Volkswagen

Transcription

Volkswagen

European Foundation for the Improvement of Living and Working Conditions
EWC case studies
Volkswagen AG
1. Overview of company and EWC
2. Influences
3. Processes
4. Outcomes and Impacts
5. Discussion and analysis
Interviewees
References
The case studies was not submitted to the standard Foundation editorial process.
It is available in electronic format only.
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Overview of company and EWC
1
The company
The Volkswagen group with its headquarter in Wolfsburg is the largest car producer in Europe and one of the world’s
leading automobile manufacturers.
In 2002, the Volkswagen group achieved the second-highest profit before taxes in the company’s history. In 2002, the
company attained a global market share of 12.1 percent. The market share in Western Europe is 17.7 percent and
increased by 2 percent since 1990. (http://www.volkswagenag.de; Frankfurter Rundschau 14 August 2003)
Since 2002, the group’s passenger car business is divided into two Brand Groups. Under the leadership of the Group, the
Audi and Volkswagen brands are responsible for the results of their respective Brand Group worldwide. Audi’s Brand
Group is made up of the Audi, Seat, and Lamborghini brands and places an emphasis on sporty values. The Volkswagen
Brand Group is made up of the Volkswagen, Škoda Auto, Bentley, and Bugatti brands and stands for more classic values.
Each brand retains its distinguished brand-image and operates as an independent entity on the market. Together, the
product ranges extend from the low-consumption 3 litre vehicle to luxury class vehicles. The Group’s commercial
vehicle products are the responsibility of the Volkswagen Commercial Vehicles brand.
The regional management of world markets comprises four areas of responsibility: Region European Union, Region
North America, Region South America/South Africa and Region Asia-Pacific. The Financial Services and Europcar
business entities are now under joint management in the Financial Services Division.
The Group operates 44 production plants in eleven European countries and seven coun-tries in the Americas, Asia, and
Africa. (http://www.volkswagen-ag.de)
The workforce increased steadily from 251 000 employees in 1989, to 324 000 employees in 2002 with the exemption
of the critical years 1993/94. However, this increase in numbers of employees took place predominantly outside of
Germany. In Germany, the number of employees remained with some variations more or less on the same level in this
period. (Table 1)
Table 1: Development of number of employees in the group in thousand
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Workforce
251
261
277
273
253
238
257
261
275
294
306
322
324
324
Inland
161
166
167
164
150
141
143
139
144
153
159
163
167
168
Foreign cou ntries
90
95
110
109
103
97
114
122
131
141
147
159
157
156
Source: Volkswagen AG, Annual report 2002 and 1998
© European Foundation for the Improvement of Living and Working Conditions, 2006
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Table 2: Development of the number of cars produced in thousand
Production (Cars)
Inland
Foreign cou ntries
1989
2,948
1,783
1,165
1990
3,058
1,816
1,242
1991
3,238
1,814
1,424
1992
3,500
1,929
1,571
1993
3,019
1,411
1,608
1994
3,042
1,425
1,617
1995
3,595
1,526
2,069
1996
3,977
1,591
2,386
1997
4,291
1,619
2,672
1998
4,823
1,983
2,840
1999
4,853
1,879
2,974
2000
5,156
1,830
3,326
2001
5,108
1,886
3,222
2002
5,023
1,781
3,242
Source: Volkswagen AG, Annual report 2002 and 1998
The number of cars produced increased steadily - with the exemption of the crisis years 1993/94 from 2 948 000 to 5
023 000 between 1989 and 2002. The increase of the number of cars produced took place in plants outside of Germany.
The EWC
The EWC has been founded in 1990. It is called ‘European Volkwagen Group Works Council’ (Europäischer
Volkswagen Konzern-Bertriebsrat). In the following the abbreviation ‘EWC’ will be used.
The EWC was established without a contract. The employees side tried to find a consensus with the company. The work
of the EWC was based on rules of procedure.
The approach was to build the EWC predominantly on elected company employee representatives. It is based on a
mechanism of representation considering both the quantity of the workforce and the relevant represented trade unions.
Therefore, there is no rigid arithmetical mode fixed for the number of the representatives from the locations.
There is no fixed scheme of distribution of delegates according to the number of employees either in the rules of
procedure or in the later EWC agreement. The attempt was not to fix voting in a strict manner. It was decisive to establish
a mechanism that would lead to a consensus by coordination.
The agreement on the EWC had been concluded in 1992, thus before the Directive on European works councils had been
in force.
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Volkswagen AG
This agreement had been revised with regard to the consideration of restructuring and acquisitions of the group in order
to regulate the according representations of the employee several times on the following dates:

09.06.1995

22.11.1995

21.11.1996

13.05.1998

20.05.1999
The EWC at Volkswagen has currently 25 members. The composition of the EWC is organised along countries and
product lines. (see table 1)
Table1: Members of the EWC
Germany
11
8 Volkswagen
2 Audi (including spokesman of the Audi committee)
1 VW Sachsen
Spain
5
3 Seat
Belgium
2
2 VW Brussels
Czech Republic
2
2 Skoda
Poland
1
1 VW Poznan
Slovakia
1
1 VW Slovakia
Portugal
1
1 VW AutoEuropa
UK
1
1 Bentley Motors
Spokesman of the other European companies
1
2 VW Navarra
Committee 'Services'
The Eastern European countries are full members of the EWC. From the beginning there has been a focus on the
geographical borderline of Europe and not on the European Union.
The EWC has a presiding committee (‘Presidium’) of 11members comprising of a president, general secretary, and 9
members representing different companies across Europe. The president and the general secretary are from Volkswagen
Germany. The ‘presidium’ has the primary function of co-ordination in a smaller circle. The ‘Presidium’ has the function
of managing the EWC.
At the same time the president of the EWC is the head of the company works council, head of the group works council,
president of the WWC, and member of the ‘presidium’ of the supervisory board.
The EWC has two committees organised along the lines of business the ‘services’ committee and the ‘AUDI’ committee.
The committee ‘services’ includes financial service companies and sales companies. This committee has 7 members
(Germany:1, France: 2, Italy: 1, Spain 1, and 2 members from Europcar). The committee ‘AUDI’ has 7 members
(Germany: 4, Hungary: 1, Italy: 1, UK: 1). The reason for establishing the committees was to keep the EWC in a
reasonable size.
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All 25 EWC members are male. Not a single women is member of the EWC.
The agreement on the World works council hade been concluded on 20 May 1999. The World works council is organised
along the same lines as the EWC. The differentiation is geographical. The WWC includes all the countries/location
beyond Europe. In practice, both committees grew together more strongly.
In principle, all subsidiaries of the Volkswagen group have committees with elected employee representatives. Partially,
there is also regional co-ordination as for example in the area of Mercosur or a co-ordination across the Seat or Audi
locations.
Thus, employee representation in the Volkswagen group is subtly differentiated and very complex.
Methodology
This case study is based on interviews with 7 interviewees of the company, company material, and literature on the
company.
The interviews were conducted with:
Parent company:
1 insider employee representative (ER)

1 outsider employee representative

2 insider management representatives (MR)

1 outsider management representative
Subsidiary in the UK (Bentley)

1 insider employee representative

1 insider management representatives
The interviews in the subsidiary in the UK have been carried out by the UK team in the project.
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Influences
2
Securing the future of Volkswagen and its employees is based on a spirit of cooperative conflict management and
social commitment on the basis of, and with the goal of, achieving economic and technological competitiveness.
The security and development of jobs is a particular expression of this social commitment.
This passage of the ‘Declaration on social rights and industrial relations at Volkswagen’ signed in 2002 by the group
management, the world works council and the International Metalworkers Federation gives an impression in which
environment the EWC at Volkswagen is positioned.
The management representative from Bentley underlines this impression from a more peripheral perspective within the
group.
The EWC is part of the core values of the Group. VW had it in place before the legislation, and in fact probably
helped shape the legislation around these issues. The Group also holds full employment important - unlike in
Britain, where profit is the concern, the German focus is different, with employment as a key objective. They are
still hard in business, but they are creative in people issues. So it is good for us - the climate is creative, open to
ideas, and involving the workforce.
A brief retrospective view from the processes of internationalisation to globalisation of the Volkswagen group supports
the understanding of the strategies towards industrial relations that developed during several decades.
Until the late seventies the internationalisation of the Volkswagen group did not imply direct competition between the
plants around the world. In 1978, a first significant change of internationalisation in the Volkswagen group took place
with the establishment of an assembly plant in the USA. For the first time, the general works council and the employee
representations in the supervisory board were involved in an agreement on safeguarding the plant in Emden in the north
of Germany. A real competition between the location in the sense of a parallel production came up in 1986 with the
acquisition of the Spanish SEAT group. A further shift towards internationalisation of the Volkswagen group occurred
with the opening of the frontiers towards Central Europe. Within a short period of time new production sites were
established based on acquisitions and new investment in the Czech Republic, Slovakia, Poland, and Hungary. (Widuckel
2001)
Around the same time the Volkswagen group was oriented towards the strategy of growth, extension of the range of
models, and a brand embracing use of aggregates and components. With these structural changes a significant shift of
the position of the traditional core locations in West Germany and of the brand Volkswagen was associated.
In this area of increased competition a change of the allocation of functions and responsibilities took place. Whereas the
central control function like product development, marketing, investment, capacity, and sales management as well as
procurement management are concentrated in Germany a number of alternatives are available for production sites.
(Widuckel 2001)
In the eighties Volkswagen was facing increased competition pressure. In 1992/93 Volkswagen had to deal with
significant profitability problems. This lead to the model of reduction of working time with a 4-day week without
compensation for wages. This model involved a cooperative effort of the management, the works council and the trade
union IG Metall.
Both, the employee representatives and the group management developed strategies to handle the development of the
company and industrial relations.
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EWC case studies
Employees
In the phase of significant competition pressure for the Volkswagen the ‘competition reference’ became integrated into
the activities of the company works council and the trade union IG Metall in an new dimension. (Widuckel 2001)
The general works council and the IG Metall developed a ‘four-pillar-strategy’ to meet these challenges:

a differentiated pact for employment and competitiveness,
an extension of employee representation by a European group works council and later consequently of a world works
council,
a recognition by the company works council and the trade union IG metal of the need of an international expansion of
the Volkswagen group of which effects of stabilisation for the German locations were expected in an increased
competition for markets in the global automobile industry, and
a qualitative extension of the influence on strategic decision making of the corporation. (Widuckel 2001)
The focus of co-determination within which the activities of the EWC and WWC are integrated is the foresighted
influencing of investment, products, and business strategies of the corporation and not the traditional fields of correcting
co-determination on social issues. Central in this context are the degrees of capacities and the volume for the single
plants. Beyond this, the company works council adopts a position towards product development, organisation of business
processes, and demands towards personnel planning.
The employee representative emphasises that it would be inappropriate to describe this approach of active codetermination superficially as ‘co-management’, since the employee representation defines its interests and objectives
independently and autonomous. There is not an identity of interests of management and employee representatives but
intersections of differing interest perspectives. (Widuckel 2001)
Management
The company emphasises the significance of a ‘workholder value’ besides shareholder value. The labour director Peter
Hartz refers to the establishment of the EWC in the context of the corporate culture of the company.
At Volkswagen this culture also includes the spirit of constructive and co-operative understanding between the
works council and corporate management. At an early stage and without being compelled by legislation, we
formed a European and World Works Council. We do not stay rooted in the tradition of conventional codetermination, we also discuss the future development of our company with our employees’ representatives. This
is the path forward from co-determination to co-responsibility
(http://www.volkswagen-ag.de/english/docs/5a-OurGuidelines.html)
The management pursues an approach to observe certain minimum standards. This is a world wide approach to transfer
the culture and spirit that characterise Volkswagen to the companies in the various countries.
For 8 or 9 issues so-called minimum standards are developed to transfer the groups’ policies and instruments of
personnel management in the corporate centre into the company’s subsidiaries. There is close contact with the
subsidiaries with regard to implementing these standards.
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Processes
3
The operation of the EWC
Establishment of the EWC
The initiative came from the employee side i.e. from the German company works council (Gesamtbetriebsrat) of the
Volkswagen AG. There had been intensive bilateral contacts between the employee representations since the seventies.
These meetings between German and foreign trade unions at Volkswagen had been co-ordinated by the IMF.
Establishing the EWC (and later the WWC) had been a development step-by-step towards a systematically organised
and institutionalised representation of employees.
The company works council and the IG Metall strived for a recognised employee representation and collective
agreements in the entire Volkswagen group. A core problem of establishing the EWC respectively the rules of order was
to find a mode of representation of the locations. Discussions took place with all locations before the rules of order and
the structure of seats had been fixed. The target was to find a solution that would be accepted unanimously despite the
different industrial relations structures in the countries.
When Volkswagen took over Bentley in 1998 one employee representative had been nominated as candidate for the
representation in the EWC. The employee representative describes that Volkswagen offered more seats in order to reflect
the multi-unionism although the employee representatives from Bentley did not take up this proposal.
Resources of the EWC
There is a specific budget, both for the EWC and WWC. In principle, all that is needed regarding technical infrastructure,
travelling costs, interpretation, secretaries etc. is provided.
In Germany, there is no specific full-time release from work for any member of the EWC for this purpose. A functioning
infrastructure already exists for employee representation on different levels. Frequently, the representatives have a
double or multiple function.
A special adviser/expert who is exclusively responsible for the EWC and the WWC supports in the daily work of the
EWC. A further adviser/expert is responsible for the EWC and company works council.
Problems of access to sites are no issue at all.
Specific training measures for members of the EWC for fulfilling their tasks do not take place. On the management side
specific training measures for personnel managers dealing with employee representatives on industrial relations in
general take place. According questions are dealt with at meetings of the personnel directors.
There is no working language of the EWC or the presiding committee. Everything takes place with simultaneous
interpretation. The official language in the group is German.
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EWC meetings
The procedure of meetings is interwoven with the meetings of the WWC. In the course of the year four meetings take
place:

In Spring, the ‘presiding committee’ of the EWC meets.
The meeting of the WWC takes place in summer. In this meeting the representatives of the European works council
are generally all present. They are embedded in the WWC.

In autumn there is a joint meeting of the EWC and WWC ‘presiding committee’.

Usually the EWC meeting takes place in October.
This means that there are two meetings only for the EWC and two meetings in connection with the World works council.
The ‘Presidium’ comprises of employee representatives. Regarding the institutional interaction with the management
side the ‘Presidium’ meets with the labour director (and the staff responsible for international labour relations) whereas
the EWC plenary meets with the entire group board of directors and all personnel directors from the subsidiaries.
A trade union representative is present at the meetings as expert not as member.
The EWC is held in a different country each time, recently e.g. Bratislava, Czech Republic, Spain, Brussels. There is
always a factory tour included of e.g. Skoda, Seat. All delegates stay in the same hotel and eat together and socialise
together.
The schedule of the main meeting of the EWC lasts 2 or 3 days. The itinerary form the employee perspective is:

a union-side meeting to discuss company reports and tactics,

a full meeting with management,

a meeting with the Board of VW,

another meeting with managers, and

a plant/ cultural visit.
Parallel to the pre-meeting of the employee representatives a meeting of the personnel managers takes place. Every
operation within the Group is represented by a personnel director or manager on the EWC. It is a diverse Group in terms
of countries and brands/companies - Scania, VW, Seat, Audi etc. There is also specialist representation of the central VW
HR function. This informal meeting of the personnel managers is not a pre-meeting for the EWC, but more an update
report or a twice- yearly conference.
As all personnel directors are present they meet all the heads of the works council. This is described as an efficient
practice by the insider MRs from the headquarters as all persons are present in order to discuss certain issues.
Breakouts
Breakouts during the joint EWCs meetings did not take place yet but would not be a problem. They occur on other levels
of employee representation in Germany.
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Volkswagen AG
Extraordinary meetings
There are no extra-ordinary meetings of the EWC or the presiding committee. The German insider employee
representative explains that if there are ‘extra-ordinary’ problems these would be dealt with in bilateral discussions. Even
on short-term announcement.
The insider management representatives emphasise that reservations by the employee representatives will be taken into
account in any case. In cases where for example one subsidiary would be concerned in another country there will be a
meeting on the employee side with the employee representatives from the subsidiary and a meeting on the managements
side. Both will take place in a smaller group. There will also be the attempt from the management side to find an
agreement with the employees representatives.
In cases of very difficult issues there will be joint working sessions dealing with these issues in order to explain and
clarify them. Such working sessions and seminars shall help to create understanding.
Agendas of the meetings
The range of issues mentioned in the interviews reflect the issues laid down in the agreement:

employment and employment safeguarding as well as structures of locations

development of the group’s structures,

productivity and cost structures

development of working conditions (e. g. working time, pay, work structuring) and social welfare benefits,

new production technologies.

new forms or work organisation,

OHS, including company environmental protection,

significant impact of political development and decisions on the Volkswagen group.
The perception of how issues are placed on the agenda of the meetings differs between the respondents from the
headquarters and subsidiary.
The insider ER stresses that issues on the agenda are decided in a mutual process between management and employee
representatives. Both sides introduce issues and there are no taboos. Although there is not always complete agreement
this does not lead to the exclusion of any issue.
The ER from Bentley states
Agenda-setting is a joint process [through the Presidium], though to be honest the early work is done in Germany
before it comes to us. ….. In reality the Germans sort issues before they tell everyone else.
The management representative from Bentley formulated this perception clearly:
Wolfsburg decides the agenda.
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EWC case studies
The insider MRs from Germany emphasise that as the meetings of the EWC take place only twice a year only the most
important issues play a role in the selection. These are the relative rates of production of a location, the planning for the
next year, and the operating rate of employment that is related to this. Other issues are investment, the long-term strategy
towards products, the total situation of the group, the situation of single locations, and the expectations towards the
development of the market and perspectives of the automobile industry.
In principle, all issues are represented. The CEO reports about the strategy, the financial director reports on the financial
situation, the sales directors reports about the market situation, the production director reports about issues of production.
The ER from Bentley also describes the information given by the members of the board of directors:
At top level, the Board members give an overview of their function - personnel, finance, production. I get the
impression they see this as a chore. It is okay to get this, and we can ask questions so it is good in that respect.
Then we get information on work allocation.
Issues revolve around a business overview and manufacturing strategy, employment, sales performance. The big issues
are production transfers and investment decisions.
The information given by the board of the group is considered as encompassing from the German insider ER. In
particular, the future development of the company is discussed. At the EWC meetings the corporate planning including
planning on the products is presented.
Political issues play an increasing role. In many countries the labour law changes in the countries and in particular with
the Europeanisation.
Further central issued discussed at the EWC meetings are working time, income, employment security, or dealing with
diversity.
The insider MRs from the headquarter stress that since there are only meetings twice a year not all issues can be on the
agenda. Equal opportunities, health, working conditions that are constantly dealt with in the background. At the EWC
meeting the urgent issues are on the agenda and are discussed. Everything else is prepared in advance. There are entire
networks in the background. These activities take place in advance and at the meeting it is taken advantage of the fact
that all are present to sign the agreement.
Both respondents from Bentley report about league tables. The managements representatives describes this vividly.
At the EWC, statistics on performance data is shared. We benchmark ourselves against the VW Group, for
example on attendance, for which the UK is good. Benchmarking data is used at the EWC in terms of league
tables and there is a ‘name and shame’ thing. There is a traffic light system where you are rated against certain
criteria, and too many red spots and you would be in trouble - Steve and I would then have to think on it. All the
statistics - labour rates, pay increases, disputes, employment of temporary workers, capacity figures etc - are fed
in beforehand to central personnel in Germany and a report is generated to the EWC; everyone gets a full copy
of the results.
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Volkswagen AG
The employee representative from Bentley describe this with an example
Nevertheless there are league tables such as the euros per hour to build a car - the dearest is Wolfsburg (45) and
the cheapest is Poznan in Poland (4.32). Bentley is around 20.
At the employee-side pre-meetings written country reports are presented and discussed. These country reports are
translated, and a chance to swap stories on what happens in the plants, though there are problems in making comparisons
because of country and legal differences.
Agreements, declaration etc.
Concrete works agreements are not concluded at the EWC. What is determined are certain projects and standards. For
example, once a year a European conference on OHS takes place. These conferences are organised jointly with the
management through the EWC.
For particular areas standards are determined. Controls take place if such guidelines are considered. A current issue is
the employment of temporary personnel. Guidelines will be agreed on the employment of temporary agency workers and
fixed-term workers.
In the last year the ‘Declaration on social rights and industrial relations at Volkswagen’ was signed.
Experts
An expert from the trade union side is present at the meetings.
Volkswagen is not a member in the employers’ federation. No external experts from the management are involved. All
issues are treated in the company itself. The interviewees from the management side emphasised the role of Volkswagen
of often leading the way with home-made models and regulations.
Minutes of the EWC meetings
The internal minutes are prepared by the employee side. The minutes of the joint meetings are prepared by the central
corporate personnel department. They are jointly agreed by the chair and the management side before they are
distributed.
Role of the Select Committee and employee-side interaction
All countries are represented on the ‘Presidium’ with one delegate each. The Presidium sets the agenda for the main
meeting. It meets over a day, and includes a closed meeting in the morning for the union side. Further, there is a meeting
with the labour director (and the staff responsible for labour relations in the headquarters).
E-mail contact within the ‘Presidium’ takes place although language differences are an obstacle.
Communication into the committees of employee representations, management, and workforce
Communication of the ‘Presidium’ with the wider EWC and other employee representations takes place.
Communication on the EWC or ‘presidium’ meeting into the committees of employee representation has several
channels. It is an issue at the meetings of the works councils..
All personnel directors from all locations that are represented in the EWC are present at the meetings. They report in
their locations.
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The EWC meetings are usually not an issue at the workforce meetings in Germany. Some information is given in the
company newspaper. Regarding communication into the workforce the insider ER states that this could and should be
improved in order to help the workforce to understand how the group operates and in which dimensions employee
representation increases.
At the subsidiary different information on the EWC meetings is given in different ways.
The management has an operations meeting every Monday and the representative reports on this occasion. Although
business updates discussed at the EWC have already been issued beforehand the personnel director reports back on
issues and interesting things from elsewhere.
The ER at Bentley raises the EWC at the monthly shop stewards meeting. They could have a separate meeting but the
shop stewards are not too interested (they jokily make to leave the room bored when it comes up as the last item!).
Regarding communication with the workforce at the subsidiary there is communication via the Bentley reps but on the
whole the employees are not interested - they don’t see themselves as European.
Analysis of the interactions
The EWC and later the WWC emerged in a process of company industrial relations without legal obligations. At
Volkswagen EWC is embedded in wider processes of interactions. The procedures are embedded in the company
practices of industrial relations.
Interactions between employee representatives and central/corporate management
In between the meetings joint seminars of employee representatives with the management on specific issues take place
as for example on working time flexibility. This is to demonstrate the joint action of management and employee
representation.
Meetings between both sides take place according to situations. There are no institutionalised meetings. The interviewees
emphasise the significance of informal relations that are also supported by the vicinity of the offices of the of personnel
department and of the employee representatives in the headquarters.
The insider MRs explain that these processes of coordination, that are summarised formally in the meetings of the
committee, are essential for cooperation otherwise no appropriate decisions can be made. The construct works council
at Volkswagen, EWC and WWC evolved. Based on the double function of the persons and the trust that developed over
the years there is a very good communication.
The EWC is an instrument that is taken advantage of by the management side. The EWC (and WWC) support the
management in particular with regard to implementing minimum standards in plants in other countries and in conflict
resolution in plants outside Germany.
In the context of the implementation of the so-called minimum standards the EWC plays a very important role. In cases
where the management is not successful with implementing the so-called minimum standards in the first step the works
council plays a strongly supporting and mediating role and partially leads the way. In this context the German works
council, that is represented in the EWC, has the powerful function of mediation.
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Volkswagen AG
The employee representatives support the management in cases where there are problems and conflicts in other
countries. If the management has to deal with conflicts in other countries and gets stuck, members of the works council
are contacted with regard to additional information and potential advice for dealing with problems and tensions. In cases
of conflicts in a subsidiary, the management does not only contact directly the management in the subsidiary, but also
the works councillors in Germany who are also members in the EWC. This is a way to receive more information and
views on such a conflict and helps the management representatives.
Employee representatives are involved in processes of decision making in a very early stage. Regarding the information
given at the EWC meetings both management respondents express their impression that the employee representatives
are not less informed than themselves. They emphasise that it does not make sense to keep information back as the
cooperation and support of the employee representatives is required in order to achieve the targets of the company. If the
management succeeds in bringing across the message that it makes sense for both sides, that there is the often mentioned
win-win situation, then the most can be achieved.
In general, in cases of acquisition, restructuring etc. both sides do not wait until the meeting of the EWC. There are
contacts with the locations concerned in advance.
There are many ways of information on transnational issues. For example in the case of assignment i.e. plant layout study
the personnel department is involved. The personnel department informs the personnel directors of the locations who
have discussions on this with their works councils. Other members of the board of directors are also involved as for
example the finance director and the production director. In these areas information is passed on. In this way this is a
permanent process. In the way of such processes a lot of issues are prepared. When the EWC meets the results achieved
by involvement of employee representatives are presented. For a quarter of a year between the meetings of the EWC or
WWC these processes takes place. At the EWC meeting the results of these processes are finally adopted.
At the EWC meetings central questions and issues are discussed. In principal, the meetings of the EWC summarise the
results of processes of discussions between the management and the employee representatives on several levels. The
basis for this are the constant processes of discussions that take place independently from the EWC.
The insider MRs underline that in the case of the EWC a formal structures had been developed that has to be dealt with
in an informal way. Otherwise such a company does not function. With any other way of dealing with it there will be
tensions and conflicts with all their disadvantageous impact.
At Volkswagen the employee representatives are involved in the final decisions in several committees often in a
combination of functions. The decisions and processes are not primarily directed towards the EWC. However, the EWC
is an integral part in the structure of employee representation.
The president of the EWC is in the supervisory board. And the supervisory board is the committee that decides in the
end. The EWC is not the committee for decisions.
Both interviewees from Bentley see the core of discussions and decisions at the headquarters. The ER from Bentley
stresses the EWC is informed before the final decision. However, the agreement between management and employee
representatives had been found in Germany before. The issues have already done the rounds of the German works
council. There is nothing too confrontational left.
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EWC case studies
The MR of Bentley describes this in the following way
There isn’t an example of a big decision - decisions are not made there, though there will be discussion of change.
… In the event of say a merger or acquisition this would be discussed at the supervisory board in Germany rather
than the EWC. The political clout within the group lies with VW in Germany, and Bentley is just a part.
Interaction between employee reps., the EWC and the national subsidiary
The ER from Bentley explains that there are differences between delegates from different countries, but not rows or
conflicts.
The Germany insider ER describes that there are very different cultures in the locations within the group. What seems
to be difficult for a lot of the employee representatives is the co-operation by co-determination that is predominant at
Volkswagen. This co-operation implies a certain form of exchange between the management and employee
representation in order to deal with it.
The distance and trenches are felt more intensively from both sides at most of the locations. And the fact that we
can deal with each other more or less without problems and without quarrelling provokes suspicion. According
to the maxim: The Germans agree at our expense if necessary. (Translation AW)
The employee representatives prepare very detailed proposals for discussions with the management on capacities and
volume of production for the locations. The focus of this is how a solid stable basis can be established. Processes of
discussion have the effect for the German representatives in the corporate centre to experience the considerations and
fears of the employee representatives in the subsidiaries. On the other side the German representatives introduce their
integrated know how about how the group operates and ‘thinks’. According to the insider employee representative this
leads to a sensible international discussion on the problems.
Compared to this description, the undertone in the interview with the employee representative from Bentley is that the
‘Germans’ are very dominant and have made most of the decisions with the management in the headquarters in advance
of the presiding committees meetings or the EWC meetings. Regarding the consideration of the national situation he
claims in particular that the ‘Germans’ are ignorant of shop steward system or the ‘Germans’ do not understand the UK
pension systems.
The German insider ER explicates that the EWC plays an important role although based on co-determination the core
influence on corporate planning is in the system of company works councils and in the supervisory board. The EWC is
an important committee with an integrative impact. The EWC offers the opportunity to learn to know the positions of
the according local employee representations. Secondly, the function of these committees is to develop a concept across
the locations that offers the basis for planning of the discussions with the board. As soon as the employee representatives
find agreements it is no longer possible to play the employees representatives or locations off against each other. The
German works council has a clear initiative function in these processes.
The combination of functions of the president of the EWC helps that the EWC and WWC can take advantage of the
German co-determination.
The takeover by Volkswagen and the involvement in the EWC had also an impact on employee representation at Bentley
in reinvigorating the ‘company council’ through which the union and management side formally meet. It is a ‘miniEWC’ for Bentley, meeting four times a year, though it is not directly linked to the EWC. Representatives from the local
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Volkswagen AG
management from the areas manufacturing, finance, sales and HR give the unions a business performance briefing which
is then discussed.
Within management
A globally operating company needs this exchange between the single units. In the context of the EWC meetings the
international meetings of the personnel directors take place.
However, such meetings also take place independently of the existence of the EWC. This information network is
required. With a focus on Europe in a geographical sense the meetings of the personnel directors have been split up in
Western and Eastern European circles in order to avoid too large meeting and to guarantee a constant exchange at the
same time.
The MR from Bentley describes the outcome the meetings as a mutual information sharing and learning from other
locations.
In principle, the German headquarters pursues an approach of transfer of minimum standards. Training measures for HR
managers on industrial relations are also seen as a way of transferring the company philosophy to the subsidiaries all
around the world since a significant number of personnel directors in the subsidiaries come from Germany or they have
handed over the function to local personnel directors. This is also seen as a way of implementing the spirit and promoted
by the department for labour relations.
The MR from Bentley states
The EWC is very German-centric: it is predominantly about Germany, but we go.
There is value in being seen to participate, and being part of the corporate culture. The EWC does not involve itself with
Bentley operations on a day-to-day basis. Bentley operates in a British way, very different to the German way.
Volkswagen did not ask Bentley to change way of operation. This also applies to the IR system that is very different to
Germany.
Insider/Outsider interaction
There is a significant difference in the degree of information about the EWC between the management outsider and the
employee representative outsider in the headquarters.
The management outsider is not well informed about the EWC. He has some general knowledge about the existence of
the EWC based on his former position in the personnel department. In his current activity he does not notice the EWC.
He does not see any minutes or other general information provided by the management side. He has no information about
the agenda or what is discussed at the meetings. It would be interesting for the middle management to have more
information on this schedule.
The interviewee emphasises that concepts of the management are developed in close cooperation with the works council.
On the other hand Volkswagen is an exemption. The company had an agreement on an EWC before the directive. He
explains the process as a mutual process that develops in a certain environment.
The EWC or WWC play an important role in the transfer management strategies and standards to the plants in other
countries. The works councils have the potential to make the strategies clear to the colleagues in the employee
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EWC case studies
representations from a different perspective. In this way the EWC or WWC can accelerate the implementation of
strategies of the company.
Regarding the results of a survey in the US on the impact of EWCs on management practices that gave evidence that the
EWCs had a positive influence on management preparation and coordination and highlighted the need to have a clear,
well thought-out and articulated explanation of corporate strategy he argued that this is a practice in Germany for long
due to the works councils and co-determination. He considers the situation different is in US companies.
The ER ‘outsider’ is well informed about the EWC. This is an outcome of his job as ‘manager’ of the local works council
of the plant ‘Wolfsburg’ and since the beginning of the year 2003 also of the group works council. In the context of his
job he sees the minutes of the EWC meetings. He stresses that the ‘normal’ member of the works councils does not see
the minutes. The works councillors are informed about the EWC meetings at the meetings of the works councils. Core
information on central issues and information about specific problematic issues at certain locations are given.
He sees the different committees and procedures of employee representation as clear-cut. This is predominantly due to
the legal provisions and the differences in opportunities of influencing and rights. In the case of the EWC or the WWC
these are more rights of information and consultation and less rights in the sense of decisions.
The works council located at the headquarter is very important for the employee representation of the Volkswagen group.
One central advantage is direct access to the management. The importance of the EWC lies in the opportunity to discuss
issues with the representatives from the other plants and in the chance to stimulate understanding for the need to develop
a joint position.
He explains the importance of the combination of functions of the president of the EWC. First of all this makes it easier
for the group’s board of directors to address issues to one person. A further aspect is the power due to the seat in the
‘Presidium’ of the supervisory board.
The EWC is not significant for the final decision. This takes place in the supervisory board. Important are the processes
of shaping positions.
For the members of the EWC the information is much better than the information they receive from their management.
The contact between the employee representatives from different countries increased.
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Outcomes and Impacts
4
Employees
The employee representation firstly developed a joint perspective towards the development of the group and secondly
managed not to be played off against each other in fundamental decisions on locations.
The strategic orientation of co-determination at Volkswagen extended and intensified with annual symposia on
safeguarding of locations and employment, demands towards the strategy of the company in the frame of the annually
forwarded medium-term projection for the next five years and participation in decisions within the ‘global- and forward
sourcing processes’ at an early stage. (Widuckel 2001: 337)
With this strategic orientation a standardised annually repeating process of discussion with group management
developed. From June till November with constant processes of information, formal and informal discussions and
coordination as well as agreements from the plant level, the company works council, the EWC and WWC the corporate
planning in the supervisory board is prepared. (Widuckel 2001: 337)
For the employee representation this implies a very complex process of balancing on the one hand harmonisation of
locations interests and on the other hand achieving consensus with the group management. The basis of mutual
obligations create trust and an orientation towards solutions within a consensus. This is one reason for the world wide
extraordinary low number of industrial actions within the Volkswagen group. (Widuckel 2001: 338)
A philosophy regarding personnel at Volkswagen oriented towards surviving situations of crisis without mass dismissal
or closure of location got part of the EWC. From the perspective of the employee representatives both the EWC and
WWC play an important role in complex process of balancing of interests of the locations within the group. According
to the employee representative insider this functions quite well. One reason why it functions is that the employee
representation in Germany tries to develop all-embracing strategies instead of focusing on the interests in the own
locations. In the meantime the employee representation thinks in terms of solutions in integrated connections
(Verbundlösungen).
Further, regarding the determination of working and employment condition equal developments are strived for. This
concerns in particular the issue of flexibility and duration of working time.
Although there had been international contacts before the EWC or the WWC had been established the discussion on
issues are much more focussed and structured than before. The cooperation intensified significantly. Based on this for
example the European OHS developed. The insider ER states
In this the EWC proves to be a catalyst that would have to be invented if it would not exist yet.
The ER from Bentley explains that the EWC members have clout because of the strength of the German works council.
He gets the draft accounts before anyone else. The EWC members are treated as VIPs too. For example when visiting
other plants they get full access as a member of the EWC. The EWC is not snubbed; it has clout. The information
provision has had a direct and significant impact for the UK unions - they’ve gone from no information to full
information, though there is still a lingering attitude on the part of UK management in not being fully committed to
informing the unions.
It did make a difference - with access to information as of right through the EWC the company could not bypass
us.
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EWC case studies
A further advantage is the access to Board members i.e. the opportunity if necessary to ask questions to the top
management. These are not vetted and can be made openly. Within the UK, Bentley company management takes the ER
more seriously because they know now that he gets the information. The EWC ‘makes the company jump’ - for example
the ER only got a PC when the EWC asked him for his email address.
The EWC enables networking and provides useful contacts.
A slight criticism is that the Germans box things off. The other EWC members could have earlier involvement and
debate.
But we have to be realistic - it’s their works council, to which we are invited guests!
Enlargement will have no impact for the EWC as the central and Eastern European countries have been integrated in the
EWC from the beginning. Enlargement is not considered as a threat by the employee representatives in the headquarters.
On the contrary a number of developments like subsidies, exemption from enterprise taxes etc. will be abolished in the
long run with regard to competition distortion and lead to a narrowing of conditions for the locations.
Management
One factor of strength at Volkswagen is that with the social background of the company a certain peace is introduced
into the company. This is beneficial on the economic side in order to realise the one or other issue. The works council is
very constructive and cooperative. And this could not be achieved if the company would not pursue the social objectives
in a way as they are pursued now. It is seen as a process that developed over the years.
One of the core benefits for management of such structures are the joint starting points with the employee representatives
and the attempts to implement this cooperation in other locations. The management representatives consider the EWC
as a very useful instrument in order to involve employee representation in the policies of the group of companies.
The employee representation at Volkswagen is seen as a competition advantage. Although it is difficult to quantify the
economic effect of the avoidance of conflicts and tension there is a clear advantage of cooperative relationships with the
employee representations. If both sides cooperate and work towards a joint target then the company is the winner. There
are no losses due to conflicts and frictions on the side of production. This is a competition advantage.
The EWC does not slow down any decisions. On the contrary the EWC speeds the decisions up based on the informal
processes taking place in the background.
In line with the personnel managers from the headquarter the MR from Bentley emphasises the advantages of the EWC.
The EWC is an excellent way to understand what is going on in the Group and in the different countries. It is a learning
process for management, making us more politically and commercially aware. It is a big company and diverse. We are
not in direct competition with other parts, but we get to understand how the group operates, and what is important.
The EWC is an incredibly positive experience.
It is a great way to understand employee relations across the Group, taking account of different issues, climates, and
drivers in each countries, and to find out what VW value, rather than us doing things alone. It helps make sure that we
are on the right track. VW is not instructive, but they expect us to learn and adapt. It is a good arena to exchange ideas,
and we learn a lot.
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Volkswagen AG
The EWC is also a superb opportunity to network, both with other managers and with the trade unions. It is an
opportunity to get to know each other better, including the UK employee side. The time with the ER is important.
We are Bentley, defending our corner. VW have invested enormous money here, and IG Metall want to know why!
Both of us are representing the workforce’s interests. We also demonstrate that we are a good corporate citizen.
The time involved isn’t really a disadvantage. It would be possible to skip the factory tour and the socials and just go for
the essentials, i.e. just a day and a half.
The EWC is seen as
a bit German-centric, both in the way things are done and in what is discussed, but we understand why.
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5
Discussion and analysis
The answers, descriptions, and arguments of the German employee representatives and respondents of the management
coincide, although they are given from the different viewpoints of the actors. Both sides and in particular the employee
representatives emphasise that there is not a complete identity of interests but active endeavours to mutually find
agreements. This relationship evolved and is characterised by trust.
Differences are clearly recognisable between the representatives from the German headquarters and the representatives
from the subsidiary. This mirrors even in the emphasis of the answers given in the interviews. Whereas the
representatives of the subsidiary describe predominantly operational issues and the practices, the focus of the German
respondents is more on strategies in a wider company context.
Both the group and subsidiary management and the employee representatives are satisfied with the EWC and emphasise
the benefits for both sides and the company. The advantages and the potential of the EWC are highlighted.
Volkswagen is not an example of a ‘typical’ German multinational company. Even in the German context Volkswagen
is often leading the way with regard to industrial relations and collective agreements. It is an exemption with regard to
many aspects. Nevertheless, it is a stimulating example how the EWC can be an integrative part of both the strategies of
employee representatives in a European (and global) perspective and of the group management. The EWC (and WWC)
at Volkswagen emerged in processes of interaction between group management and company works council and
employee representatives in the supervisory board in the context of globalisation of the company. It developed its role
in its 13 years of existence.
The EWC is taken very serious from both sides in the headquarters of the group. It offers a forum not only for meetings
of the group management with employee representatives, but also for interaction on both sides. The perception as
‘German centric’ from outside Germany does not question the model itself.
The focus of the answers of the German interviewees from the headquarter is more global rather than simply European.
The actions and practices of the EWC and WWC are closely interwoven. This features mirrored also in the inclusion of
all Eastern European plants into the EWC from the very beginning. The focus is wider.
Very complex and dynamic processes of interaction between management and employee representatives and between
the actors of the employee side and of the management side are evident. Of significance are the constant informal
contacts between management and employee representative in the corporate centre.
The impression is that at Volkswagen highly motivated specialists do a good job in dealing with industrial relations. A
weak point seems to be the communication into the management beyond the board of the group and the personnel
management and the workforce. Other work council committees are more involved due to the structures of employee
representations and the often dual or multiple functions of works councillors.
Both employee representation and management have developed a European perspective although this is closely
interlinked or substituted by a global focus.
The strategic initiatives come from the headquarter and are far-reaching and determined. They are related to the approach
of transferring certain standards to all plants. Potentially, this implies the perceptions from outside Germany that
strategies, procedures, regulations etc. are developed in Germany and serve as model for the other plants. Although the
representatives from the parent company describe the attempts to involve the plants out side Germany - and this was a
central incentive for establishing the EWC and WWC - this is not an issue mentioned by the respondents from the
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Volkswagen AG
subsidiary. This can be related to the cultural differences between Germany and the UK regarding industrial relations
leading to different interpretations.
The strength of the employee representation on the background of the legal entitlement to co-determination by works
councils and the supervisory board and the for long established practices in the company make the EWC to an effective
committee. Unlike other examples of companies with EWCs in Germany, this does not lead to a more or less unimportant
committee due to the ‘toothless’ entitlements of the EWC. Both sides build the EWC up to a cross-national instrument
that has its significance beyond the national level.
The approach of the group management to involve the employee representatives into all process in a very early stage
beyond national or European regulation pays off in the acceptance and support by the employee representatives.
Dr. Anni Weiler, ArbeitsWelt - Working World (AWWW) Research and Consultation
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Interviewees
Parent company
Management insider:
Head of Labour Relations
in the company since 1992
Management insider:
Department Labour Relations
responsible for the foreign companies and in this context for the EWC and World works council
in the company for one year
Management outsider:
General manager Industrial Engineering
Employees representative insider:
Adviser on the president of the EWC; also responsible for the co-ordination of the company works council
has been actively involved in the establishment of the EWC
Employees representative outsider:
Manager of company, group and local works council in Wolfsburg
Subsidiary Bentley in the UK:
Management insider:
Member of the Board, Personnel
in the company for seven years
Employees Representative insider:
Senior Union Representative, Shop steward
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References
Liedtke, Rüdiger, Wem gehört die Republik? Die Konzerne und ihre Verflechtungen 2003, Eichborn, Frankfurt am Main,
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Widuckel, Werner, Globale Integration von Unternehmen und Interessenvertretung von Arbeitnehmern am Beispiel der
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Organisationsstatut
des
Volkswagen-
Volkswagen Group URL: http://www.volkswagen-ag.de/english/defaultIE.html
EF/05/71/EN - 46
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