Volvo 1997 Annual Report Download - page 38

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Personnel and Operational developm ent
The Volvo Group wants to introduce forms of work that increase productivity,
raise quality and thereby increase the Group’s competitiveness and profitability.
Increased knowledge, process-orientation, less bureaucracy and the assumption
of more responsibility by employees are cornerstones in the continuous process
of change that is necessary for lasting competitiveness.
A number of pilot projects for Operational development were begun in parts
of Volvo’s business areas during 1996. The work procedure follows to a high
degree the change in work forms that were implemented in Volvo Aero and
which earned the company the 1996 Swedish Quality Prize. The projects have
increased in number and today are also being conducted by Volvo dealers and
suppliers. In all, 15,000 persons were actively involved in 1997 and another
15,000 will be added during the first half of 1998.
All of the programs that have been conducted for more than 12 months have
contributed to significant improvements in the form of increased productivity,
higher quality and shorter lead times. There are examples of such results in Cars,
in Procurement, in the passenger car plant in Torslanda and in the truck factory
in Tuve as well as Försäkrings AB Volvia. Development programs to date have
pertained to operations in Sweden but programs will be started in Europe and
the United States during 1998.
Executive developm ent and internationalization
Volvo conducts a large number of executive development programs with a focus
on internationalization as a means of broadening its recruiting base and to ensure
that today’s and tomorrow’s managers have a more global perspective on the
business. It may be noted, as an example, that Volvo Car Corporation in
Göteborg and Born is conducting a “Leadership across borders” project that is
designed to develop knowledge of management and the conditions facing
employees in joint ventures; it focuses in particular on studies of the ways in
which project and management groups work together to achieve common results.
Volvo Euro Dialogue
Volvo’s European Council was started in 1997. Approximately 30 employee
representatives appointed on a national basis meet with Volvo’s management
once a year. A direct dialogue between Group management and employees in
Volvo’s European companies is thereby being established. The purpose of this
dialogue is to encourage all Volvo employees to participate actively and assume
responsibility for a continuous program of improvement.
Profit-related bonus and 60-year fund
As an important component in creating solidarity, a sense of involvement and a
focus on growth in earnings, an agreement on a profit-related bonus was reached
by Volvo and the union organizations for the year 1998. The profit-related bonus
is based on Volvo’s return on shareholders’ equity, which must amount to at least
10%. A profit-related bonus based on a scale between 10% and 18%, but not ex-
ceeding SEK 350 M will be paid on the amount exceeding the yield requirement.
The collective savings program designated the 60-Year Fund has been expanded.
The objective is to strengthen the financial condition of employees when they
retire. A full share in the 60-year fund is the equivalent of SEK 185 per month
deposited in an account in their name. The profit-related bonus system and the 60-
Year Fund cover employees of AB Volvo and its wholly owned subsidiaries in Sweden.
The number of em ployees in the
Volvo Group increased during
the year by 2,570 to 72,900.
Acquisitions of com panies,
mainly The AGES Group and
Champion Road Machinery,
increased the number of em ploy-
ees by approximately 1,600.
Critical factors for success
in Volvo’s Operational
development
Communication of objectives and
areas of change, as well as condi-
tions in the business environm ent
that change the com pany’s com peti-
tive situation
Employees share com m on knowled-
ge of the com pany’s strategy; they
organize themselves in groups, set
objectives, implem ent action plans
and evaluate results through
continuous follow-ups.
Highly qualified internal consultants
help both m anagement and opera-
tional developm ent groups to
achieve and m aintain a high level of
activity, a result-oriented method of
work ing and efficient cooperation.
Specially trained m anagers m onitor
the program and contribute by cont-
inuously helping to develop m ana-
gers and em ployees.
Detailed inform ation on Volvo’s
employees and payroll costs, and on
benefits accruing to members of the
Board of Directors and senior exe-
cutives appears in note 29, page 51.
Number of em ployees
thousands
80
40
20
60
95 96 97
Board of Directors’ report