SHRI RAMSWAROOP

MEMORIAL UNIVERSITY

Academic year: 2020 – 2022

Masters of Business Administration
Subject: Human Resource Planning
A study on performance management and human resource
planning at Volkswagen

Submitted by: Submitted to:

Priyanjali Singh Dr. Rajlaxmi Srivastava

202010702010039 (Associate Professor)

(IInd Year - IIIrd Sem)

 Acknowledgment
“Motivation and guidance has always played a key role in the success of any venture.”

I also pay my deep sense of gratitude to Prof. (Dr.) Ajay Praksah (Pro Vice Chancellor

& Director), Prof. (Dr.) Mohit Verma (Dean) to encourage me to highest peak and to

provide me the opportunity to prepare this project. I owe a tremendous sense of

gratitude to all the faculty members of IMCE department, Shri Ramswaroop Memorial

University for their constant motivation and support in completing this project.

I would like to express my sincere gratitude to our subject teacher Dr. Rajlaxmi

Srivastava (Associate Professor) for provide me the valuable knowledge and

information related to my project. I’m glad for her constant inspiring words, assistance

and guidance in completing this project. It has been a great privilege to work under

their guidance.

Last but not the least, I would like to thank my family and my friends also for their

encouragement and help in designing and making my project creative. I am in debt of

all these. Only because of them I was able to create my project and make it good and

enjoyable experience.
Performance Management
The role of HR in the present scenario has undergone a sea change and its focus is on evolving such
functional strategies which enable successful implementation of the major corporate strategies. In a
way, HR and corporate strategies function in alignment. Today, HR works towards facilitating and
improving the performance of the employees by building a conducive work environment and providing
maximum opportunities to the employees for participating in organizational planning and decision
making process.

Today, all the major activities of HR are driven towards development of high performance leaders and
fostering employee motivation. So, it can be interpreted that the role of HR has evolved from merely
an appraiser to a facilitator and an enabler.

Performance management is the current buzzword and is the need in the current times of cut throat
competition and the organizational battle for leadership. Performance management is a much
broader and a complicated function of HR, as it encompasses activities such as joint goal setting,
continuous progress review and frequent communication, feedback and coaching for improved
performance, implementation of employee development programmes and rewarding
achievements.

The process of performance management starts with the joining of a new incumbent in a system and
ends when an employee quits the organization.

Performance management can be regarded as a systematic process by which the overall performance
of an organization can be improved by improving the performance of individuals within a team
framework. It is a means for promoting superior performance by communicating expectations,
defining roles within a required competence framework and establishing achievable benchmarks.

The term performance management gained its popularity in early 1980’s when total quality
management programs received utmost importance for achievement of superior standards and quality
performance. Tools such as job design, leadership development, training and reward system received
an equal impetus along with the traditional performance appraisal process in the new comprehensive
and a much wider framework. Performance management is an ongoing communication process which
is carried between the supervisors and the employees through out the year. The process is very much
cyclical and continuous in nature. A performance management system includes the following
actions.

▪ Developing clear job descriptions and employee performance plans which includes the key
result areas (KRA') and performance indicators.
▪ Selection of right set of people by implementing an appropriate selection process.
▪ Negotiating requirements and performance standards for measuring the outcome and overall
productivity against the predefined benchmarks.
▪ Providing continuous coaching and feedback during the period of delivery of performance.
▪ Identifying the training and development needs by measuring the outcomes achieved against
the set standards and implementing effective development programs for improvement.
▪ Holding quarterly performance development discussions and evaluating employee
performance on the basis of performance plans.
▪ Designing effective compensation and reward systems for recognizing those employees who
excel in their jobs by achieving the set standards in accordance with the performance plans or
rather exceed the performance benchmarks.
▪ Providing promotional/career development support and guidance to the employees.
▪ Performing exit interviews for understanding the cause of employee discontentment and
thereafter exit from an organization.

A performance management process sets the platform for rewarding excellence by aligning
individual employee accomplishments with the organization’s mission and objectives and making the
employee and the organization understand the importance of a specific job in realizing outcomes. By
establishing clear performance expectations which includes results, actions and behaviors, it helps the
employees in understanding what exactly is expected out of their jobs and setting of standards help in
eliminating those jobs which are of no use any longer. Through regular feedback and coaching, it
provides an advantage of diagnosing the problems at an early stage and taking corrective actions.

To conclude, performance management can be regarded as a proactive system of managing employee

performance for driving the individuals and the organizations towards desired performance and results.

It’s about striking a harmonious alignment between individual and organizational objectives for

accomplishment of excellence in performance.

Objectives of Performance Management
According to Lockett (1992), performance management aims at developing individuals with the
required commitment and competencies for working towards the shared meaningful objectives within
an organizational framework.

Performance management frameworks are designed with the objective of improving both individual
and organizational performance by identifying performance requirements, providing regular feedback
and assisting the employees in their career development.

Performance management aims at building a high performance culture for both the individuals
and the teams so that they jointly take the responsibility of improving the business processes on
a continuous basis and at the same time raise the competence bar by upgrading their own skills
within a leadership framework. Its focus is on enabling goal clarity for making people do the right
things in the right time. It may be said that the main objective of a performance management system
is to achieve the capacity of the employees to the full potential in favor of both the employee and the
organization, by defining the expectations in terms of roles, responsibilities and accountabilities,
required competencies and the expected behaviours.

The main goal of performance management is to ensure that the organization as a system and its
subsystems work together in an integrated fashion for accomplishing optimum results or outcomes.

The major objectives of performance management are discussed below:

▪ To enable the employees towards achievement of superior standards of work performance.

▪ To help the employees in identifying the knowledge and skills required for performing the job
efficiently as this would drive their focus towards performing the right task in the right way.
▪ Boosting the performance of the employees by encouraging employee empowerment,
motivation and implementation of an effective reward mechanism.
▪ Promoting a two way system of communication between the supervisors and the employees
for clarifying expectations about the roles and accountabilities, communicating the functional
and organizational goals, providing a regular and a transparent feedback for improving
employee performance and continuous coaching.
▪ Identifying the barriers to effective performance and resolving those barriers through constant
monitoring, coaching and development interventions.
 ▪ Creating a basis for several administrative decisions strategic planning, succession planning,
promotions and performance based payment.
▪ Promoting personal growth and advancement in the career of the employees by helping them
in acquiring the desired knowledge and skills.

Some of the key concerns of a performance management system in an organization are:

▪ Concerned with the output (the results achieved), outcomes, processes required for reaching
the results and also the inputs (knowledge, skills and attitudes).
▪ Concerned with measurement of results and review of progress in the achievement of set
targets.
▪ Concerned with defining business plans in advance for shaping a successful future.
▪ Striving for continuous improvement and continuous development by creating a learning
culture and an open system.
▪ Concerned with establishing a culture of trust and mutual understanding that fosters free flow
of communication at all levels in matters such as clarification of expectations and sharing of
information on the core values of an organization which binds the team together.
▪ Concerned with the provision of procedural fairness and transparency in the process of decision
making.

The performance management approach has become an indispensable tool in the hands of the corporate
as it ensures that the people uphold the corporate values and tread in the path of accomplishment of
the ultimate corporate vision and mission. It is a forward looking process as it involves both the
supervisor and also the employee in a process of joint planning and goal setting in the beginning of the
year.
 Benefits of Performance Management
A good performance management system works towards the improvement of the overall
organizational performance by managing the performances of teams and individuals for ensuring the
achievement of the overall organizational ambitions and goals. An effective performance
management system can play a very crucial role in managing the performance in an organization
by:

▪ Ensuring that the employees understand the importance of their contributions to the
organizational goals and objectives.
▪ Ensuring each employee understands what is expected from them and equally ascertaining
whether the employees possess the required skills and support for fulfilling such expectations.
▪ Ensuring proper aligning or linking of objectives and facilitating effective communication
throughout the organization.
▪ Facilitating a cordial and a harmonious relationship between an individual employee and the
line manager based on trust and empowerment.

Performance management practices can have a positive influence on the job satisfaction and
employee loyalty by:

▪ Regularly providing open and transparent job feedbacks to the employees.

▪ Establishing a clear linkage between performance and compensation
▪ Providing ample learning and development opportunities by representing the employees in
leadership development programmes, etc.
▪ Evaluating performance and distributing incentives and rewards on a fair and equated basis.
▪ Establishing clear performance objectives by facilitating an open communication and a joint
dialogue.
▪ Recognizing and rewarding good performance in an organization.
▪ Providing maximum opportunities for career growth.

An effectively implemented performance management system can benefit the organization, managers
and employees in several ways as depicted in the table given below:
Organization’s Benefits Improved organizational performance, employee retention and
loyalty, improved productivity, overcoming the barriers to
communication, clear accountabilities, and cost advantages.

Manager’s Benefits Saves time and reduces conflicts, ensures efficiency and consistency
in performance.

Employee’s Benefits Clarifies expectations of the employees, self assessment opportunities

clarifies the job accountabilities and contributes to improved
performance, clearly defines career paths and promotes job
satisfaction.

Clearly defined goals, regular assessments of individual performance and the company wide
requirements can be helpful in defining the corporate competencies and the major skill gaps which
may in turn serve as a useful input for designing the training and development plans for the employees.
A sound performance management system can serve two crucial objectives:

Evaluation Objectives

▪ By evaluating the readiness of the employees for taking up higher responsibilities.

▪ By providing a feedback to the employees on their current competencies and the need for
improvement.
▪ By linking the performance with scope of promotions, incentives, rewards and career
development.

Developmental Objectives

The developmental objective is fulfilled by defining the training requirements of the employees based
on the results of the reviews and diagnosis of the individual and organizational competencies.
Coaching and counselling helps in winning the confidence of the employees and in improving their
performance, besides strengthening the relationship between the superior and the subordinate.

In a nutshell, performance management serves as an important tool for realizing organizational goals
by implementing competitive HRM strategies. It helps in aligning and integrating the objectives with
the KPI’s in an organization both vertically and horizontally across all job categories and the levels
and thus helps in driving all the activities right from the bottom level towards one single goal.
 Human Resource Planning
Human Resource Planning (HRP) is the process of forecasting the future human resource
requirements of the organization and determining as to how the existing human resource
capacity of the organization can be utilized to fulfil these requirements. It, thus, focuses on the
basic economic concept of demand and supply in context to the human resource capacity of the
organization.

It is the HRP process which helps the management of the organization in meeting the future demand
of human resource in the organization with the supply of the appropriate people in appropriate numbers
at the appropriate time and place. Further, it is only after proper analysis of the HR requirements can
the process of recruitment and selection be initiated by the management. Also, HRP is essential in
successfully achieving the strategies and objectives of organization. In fact, with the element of
strategies and long term objectives of the organization being widely associated with human resource
planning these days, HR Planning has now became Strategic HR Planning.

Though, HR Planning may sound quite simple a process of managing the numbers in terms of human
resource requirement of the organization, yet, the actual activity may involve the HR manager to face
many roadblocks owing to the effect of the current workforce in the organization, pressure to meet the
business objectives and prevailing workforce market condition. HR Planning, thus, help the
organization in many ways as follows:

▪ HR managers are in a stage of anticipating the workforce requirements rather than getting
surprised by the change of events
▪ Prevent the business from falling into the trap of shifting workforce market, a common concern
among all industries and sectors
▪ Work proactively as the expansion in the workforce market is not always in conjunction with
the workforce requirement of the organization in terms of professional experience, talent needs,
skills, etc.
▪ Organizations in growth phase may face the challenge of meeting the need for critical set of
skills, competencies and talent to meet their strategic objectives so they can stand well-prepared
to meet the HR needs
 ▪ Considering the organizational goals, HR Planning allows the identification, selection and
development of required talent or competency within the organization.

It is, therefore, suitable on the part of the organization to opt for HR Planning to prevent any
unnecessary hurdles in its workforce needs. An HR Consulting Firm can provide the organization with
a comprehensive HR assessment and planning to meet its future requirements in the most cost-effective
and timely manner.

An HR Planning process simply involves the following four broad steps:

▪ Current HR Supply: Assessment of the current human resource availability in the

organization is the foremost step in HR Planning. It includes a comprehensive study of the
human resource strength of the organization in terms of numbers, skills, talents, competencies,
qualifications, experience, age, tenures, performance ratings, designations, grades,
compensations, benefits, etc. At this stage, the consultants may conduct extensive interviews
with the managers to understand the critical HR issues they face and workforce capabilities
they consider basic or crucial for various business processes.
▪ Future HR Demand: Analysis of the future workforce requirements of the business is the
second step in HR Planning. All the known HR variables like attrition, lay-offs, foreseeable
vacancies, retirements, promotions, pre-set transfers, etc. are taken into consideration while
determining future HR demand. Further, certain unknown workforce variables like competitive
factors, resignations, abrupt transfers or dismissals are also included in the scope of analysis.
▪ Demand Forecast: Next step is to match the current supply with the future demand of HR,
and create a demand forecast. Here, it is also essential to understand the business strategy and
objectives in the long run so that the workforce demand forecast is such that it is aligned to the
organizational goals.
▪ HR Sourcing Strategy and Implementation: After reviewing the gaps in the HR supply and
demand, the HR Consulting Firm develops plans to meet these gaps as per the demand forecast
created by them. This may include conducting communication programs with employees,
relocation, talent acquisition, recruitment and outsourcing, talent management, training and
coaching, and revision of policies. The plans are, then, implemented taking into confidence the
mangers so as to make the process of execution smooth and efficient. Here, it is important to
note that all the regulatory and legal compliances are being followed by the consultants to
prevent any untoward situation coming from the employees.
Objectives of Human Resource Planning

• Assess Future Manpower Needs

Human resource planning helps the organization in identifying future manpower
requirements for organizations. In view of organizational objectives to be achieved in the
future, this process analyses the precise manpower required for the functioning of the
organization. This process ensures the right number of peoples at the right time in an
organization to derive requisite output.

• Identify Manpower Gap

Identification of the gap between the manpower supply and manpower demand is a must
for every organization. Human resource planning helps in finding out the surplus or deficit
of employees in an organization. Accordingly, it makes a plan to overcome these gaps. In
case of the deficit its plans for hiring new employees and in case of the surplus it reduces
the number of employees by retirement, termination, layoff, etc.

• Determination of Training and Development Needs

Human resources planning aims at providing various training to all employees as per the
requirement of market needs. These training and development programmes are meant for
both new and existing employees. It focuses on updating and improving skills of manpower
 to derive the requisite productivity from them. This way it aims at the advancement of
employees and serves the high skilled employees need of an organization.

• Ensures Optimum Use of Manpower

Human resource planning process helps in the full utilization of human resources. The right
man at the right place is a must to achieve high productivity and efficiency. This process
aims at providing job to individuals according to his knowledge, skills, and experience. Job
positions are properly analyzed before deputing persons and it is checked whether a person
is capable of delivering roles or not. This way Human resources planning ensure fuller
utilization of human resources within the organization.

• Meet Expansion and Diversification Needs

Expansion and diversification are activities that every organization needs to follow as they
achieve progress over time. Human resource planning supports the organization in its
various expansion, diversification, and modernization programs. It formulates plans for
meeting the employee requirements as per the expansion plan. This ensures that skilled and
knowledgeable people are available at the right time that is able to face the challenging job
roles.

• Estimates Human Resource Cost

Human resource planning controls the cost of human resources of an organization. It aids
the preparation of the budget for meeting these expenses by estimating the cost of each and
every human resource working in the organization. Formulation of appropriate budgets will
ensure timely payment to employees and also avoids a shortage of funds.

• Monitors Human Resource Performance

It monitors and controls the performance of employees from time to time. Human resource
planning measures the actual performance of manpower with planned performance. If any
deviations are found in performance it aims at removing them by taking appropriate
corrective measures. It ensures whether human resources are performing as their defined
roles and responsibilities. This way it helps in the achievement of organizational goals and
objectives timely.
Benefits of Human Resource Planning

HR planning can be a long and tedious process. It involves a lot of work – brainstorming, debate,
decision, analysis, and so much more – but it is one of the most important tasks that should help the
HR team achieve their goals. The following are the major benefits of human resource planning:

1. Retaining top talents:

Hiring is one thing. But retaining high-performing employees is another. According to a new study,
60% of workers have quit or considered quitting their jobs and it’s not because of how much they are
paid, but how they are treated. HR planning encompasses talent retention. The thing is, businesses lose
more money on attrition than on recruitment. So, the lower the attrition rate, the better for companies.

A high retention rate suggests that a company is doing wrong, especially in managing their employees.
The HR department is in charge of creating programs that promote the welfare of its employees, such
as giving them access to payday loans, health and wellness benefits, incentives, and much more.

In addition to providing competitive compensation, planning helps the HR team identify the factors
that keep employees engaged. Employee engagement is a critical component of talent retention.
Research shows that when employees feel valued within the organization, they are likely to stay.
2. Addressing the organization’s manpower needs:

HR departments are primarily responsible for recruitment and staffing. Recruiting and screening
employees are time-consuming processes that require detailed attention. They involve many steps,
from advertising or creating job posts, managing application process, screening applicants based on
the qualifications set, interviewing prospective candidates, creating an offer and contract for successful
applicants, on-boarding newly hired personnel, and training them.

With an effective planning process in place, the HR team can ensure that the business staffing needs
are met. They can prepare ahead of time for any vacancies should an employee resigns (which can
greatly affect productivity). Also, they can effectively handle the hiring process should there be an
urgent need to ramp up and prevents potential problems that come along with attrition.

3. Ensuring that the right people are hired:

Another benefit of a recruitment plan is ensuring that only the most qualified individuals are hired to
handle varying roles. Part of HR planning is determining the skill sets needed for a specific role and
creating an interviewing process so that managers or interviewers can ask the right questions to their
applicants. Companies that have an effective HR planning in place are prepared for their current and
future staffing needs that ultimately result in business growth and expansion.

4. Training employees:

HR planning also involves creating training models and procedures. After finding the people who
possess the right skill sets, the next thing that the HR department needs to do is to ensure that they are
able to perform their roles based on the needs of the organization and 5. the customers. Training and
on-boarding are also necessary to teach new employees about the company rules and policies, its
culture, ways of working, internal databases, tools and software, benefits and compensation, and other
things they need to know.

HR planning also addresses the need for creating training programs for current employees. Regardless
of qualification and background, most employees have some weakness in their workplace skills. A
clearly defined training program allows the organization to strengthen the skills of its employees and
equip them with the latest techniques and knowledge to perform their roles.
5. Managing employees:

While it is the role of managers and supervisors to ensure that their staff members are able to effectively
perform their job, an effective HR planning process also incorporates employee management,
particularly performance reviews and disciplinary procedures. Standardizing performance reviews, for
example, guide managers in rating the performance of their subordinates and ensure that every
employee is reviewed using the same set of metrics. Furthermore, standardizing disciplinary
procedures sees to it that company rules are strictly followed and not adhering to them imply
consequences.

6. Facilitating expansion programs:

These days, it is not uncommon for companies to undergo expansion activities. Growth is the goal of
every start-up. Due to the technological advances of the modern world, many companies have achieved
rapid growth. While it’s a huge leap for an organization, there is no denying that it can be a difficult
challenge for the HR department.

As a company increases in size, the demand for human resources. Whether it’s as simple as ramping
up through massive hiring, or as complex as mergers and acquisitions, HR planning is crucial in
facilitating company expansion programs needed to address the growing manpower needs.

7. Coping with change:

In any business organization, change is inevitable. Human resource planning is utilized to create
appropriate measures to deal with change associated with varying factors, such as customer demands,
business expansion, and political and economic conditions.

Another thing that HR has to cope with is the rapid change in technology. With such change, job and
job requirements also change. Needless to say, technology has gotten its way into the workforce, taking
over repetitive tasks via automation and the like. Through HR planning, an organization can forecast
and meet the changing needs of manpower.
The Volkswagen is the world leading automobile manufacturers and it is the largest carmaker in
Europe. Volkswagen was based in Wolfburg, Germany and they have over 342,000 employees that
able to build up over 21,500 vehicles a day. Volkswagen production site are located in Europe,
America, Africa and Asia.

They divided they car business in to two group is Volkswagen and Audi since 2002. The first brand
group of Volkswagen consist of Volkswagen, Skoda, Bentley and Bugatti. And the second brand group
Audi comprises of Audi, Lamborghini and SEAT.

Volkswagen aspires to raise its focal point on foundation business, decrease production costs, and
improve profitability. To ensure the company can achieve these goals, the company is consider a
variety of planned and business growth inventiveness such as divesture of the non core business
segments, and preface of new models.

The Product Data Management (PDM) at Volkswagen company will chains engineering teams
operating at numerous locations enlarge across four continents. From an information technology
perspective, this high scale of geographic division is totally apparent with regard to information
contact, management, and high accessibility.

The Volkswagen Company observes well-built profits growth over the past five years. With new
slogan “Think Blue” will ensure that Volkswagen will produce more eco-friendly product, not money
and make the world go round. This means that the Volkswagen will think smarter about the
sustainability and efficiency toward the business and the product.

The corporate strategy of the Volkswagen group is to become the top automobile producer and to lead in
sustainability within the next six years (Martin, 2010). So as to meet the mentioned corporate strategy, the
Volkswagen group will require an effective, resilient, and creative workforce that is properly managed to
develop attractive brands, increase production volumes, increase sale volumes, and move towards
sustainability among other key areas of its corporate strategy (Peter, 2006). The strategic management of
the human resource so as to meet the expectations above has been a key area that is pursued by the
Volkswagen group. Among the key approaches that are applied for the strategic management of employees
at the Volkswagen, group include the use of training and development programs, performance management,
and pay for performance, among others (Martin, 2010). Apart from a few limitations and shortcomings, the
above approaches have generally been helpful in directing the Volkswagen group towards achieving its
corporate strategy.

Performance management at Volkswagen

Performance management at the Volkswagen group is the process in which the Volkswagen group employs
a range of activities as a way of measuring its (Volkswagen group) progress towards achieving the set out
corporate strategy (Floyd, 1994). All the employees that work in the Volkswagen group are thus required to
adopt a range of behaviours and practices that are suited to increase productivity, produce quality items, and
respond appropriately to customer needs (Howard, 2010). Emphasis has been laid out to each of the
employees (through training and established norms and behaviours) of the Volkswagen group on how
his/her behaviour at the workplace has an impact on meeting the company’s expectations (Kraut et al.,
1989). For example, each employee knows that arriving at the workplace late has an impact on productivity
(Hart & Cooper, 2001). Here, the premise is not just been to provide the worker with do’s and don’ts, but to
make the worker understand that as a valuable member of the Volkswagen workforce, he has a direct impact
in meeting set targets (Hart & Cooper, 2001). The highly attractive and competitive automobile brands that
have originated from the Volkswagen group can be attributed to a highly disciplined and creative workforce
there; who have been guided by effective performance methodologies (Martin, 2010).

Among the approaches that are employed by the management of the Volkswagen group to review and guide
the workforce in meeting set targets is the use of performance reviews. Here, structured meetings where the
progress of workers in meeting set targets is reviewed are common (Peter, 2006). During such meetings,
group leaders, workers, and managers get a chance to give opinions, corrections, and guidance on the
progress that has been made by employees in achieving set targets (Hart & Cooper, 2001). Since it is normal
for worker deviates from achieving specific objectives, performance review meetings at the Volkswagen
group have helped to align the behaviours of the workforce towards achieving set out goals (Hart & Cooper,
2001).

Improved performances in the two key areas that are required for the attainment of the corporate strategy at
the Volkswagen group (Financial performance and sustainability) indicate a workforce that is responding to
performance management (Howard, 2010). As it had been indicated earlier, there has been a progressive
increase in the volume of sales, and revenue for the Volkswagen Company over the past year (Profit after
tax rose to 700 billion Euros in 2010 from 900 million Euros in 2009) (Martin, 2010). In the direction of
moving towards sustainability, the Volkswagen group has attained a high health index of 98% (Martin,
2010). Besides, apart from developing models that consume very little fuel (including innovative units that
can travel about 100 kilometres on just a litre of fuel), the Volkswagen group has reduced carbon emissions
per produced units, among other steps towards sustainability (Martin, 2010).

However, it is fruitful for the Volkswagen management to identify key challenges in performance
management and develop improved approaches towards the same. For example, the Volkswagen group will
require developing a more creative approach that can translate its goals to easily measurable parameters so
as to give appropriate feedback to the workers (Floyd, 1994). Workers would like to see clearly how their
individual actions contribute to increasing sustainability and production. Besides, instead of just focusing
on individual actions of employees, it is would be more useful for the Volkswagen management to apply an
approach that views the Volkswagen Company as an interdependent system (Peter, 2006). Failure by
employees to meet tasks can then be viewed in light of the responsibilities of other employees. Importantly,
instead of on focusing merely on influencing individual actions of employees to increase productivity, the
management of the Volkswagen group should develop a fruitful approach where employees are placed in
groups that can exploit the strengths and weaknesses of each of the employees (Peter, 2006).
 Human Resource Planning at Volkswagen
With the human resources planning strategy “Empower to transform”, the Group is continuing with
key and successful approaches to human resource management. These include the pronounced
stakeholder focus on corporate governance, comprehensive participation rights for employees,
outstanding training opportunities, the principle of long-term service through systematic employee
retention and the aspiration to appropriately balance performance and remuneration. At the same
time, the new human resources strategy is setting innovative trends. Hierarchies are being
dismantled, and modern forms of working such as agile working – an approach whereby most
responsibility for the work organization is transferred to the teams – are set to be expanded. In the
future, collaborative robots will ease heavy physical work in factories and digital processes will
simplify administration.
In the Human Resources division, we are guided by five overarching objectives:

▪ The Volkswagen Group aims to be an excellent employer with all of its brands and companies
worldwide.

▪ Highly competent and dedicated employees strive for excellence in terms of innovation, added
value and customer focus.

▪ A forward-looking work organization ensures optimal working conditions in factories and offices.

▪ An exemplary corporate culture creates an open work climate that is characterized by mutual trust
and collaboration.

▪ The Company’s human resources work is highly employee-oriented while also aiming for
operational excellence and providing strategic value-added contributions.

In the course of the 2018 reporting period, VW continued to work on our diversity management
program that we are rolling out throughout the Company. Given the cultural diversity in our global
markets and the growing economic momentum, competitive success requires an ever-broader range
of experience, world views, problem-solving and product ideas. The diversity of our staff provides
potential for innovation in this area, which we aim to make better use of in the future. Mandatory
rules on the percentage of women in management, combined with targets for the internationalization
of senior management, are at the heart of diversity management at Volkswagen.
 VW also driving large-scale cultural change to achieve greater openness and transparency in line
with our corporate strategy. Seven Volkswagen Group Essentials formulated in 2018 provide shared
values and the foundation for cultural change across all brands and companies:

▪ VW take on responsibility for the environment and society.

▪ VW are honest and speak up when something is wrong.

▪ VW break new ground.

▪ VW believe in diversity.

▪ VW are proud of the work we do.

▪ VW is not me.

▪ VW keep its word.

Group-wide activities such as team dialog encourage employees to analyze the Group Essentials.

In 2018, VW also began to implement our new approach throughout Human Resources departments
across the Group. Going forward, the development paths into management will be characterized by
greater individual responsibility, transparency and practical relevance and will include employees
from different levels of the hierarchy in the evaluation of candidates.

When implementing our Group strategy TOGETHER – Strategy 2025, VW paid particular attention
in the reporting period to the level of achievement regarding the goals set by the applicable strategic
KPIs. For the passenger car-producing brands, VW compile and analyze the following information:

▪ Internal employer attractiveness. The indicator is determined by asking respondents, as part of the
Group-wide opinion survey, whether they perceive the respective company as an attractive
employer. The target for 2025 is 89.1 out of a possible total of 100 index points. A score of 84.2
index points was achieved throughout the Group in the reporting period, contrasting with 85.2
points in the previous year.

▪ External employer attractiveness. The ability to recruit top talent is of decisive importance,
particularly in view of the Company’s transformation into a world-leading provider of sustainable
mobility solutions and the associated development of new business fields. Using this strategic
indicator, we check the positioning of the major passenger car-producing brands on the labor
markets once a year with regard to graduates and young professionals. Rankings in surveys by
 renowned institutions, in which we aim to achieve top scores for all Group brands, serve as the
basis for this.

▪ Diversity index. As we establish diversity management across the Group, this strategic indicator
for the active workforce is used worldwide to report the development of the proportion of women
in management and the internationalization of top management. In particular, it underpins the
objective of the human resources strategy, which is aimed at contributing to an exemplary
leadership and corporate culture. The proportion of women in management amounted to 13.8% in
2018 and was therefore at the prior-year level; we aim to raise this to 20.2% by 2025. We aim to
increase the level of internationalization in top management, the uppermost of our three
management tiers, to 25.0% in 2025; in the past fiscal year this was 19.2 (18.7)%.

In the truck and bus business, we look at the opinion survey and cross-brand exchange of employees
to identify how well strategic targets are being achieved:

▪ Opinion survey. The sentiment rating is used to determine the level of employee satisfaction and
identification with the company. The sentiment rating is calculated as the average score of all
responses regularly submitted as part of the opinion survey. In the truck and bus business, the 2018
result amounts to 76.4 (74.7) index points and is therefore higher than the previous year’s level.

▪ Cross-brand exchange and rotation. The aim is to continuously intensify collaboration between the
commercial vehicle brands. It is also designed to enable the creation of specialist and international
networks at the same time. We use this indicator to analyze how many employees work at another
brand through rotation. In 2018, this opportunity for career development again saw an increase in
uptake.

One strategic indicator has been defined for the financial services business:

▪ External employer ranking. This involves taking part in an external benchmarking, in general once
every two years. The aim is to position ourselves as an attractive employer and identify measures
to become a top-20 employer by 2025, not just in Europe, but globally. Volkswagen Financial
Services AG was represented in various national and international best-employer rankings the last
time it participated in 2016. In 12th place, it was among the top European employers in the “Great
Place to Work” employer competition.
 Conclusion
The Volkswagen group has embedded critical aspects in its human resource management that are useful in

aligning the behaviours of its workforce to meet set goals. The training and development program that has

been adopted by the Volkswagen group will obviously prove useful in producing a more competent and

able workforce. Moreover, the performance management strategies that have been employed at the

Volkswagen group are relevant to the strategic needs of the Company. However, just like any other

corporation in the real world, the Volkswagen group will continue to face limitations and challenges that

come with the implementation of human resource strategies. A creative and sustainable approach in dealing

with such challenges would help the Volkswagen group achieve its set out corporate strategy.
 Bibliography
• https://studycorgi.com/volkswagen-groups-human-resource-management/
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• https://commercemates.com/importance-of-human-resource-planning/
• https://www.managementstudyguide.com/performance-management.htm
• www.managementstudyguide.com/objectives-of-performance-management.htm
• https://www.managementstudyguide.com/benefits-of-performance-
management-system.htm