How and why Akerson backs pay-for-performance on the factory floor

DETROIT -- In case there was any question whether the issue of pay-for-performance looms large in the UAW's contract negotiations with the Detroit 3, GM CEO Dan Akerson answered it Wednesday.

In an interview on National Public Radio, Akerson gave perhaps his broadest view yet of how he thinks hourly workers should be compensated.

"Let's not increase our structural cost by having commitments to x percent increase in salary every year," Akerson told Kai Ryssdal, host of NPR's "Marketplace."

No surprise there. All of the Detroit 3 automakers have done their best to cement the expectation early on that structural costs can't go up.

But Akerson made it clear that factors like quality should be baked into a formula for determining extra pay for UAW workers. Today, workers get a bonus tied directly to company profits.

Rating hourly workers on a "composite" score that includes quality is a way to align their incentives with the company's, Akerson figures.

After all, that's how managers' bonuses are calculated. They're measured on "four metrics," one being quality, Akerson said. He didn't name the other three. But you can bet that some measure of productivity and profitability are in the mix, too.

"Let's close the divide and all be on the same team, and we all would be incented on the same four things," Akerson said.

On a day that the Dow Jones Industrials dropped more than 400 points, one thing seems clear: The UAW's prospects for a straight wage increase, while dim when talks began last month, are evaporating fast.

Those "four metrics" Akerson mentioned are likely getting plenty of attention at the bargaining table.

For a transcript, click here.

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