Ford changes how executives' benefits tied to auto shop bills
Hee's a bit of news that surely had Ford’s executive eyeing Consumer Reports rankings on all of the
Blue Oval's offerings...According to Jim Mateja of the Chicago Tribune, the recent 8-K form Dearborn filed with the Securities and Exchange Commission altered one of the factors that determines executive stock bonuses. In years past, that factor: "high time in service improvement," translated to how much repair work costs owners after three years. Or at least it did... now that span has been shortened to just three months of ownership. The net effect is that bonuses will be based on keeping new vehicles out of repair facilities as much as possible. Ford is saying that it is implementing the policy to keep its executives focused on the company’s goal of customer satisfaction.
Ford Chairman and CEO Bill Ford Jr., will not be affected by the change, as he's already vowed not to take any form of compensation until the company is profitable again in North America.
[Source: Chicago Tribune]
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Reader Comments (Page 1 of 1)
John 9:20PM (3/22/2006)
Is it me or does the transition from years to months make absolutely no sense? Is this implying that a faulty fuel pump or unreliable ball joints at 10K miles will no longer affect the bonuses?
If anything this just makes the execs more likely to institute policies to make sure dealerships smooth-talk owners into thinking a problem at 3 months will "work itself out" with a new batch of gasoline or attribute other issues to a new car "settling in."
Really, what is wrong with a 3-year 36K mile period for analyzing reliability? Am I missing something here? I like the necessary fast-feedback and fast-response of a 3 month period... but I think this new policy shifts the incentives in a dangerous direction for long-term satisfaction.
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Mad Scientist Matt 9:30PM (3/22/2006)
John, I read it that way too at first, but then I took a closer look. Their previous system ignored the downtime until a car reached three years old, then started tallying up the time. Now they start the stopwatch at the three month mark. Previously, a fuel pump failing at 10K miles wouldn't have counted, and now it does.
George Eckes's guide to Six Sigma constantly emphasized that management must be behind a good QC program, or it is likely to fail. The whole company has to have a mindset that failures hurt the bottom line even if it doesn't show up on a bean-counter's cost benefit analysis.
I'd say this is a good sign. (Then again, right now I'm looking to buy an aftermarket kit to stop my Focus from accumulating puddles of water on the passenger side floor.)
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John 9:54PM (3/22/2006)
Mad Scientist... I think we're at odds on the semantic meaning of the term "after" in that Chicago Tribune Article. It would make even *less* sense to me, if prior to this decision, that Ford ignored all problems prior to the 1456th day of ownership.
-- From the Article --
But there will be a change. One of the factors that went into the bonus was "high time in service improvement," which, when translated from legalese, meant things gone wrong and repairs needed with the vehicles after three years in customers' hands.
Now it will be things gone wrong after only three months.
-- -- -- -- --
To me, this sound like the old way of incentives would wait 3 years (or 36K miles) after a car was sold and then offer incentices if the 3 year old cars had a certain (low) level of time in the shop (and probably low warranty costs). Of course, I'm sure they considered the month of production rather than just looking at the entire model year.
Already, this places a disconnect of time for incentives since a manager who is in place in 2002 may have changed roles in 2005 and had no role for reliability or there could be a manager who really spearheaded a fast, effective diagnostic and repair for a certain problems in 2004 and really helped reduce warranty costs in his brief time on board.
But, if you read the word "after" in the article to mean that only problems after 3 years of ownership are considered, that particular incentive structure would definitely be horrible and in need of improvement.
What troubles me is that Ford isn't adopting a way of giving bonuses for both short and longer-term reliability.
Six Sigma (or some other form of continuous improvement and constant analysis) is probably in place in many facets of the manufacturing process. I can see that quality parts will likely lead to quality cars.
However, one of the biggest aspects of long-term reliability is to find problems and fix them during a production run. So let's pretend a car made in late 2005 tends to have problems with a weak head gasket; even though it was made to specification and passed six-sigma. The head gasket must be altered to improve the reliability of future cars. So, problems like this must be quickly identified and resolved for the same cars made in the Spring of 2006. This type of reliability concern requires a separate form of incentive.
The way I read the word "after" in that article - Ford basically erased the incentive to find problems (was it a design flaw or a manufacturing flaw?) after the car is built.
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Paul 10:02PM (3/22/2006)
I read "bonuses will be based on keeping new vehicles out of repair facilities as much as possible" to mean that it will be a heck of a lot harder to convince the dealer to actually do any warranty work on a covered car. Less warranty work will "prove" that the company is improving the quality of their cars.
The easiest way for a dealer to report that less warranty work is being done and show that the cars have "better" quality, is to exclude as much work as possible that is done on a car. i.e. make the consumer pay.
I can only see more hassles as a result of this policy unless there is something in there to prevent these service abuses.
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RossL 11:04PM (3/22/2006)
Paul, I think you're assuming that the dealers' interests are aligned with those of Ford execs, which I doubt. The last thing most dealers want to do is to stick a recent car buyer with a big repair bill - that's hardly likely to encourage repeat customers. In my experience, dealers tend to want to keep customers happy by charging repairs to the manufacturer when possible.
Under the old system, Ford execs paid a price (in lost bonuses) if fewer repairs were reported after three years. Typically, the comprehensive warranty expires after three years, doesn't it? And when a vehicle comes off warranty, owners either don't both fixing certain defects or else they take it to a non-dealer for repairs. Either way, Ford would never be aware of the problem. If they're going to starting counting problems after only three months of ownership, when the car is still under warranty, you can be darn sure they're going to be aware of those problems.
I think we have to believe that Ford is doing this because it believes it will increase customer satisfaction. Some of us may harbor a touch of cynicism about Detroit, but they aren't complete idiots. I think Ford deserves to be applauded for this move.
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Dave 12:49AM (3/23/2006)
I love how the front most car is a Pontiac Fiero in this photo.
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Phil L. 7:45AM (3/23/2006)
...and that Fiero doesn't even appear to have wheels on the ground...
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Puff Chippy 9:14AM (3/23/2006)
This is a definite move in the right direction. I wonder how this compares to the plan at GM?
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Clark Kent 10:02AM (3/23/2006)
My Ford spends enough time in the shop to guarantee that no Ex a Ford will be paid anything this year!
It would be nice to see them all at the "food bank" instead of at Safeway!
CK
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Clark Kent 10:03AM (3/23/2006)
My Ford spends enough time in the shop to guarantee that no Ex a Ford will be paid anything this year!
It would be nice to see them all at the "food bank" instead of at Safeway!
CK
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