VW will reduce management ranks in cost-cutting move

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FRANKFURT — Volkswagen brand plans to thin out its management ranks in Germany using the same early retirement schemes offered to rank and file workers, with the aim of flattening out hierarchies and encouraging greater entrepreneurial thinking.

The plan is part of a broader transformation at the brand following VW Group’s costly diesel-emissions scandal. VW targets savings of 3 billion euros in Germany.

“We are expecting our management levels to become younger and slimmer,” VW brand CEO Herbert Diess said in a statementon Monday.

VW brand aims to boost annual productivity in Germany by 7.5 percent this year and next year, and by a further 5 percent in the following two years, translating to a cumulative 25 percent improvement by the end of 2020.

A VW spokesperson declined to comment when asked about the number of managers potentially affected by the plan.

VW also aims to overhaul its selection process to ensure greater initiative in the future. Assessment Centers, a popular method used by corporations that involve a battery of tests typically conducted during the course of a day, will be abolished. Rather than providing a snapshot of a person’s performance, junior managers will instead have to prove themselves over the course of an entire introductory year.

“Managing means creating, not administering,” Diess said.

VW said last month it was close to finalizing plans this year to reduce its German blue collar workforce by roughly 9,200 workers via early retirement schemes that would phase out their employment by the end of the decade.

The early retirement offer is for employees born between 1955 and 1960. It expires at the end of next month.

You can reach Christiaan Hetzner at christiaan.hetzner@gmail.com.


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