1. Based on the information given, summarize the method(s) BMW intends to use for determining incentive pay. Are these rewards for individual, group, and/or company performance?
2. Explain BMW’s claim that under the new bonus program, “upper-level management could potentially lose more money than their lower-level counterparts for bad performance.” Does this sound like a system that would support BMW’s business strategy? Why or why not?
3. BMW says that one motivation for the new bonus method is to establish “sustainable personnel politics” in which employees have a positive relationship with the company. Describe how you think employees would rate the fairness of tying executive bonuses to their bonuses. Describe how you think executives would rate the plan’s fairness. Why is fairness an important quality of incentive pay?

BMW became the first major blue-chip German company to link the bonuses of its top managers to those of its assembly line workers, amid growing global criticism of executive compensation. The move sends a strong message to other firms also examining their compensation practices, as the world’s largest banks in particular have come under fire from politicians, shareholders and the public over excessive bonuses during one of the worst economic crises the world has seen.