Partnerships with employees

Strategy and concepts

Organisation and management of human resources work

Human Resources (HR) is the “HR business partner”/“HR partner” of the Mercedes-Benz Group’s business units. In addition, there are governance/cross-sectional units, e.g. for HR and labour policy, including Health & Safety, Talent & Learning and Human Resources IT Strategy.

As we move into an electric and digital future, we need a powerful Mercedes-Benz team for our transformation. The switch to electric mobility will change and shift tasks and job profiles. We want to shape this change for our employees in a responsible, socially acceptable and future-oriented manner. For us, the focus is on people. We are putting ourselves on a future-oriented footing and thus ensuring our competitiveness.

At the same time, we are continuously investing in the qualification of our employees and bringing new talents and experts on board. We are creating an attractive working environment for the people at Mercedes-Benz. As a diverse team, we are shaping our shared future with our daily actions on the basis of our cooperation principles. Our sustainable control instruments include 360° feedback and employee surveys for the improvement of our corporate culture. These instruments are supplemented by HR eData Manager Reports, which contain KPIs and detailed information on managers’ respective areas of responsibility and are available to all managers via an intranet app.

Involvement of the workforce

We want to structure our decision-making processes in a manner that ensures transparency for our employees, and to enable them to participate in decision-making processes. In doing so, we respect our interests and get people actively involved in our company’s affairs. We have established how we take on responsibility in our employee relationships in our policies and company agreements.

Entrenching our work and social standards

In 2002, Mercedes-Benz Group AG (then operating under the name DaimlerChrysler AG) issued its own Group-wide Principles of Social Responsibility, which are based on the International Labour Organization’s (ILO) work and social standards. These principles were completely reworked and comprehensively extended in 2021 and republished as the Principles of Social Responsibility and Human Rights.

With the newly included regulatory fields, we are taking account of the fundamental transformation of the automotive industry and the associated rise in sustainability requirements. Several topics have been added, including “Protection of Local Communities and Indigenous Peoples”, “Protection of Human Rights Defenders” and “Handling Artificial Intelligence”. Another change is that we no longer address human rights and environmental issues separately, but in combination.

Moreover, we have refined the principles and rights concerning working conditions at the Group. This pertains, for example, to the topics “Health and Safety at Work”, “Equal Opportunity and Non-Discrimination”, “Education and Training” and “Collective Bargaining Rights”.

As early as 2006, the then Daimler AG set up the Business Practices Office (BPO) whistleblower system in order to fairly and appropriately investigate violations of legal and in-house regulations that pose a high risk for our company and employees. This system has been further developed in the meantime and remains in force. These regulations also include our aforementioned Principles. Notifications about suspicious cases are sent to the BPO, which examines them and conducts an investigation if there is a high-risk case. Such cases include violations of anti-corruption, antitrust and anti-money-laundering laws, infringements of technical provisions, breaches of environmental regulations, and severe cases of discrimination and racism. With regard to those cases that are closed “with merit”, the company decides on appropriate response measures in line with the principles of proportionality and fairness.

Furthermore, the Mercedes-Benz Group also recognises its social responsibilities and the ten principles on which the UN Global Compact (UNGC) is based. As a participant in the UNGC, we commit ourselves, among other things, to respecting key employee rights ranging from the provision of equal opportunities to the right to receive equal pay for equal work.

Remuneration systems

The company remunerates work in accordance with the same principles at all Group companies around the world. Our global Corporate Compensation Policy, which is valid for all groups of employees, establishes the framework conditions and minimum requirements for the design of the remuneration systems. Among other things, it stipulates that the amount of the remuneration is determined on the basis of the requirements of each employee’s tasks (taking into account factors including the person’s knowledge, expertise, responsibilities and decision-making authority, for example) and in some cases their performance. Gender, ethnicity or other personal attributes have no bearing whatsoever on salary decisions. The auditing department conducts random annual internal audits to determine whether selected aspects of the policy are complied with. In our desire to offer salaries and benefits that are customary in the industry and the respective markets, we also give consideration to local market conditions.

The management’s variable remuneration (the company bonus) for Levels 1–3 and for Level 4 executives is based not only on financial targets but also on transformation goals and non-financial targets. The transformation component of the company bonus for 2021 contained CO₂ targets, for example. Additional remuneration-related non-financial targets pertained, among other things, to integrity and diversity.

Our HR departments regularly conduct income review talks for employees and managers. This ensures salary decision-making transparency and compliance with all data protection regulations. The discussions also address employee development potential.

Employees who are not satisfied with their remuneration can speak to their manager. If the employee and the manager fail to resolve the issue, the responsible human resources unit or works council can be brought in.

In companies subject to collective bargaining agreements, such as Mercedes-Benz Group AG, the agreements that have been reached grant employees additional rights, including the right to object to their placement in a specific salary group or to the results of their performance assessment.

Further development of the management culture

The company believes that the interplay of strategy and corporate culture offers a key competitive advantage. We therefore work constantly to improve our management culture and the way we cooperate.

The initiative Leadership 2020, which was launched at the Group in 2016, laid the basis for our future success. Working groups with a diverse composition of employees and managers agreed with the Board of Management on what we understand by good leadership (leadership principles) and which structural changes and tools we need in order to transform the way we work (Game Changers). Since 2020, we have been using these agreements as a basis for Leadership 20X, which has provided an additional impetus to the reorganisation of our corporate structure. In doing so, we are focussing on the empowerment and mutual networking of the employees and managers during the transformation process. In this way, we enable a close interplay between strategy and corporate culture. The units can use our shared basis of the leadership principles to focus on specific areas and develop their own measures.

The resulting framework, within which we want to change the culture at our company, is an integral part of our processes for human resources development and decision-making, as well as our organisational structures and work methods and tools. We intend to continue with this work even though the initiative Leadership 20X concluded in 2021. The leadership principles have been incorporated as general principles of cooperation — People Principles — into our processes for rules and culture and are now considered as a basis for our human resources strategy. To this end, we have established eight leadership principles as a shared guideline for all of the employees of the Mercedes-Benz Group: Pioneering Spirit, Agility, Purpose, Empowerment, Customer Orientation, Co-Creation, Learning and “Driven to Win”. These principles serve as the basis for our cooperation and are intended to help to make the company even faster, more effective and more flexible as well as boosting its innovative potential.

Handling of covid-19

Since the beginning of 2020, the covid-19 pandemic has posed great challenges for governments, society and the economy. Against the background of the company’s established anti-pandemic protection measures, the Group has repeatedly been faced with many unforeseeable developments and has quickly responded to them at the national and international levels. Our employees’ health and safety have top priority. As early as April 2020, the company took extensive precautions to prevent infection and agreed with the General Works Council on a comprehensive package of measures that were then implemented. These measures include hygiene and cleaning standards as well as rules for individual behaviour in the workplace. These rules still apply.

The framework for this is provided by the German government’s stipulations and requirements as well as those of the respective state governments and authorities.

During the reporting year we focussed our company measures on safety and hygiene rules for people who had to continue to work at our facilities, especially employees in the production and logistics areas.

Since the spring of 2020, our employees have been working from home wherever their jobs permit in order to further limit the risk of infection. A company agreement on mobile working has been agreed with the General Works Council since 2009. This agreement was expanded in 2016. Since then, all employees have had the right to work outside the office for up to 100 per cent of their job time if such a format is compatible with the task at hand.

The covid-19 pandemic has also impacted our procurement markets. Among other things, semiconductors were subject to supply bottlenecks worldwide. The automotive industry was affected by this as well. This forced the Mercedes-Benz Group to interrupt production at several locations. We applied for short-time work for our employees wherever it was appropriate and possible.

Measures

Dialogue with employee representative bodies

Corporate management and the employee representative body maintain an ongoing dialogue. The rights of our employees are defined, among other things, in various company(-wide) agreements, which address topics such as mobile working, family leave and home health care.

For example, employees at Mercedes-Benz Group AG (then named Daimler AG), Mercedes-Benz AG and Daimler Brand & IP Management GmbH & Co. KG have been given a job-security guarantee for the period until 2029. In addition to this agreement, corporate management and the employee representative body concluded a company-wide agreement in July 2020 that made it possible to reduce labour costs in the period until the end of December 2021. At that time, Daimler AG was the contracting party. The spin-off and hive-down of the Daimler commercial vehicles business does not affect the validity of the job-security guarantee until 2029. This agreement was concluded in response to the various challenges associated with both the transformation of the automotive industry and the covid-19 pandemic. The company-wide agreement applies among others to all employees at Mercedes-Benz Group AG, Mercedes-Benz AG, Daimler Brand & IP Management GmbH & Co. KG, and Daimler Gastronomie GmbH in Germany. The agreement, which went into effect on 1 October 2020 and remained valid until 31 December 2021, provided for reduced working hours with no wage or salary compensation until the end of September 2021. Due to the positive economic development, the regulation for reduced working hours was terminated ahead of time on 1 April 2021. The Board of Management, the Supervisory Board and senior executives also did their part to help reduce costs.

In addition, the then Daimler AG, Mercedes-Benz AG and Daimler Brand & IP Management GmbH & Co. KG decided to enable all non-exempt employees in Germany to participate in the success of the 2020 financial year and signed a corresponding agreement with the General Works Council. This profit-sharing bonus was paid to the workforce in April 2021 as recognition for its extraordinary performance.

Within the context of the Strategy Dialogue, we have also agreed with the General Works Council on a qualification offensive. This is an important pillar for the successful transformation of our company, especially in the focus fields of digitalisation and electric mobility. This offensive builds on the already existing qualification initiatives and programmes and is being continued in both companies after the spin-off and hive-down of the Daimler commercial vehicle business into the Mercedes-Benz Group and Daimler Trucks.

At our German locations, the local organisations of youth and trainee representatives are addressing the needs of trainees and young employees in particular. The heads of these local organisations form the Gesamtjugend- und Auszubildendenvertretung (GJAV/General Youth and Trainee Representation), which represents the interests of the young generation at our company, contributes ideas and provides momentum in its role as a co-determination body. We accomplish this in a dialogue between the GJAV and the specialist units, particularly HR.

Cooperation with trade unions

The Mercedes-Benz Group acknowledges its employees’ right to form employee representative bodies and conduct collective bargaining in order to regulate working conditions. It also recognises their right to strike in accordance with the applicable laws. We work together intensively with the employee representative bodies and the trade unions so that they can exercise this right. Important partners here include the local works councils, the European Works Council and the World Employee Committee (WEC). Collective bargaining agreements exist for the majority of our employees throughout the Group. Such agreements apply to all employees subject to collective bargaining agreements at Mercedes-Benz Group AG, Mercedes-Benz AG and other units at the Group. In jointly constituted committees, we regularly inform the employee representatives about the economic situation and all of the key changes at the Group. We conclude agreements with the respective employee representative bodies concerning the effects that our decisions may have on the employees. In Germany, comprehensive regulations to this effect are contained in the Works Council Constitution Act. We notify our employees about far-reaching changes early on.

Transparent management and remuneration instruments

The Mercedes-Benz Group (previously named Daimler AG) has long supported its managers and employees in their tasks with standardised management tools. These tools help us to support cooperative working practices and to measure the results of our actions.

With the introduction of the remuneration framework agreement (ERA) in 2007, we also established a one-year standardised leadership process for non-production employees below Level 4 at Mercedes-Benz Group AG, Mercedes-Benz AG and Daimler Brand & IP Management GmbH & Co. KG in Germany. In the initial stage, managers and their employees agree on goals, targets and areas of focus for their work. Expectations regarding work performance and qualification measures can also be defined in this discussion. Further conversations take place in the middle of the year in order to determine how much progress has been made and, if necessary, formulate measures that can help support the employee in question throughout the rest of the year. Progress is then assessed again at the end of the year, as are the employee’s work performance and development potential. All of these aspects are also discussed by the responsible management team. Finally the results are personally discussed with the respective employee by the manager. Agreements are also reached regarding the employee’s further professional development.

A single regulation regarding performance-based remuneration applies to employees at Mercedes-Benz Mobility AG and Mercedes-Benz Bank AG (including their subsidiaries). In accordance with the remuneration group as defined in the supplemental collective bargaining agreement of 1999 for services, a target annual salary is contractually defined; this salary consists of a fixed (80 to 90 per cent) and a variable (10 to 20 per cent) component. Despite the existence of the variable component, the high proportion of the fixed component ensures sufficient financial planning security. The collective agreement also regulates other remuneration components. A performance assessment/target achievement process (PA/TA process) is conducted each year to evaluate the employee’s performance and target achievement. Employees below Level 3 define individual goals and targets with their respective managers at the beginning of each year. During an interim review discussion and a final discussion at the end of the year, managers and employees then determine the extent to which the goals and targets have been achieved. This procedure promotes transparent communication between the manager and employees in a manner that is appropriate for the subject. The PA/TA process helps managers and employees formulate reasonable goals and targets that both can accept. It also increases transparency and thus acceptance of the remuneration system.

The remuneration guidelines and tables for employees paid according to collective bargaining wage tariffs, for example at Mercedes-Benz Group AG, can be viewed on the intranet. Employees of Mercedes-Benz Group AG and Mercedes-Benz AG can find out online about the composition and amount of their remuneration — including in comparison to comparable groups.

Employees at Mercedes-Benz Group AG and its subsidiaries who are subject to a collective bargaining agreement are usually also offered voluntary benefits that are agreed upon with the respective employee representative bodies. These benefits include employer-funded contributions to retirement benefits and options for the employee-funded retirement benefits system. In many cases, employees who are subject to collective bargaining agreements can also participate in profit-sharing arrangements at their respective company. In addition, our employees can avail themselves of the services of a wide variety of sports facilities and fitness centres — as well as social amenities ranging from kindergartens to counselling services.

New management culture

The Mercedes-Benz Group is undergoing a transformation that applies to products as well as to the organisation and the employees. In addition to a technical and a strategic change, a cultural change is required to ensure that this transformation is successful over the long term. The leadership requirements have changed in particular. That’s why our leadership principles are key elements in our HR processes. We take them into account in order to enable managers to perform their important roles in the company’s cultural and strategic transformation. Our leadership principles also serve as the basis for our global network, whose members should act as role models that promote the changes in their respective areas and put them into practice. This network consists of experts and volunteers, some of whom were previously active in the Leadership 2020 initiative, and who are now helping their colleagues and managers tackle the current change processes. To do this, they are developing specific formats and initiatives for the various corporate units in order to support the Group’s realignment and jointly promote its cultural and strategic transformation.

In addition, we have created hybrid teams incorporating extensive cross-sectional expertise. These teams support managers at the Mercedes-Benz Group as they manage transformation processes by means of repeated bursts of momentum and blueprints for successful team discussions. One focus is on communicating leadership skills in hybrid working environments. Among other things, the focus is on the use of digital tools and the topic of work-life balance. Another focus is on peer-to-peer communication within small groups. Since the start of the covid-19 pandemic, we have increasingly created virtual dialogue formats for managers to address the strategic alignment. This lets the participants directly communicate with Board of Management members and find guidance for their challenges as managers. The formats are targeted at managers at different levels and are sometimes planned over the long term or created on the spot.

Moreover, we have created a human resources development tool for our managers. This online tool is available to all executives and Level 4 management staff. Among other things, the tool includes a 360° feedback process, in which supervisors, employees and selected colleagues provide the manager with feedback. The assessment is based on the leadership principles and should help managers refine their leadership behaviour and improve their performance.

This personnel development tool also contains other features such as a controlling tool for defining and monitoring work priorities. In addition, it helps managers and employees define, modify and monitor specific contributions and metrics associated with the implementation of unit strategies.

The new hybrid world of work poses different challenges for our leadership culture. We offer our managers in-class and virtual training courses about the opportunities and framework conditions of leadership in order to ensure a type of leadership that is in tune with the times.

Working-time arrangements

The experiences of Mercedes-Benz Group AG during the pandemic have shown that increasing digitalisation and hybrid working are having a positive effect on the work-life balance. This is enabling people to arrange their working hours more flexibly — under consideration of their specific needs as well. This in turn is helping to enhance the performance and satisfaction of the employees at Mercedes-Benz Group AG. For this reason, we support managers and employees with a wide range of flexible working options that make it easier for them to balance their work with their personal lives in the most effective manner possible.

In team meetings and surveys, our employees have also informed us that direct communication with one another is important for their well-being as well as for good work results. We want to combine the benefits of both working models — at the workplace and mobile work — and are therefore encouraging hybrid working. This means that different forms of work are possible — from attendance exclusively at the workplace to 100 per cent mobile work. The company does not impose any specific requirements in this respect, but instead provides the corresponding framework conditions in the form of a comprehensive company-wide agreement on mobile work that has been in force since 2016. Moreover, we hold continuous consultations with the works council on this matter.

The Mercedes-Benz Group also offers a variety of part-time working arrangements — for example, employees can reduce their working hours and spread their daily, weekly or monthly hours over a period of one to five days or in blocked part-time work — a combination of full-time work and leave time.

We also promote job sharing for employees at all levels who wish to share a task or position while working part-time. This is especially helpful for employees with challenging home situations who wish to balance their professional and private lives more effectively and continue to develop professionally by sharing a job. We are convinced that a tandem job share with two people uniting their mixture of experience, strengths and networks brings better results with regard to complex professional and/or management tasks. Three internal part-time work communities were set up in 2015 in order to facilitate the search for a tandem partner. These communities bring together potential tandem partners, no matter whether they are in administration and production units or in leadership positions. We also organise events that offer those interested in job sharing the opportunity to get to know each other and exchange information and ideas. There were 199 tandem job shares at the management level of Mercedes-Benz Group in the reporting year.

Employees can also make arrangements with the company to take a sabbatical lasting between three months and a year, with a reinstatement guarantee.

Employees who wish to obtain additional qualifications — including pursuing a course of study at a university — can also make arrangements with the company to take a three- to five-year leave with guaranteed reinstatement.

Balancing professional and private life

Mercedes-Benz Group AG offers various types of working-time arrangements and other options to support employees who have children or relatives they need to care for. For example, we provide more than 540 slots for our employees’ children at the company-run kindergartens in Germany. We can also arrange over 170 additional childcare opportunities at various locations in Germany. Moreover, we cooperate with various counselling centres.

The Mercedes-Benz Group also implements measures that make it easier for its employees in Germany to get back to work after taking parental or family leave. For example, our employees can stay abreast of events at the Group during parental and family leave via the intranet and also access the internal job exchanges. We also support mothers and fathers by using checklists during the transition to parental leave and by helping them maintain contact. In addition, there are regular information events and experience-sharing opportunities for expectant parents and employees on parental leave. These events were held exclusively online in 2021 due to the covid-19 pandemic.

Specially trained personnel are also available in the HR Service Center to answer questions related to parental and family leave for employees at Mercedes-Benz Group AG, Mercedes-Benz AG, the Mercedes-Benz Bank and Mercedes-Benz Mobility AG. In 2021, 4,017 employees at Mercedes-Benz Group AG, Mercedes-Benz AG, Mercedes-Benz Mobility AG and Mercedes-Benz Bank AG were on parental leave; 72.7 per cent of them were men.

Furthermore, the Mercedes-Benz Group expanded its cooperation with an external counselling service for employees who care for relatives in Germany. Here, employees can obtain advice about caregiving by phone or in person — 24/7 and 365 days a year. The external care provider also offers consultation at employees’ homes. Employees made particularly frequent use of this service during the reporting year.

Our company health insurance fund regularly offers consultation on this topic at its locations in Germany. Due to the covid-19 pandemic, this consultation was provided in the form of private online sessions or house calls during the reporting period.

We have held several online events as well on issues related to authorising power of attorney, financing and other care topics that are important today. These events were very well received by our employees. Employees who would like to take care of a family member or relative can leave the company for a period of time beyond that defined by legal provisions — for up to four years with guaranteed reinstatement. Alternatively, they can reduce their working hours for the same period of time.

Effectiveness and results

The Group-wide employee survey is a key indicator of where we currently stand from the point of view of our employees and what we can do to improve the company in the future. We generally carry out the survey at least every two years. However, the covid-19 pandemic caused the 2020 employee survey to be pushed back to 2021 and to be carried out during the reporting year. Mercedes-Benz Mobility AG and Mercedes-Benz Bank AG and their subsidiaries also conduct an employee survey every two years in line with the guidelines defined by the Great Place to Work Institute. These surveys ensure that the companies receive extensive feedback from their employees, which helps the companies to continuously improve their management and corporate culture and further develop their work culture within the framework of the transformation process.

We also use our annual Sustainability Dialogue to obtain feedback from our stakeholders in various areas, such as business, associations and the scientific community. These dialogue events feature various working groups in which we address current and future issues related to sustainability. The 14th Sustainability Dialogue was held in mid-November 2021. Here, the “Employees & Integrity” working group focussed on how Artificial Intelligence can help people make sustainable and responsible decisions. The results of the Sustainability Dialogue, which was held digitally during the reporting year, are incorporated into other activities related to integrity and human resources.

Results

The covid-19 pandemic and the transformation of the economy have created challenging tasks for many companies in 2021 as well. They have also revealed the importance of a constructive partnership between the workforce and the management as well as between the company and the employee representative bodies, because this is the only way that viable solutions can be found. For example, during the reporting year the company together with the employee representative body once again managed to reach long-term agreements and anchor them in company agreements. Among other things, we agreed on a qualification offensive and on joint efforts to address the tense economic situation associated with the pandemic.

As a member of the UN Global Compact, the company has committed itself to the ten principles of the Compact. As a result, we commit ourselves, among other things, to the right to equal pay for equal work. The framework for this is provided by our global Corporate Compensation Policy. No violations of this policy were reported in 2021.

During the reporting period, an external party honoured us for our commitment to leadership measures. Specifically, the international EFMD Excellence in Practice Award 2021 was presented to us in Gold for our comprehensive manager qualification programme Leading Transformation. This award, presented by the European Foundation for Management Development (EFMD), recognises outstanding achievements in the domains of Leadership, Professional, Talent and Organisational Development. Moreover, the team that bears central responsibility for manager development at the company came in second for the St. Gallen Leadership Award 2021 with its Leading Transformation initiative.

The sustained impact of the Leading Transformation initiative, which was launched in 2020, was also apparent during the reporting year. The specialist units continue to request the colleagues from the moderator and support network for their events. The content and formats are used for unit-specific events. The survey of the employees of the Mercedes-Benz Group in 2021 showed that 74 per cent¹ of them are proud to work for the Mercedes-Benz Group and that they are satisfied or very satisfied with the company as an employer. The next Group-wide employee survey is scheduled to be held for the Mercedes Benz Group in 2023.

Our employees’ loyalty to the company is also expressed by the high average amount of time they have worked for the Group. During the reporting year, it amounted to 17 years. In Germany, employees had worked for the company for an average of 20 years at the end of 2021. Employees outside Germany had worked for the Group for an average of ten years. In 2021, our labour turnover rate amounted to 8.7 per cent worldwide.

1 Approximate value, as the structure at the time of the survey did not correspond 100% with the structure at the end of the year.