 i.e. each team is forced into competition to
raise its rate. That’s the secret of toyota’s rising
productivity.
 The important factor in rising productivity is:
 two separate teams share one assemblyline, one
during the day & other at night. Productivity of these
2 groups differ despite fact they use the same
equipment.this reflects an assessment of work
supervisors. The manager with a high rate can show
these numbers to supervisors,who then condemn the

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.
 Its new personal merit system served to widen
the gaps between the individuals.

8. CHANGING TOYOTA’S OLD SYSTEM TO NEW WAGE SYSTEM

9. HOW TOYOTA MOTIVATES ITS WORKERS
 i. Agreed to guarantee lifetime employment for employees
 ii. Developed a system of internal promotion
 1. enabled workers to rise within the hierarchy
 a. casual workers could receive permanent contracts
 b. could go on to become team leaders, foremen and even managers.
 2. worker can become a sort of minor manager
 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

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

11. BY END OF 2006, TOYOTO WON ON GM BCOZ..
GM 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.

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

13. PAY SCALE BY CITY

14. SALARY VARIES BY STATE

15. SALARY BY BENEFIT/PERK

16. SALARY CHANGES WITH
YEARS OF EXPERIENCE

17. HOURLY RATE BY JOB

18. SALARY BY GENDER

19. SALARY VARIATION BY SALES TERRITORY

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

21. AUTOMOTIVE ENGINEERS OVERALL

22. PUBLIC MOTOR TRANSPORT- Andhrapradesh
Minimum Wages and VDA payable from 01-10-2010 to 31-03-2011
VDA payable
Sl.No. Category of Employment Basic Wage Total Wage
for 298 points
1 Accountant 4822.00 1564.50 6386.50
2 Heavy Vehicle Driver 4319.00 1564.50 5883.50
3 Checking Inspector 4160.00 1564.50 5724.50
4 Typist/ Contractor/ Clerk 3829.00 1564.50 5393.50
5 Time Keeper 3658.00 1564.50 5222.50
6 Light Vehicle Driver 3435.00 1564.50 4999.50
7 Conductor 3435.00 1564.50 4999.50
8 Computer Operator 3168.00 1564.50 4732.50
9 Cleaner/Security Guard 2645.00 1564.50 4209.50
10 Mazdoor 2645.00 1564.50 4209.50

23. COMPENSATION CAN FOLLOW….
“Best Practices”
•Incentives not too large.
•pay based on individual performance.
• reduce seniority pay
9-23

24. OUR SUGGESTED STRUCTURE TO PAY
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.