Saturn Corp.-A Different Kind of Pay

Abstract

Any effort to explain the success of General Motors' Saturn Corporation must address a complex combination of factors, including Saturn Corp.'s unique "Memorandum of Agreement" with the United Auto Workers, extensive employee training in team-based production systems, no-price-hassle sales policy, and design of the car itself. Another factor, often overlooked, is the company's distinctive "risk and reward" pay plan. Developed jointly by GM management and the UAW, the plan sets base wages for the Spring Hill, Tennessee, plant lower than the national average for GM workers. An atrisk component with a heavy emphasis on ongoing training brings pay to a level equal with the national average, and a reward component, based on productivity and quality, provides opportunity for earning significantly more than the national rate. Evidence to date suggests that the plan has been highly effective. But the future is uncertain. America has lost its taste for small cars, and Saturn faces the challenge of changing its strategies to cope with these new market conditions.