For automotive components and system supplier Magna International, innovation is built into a ‘corporate constitution’ that outlines the company’s core principles: one of which is to foster inventive...

For automotive components and system supplier Magna International, innovation is built into a ‘corporate constitution’ that outlines the company’s core principles: one of which is to foster inventive thinking on the part of employees. ‘Incremental innovation requires the right environment 3 one built on fairness, security, safety and proper communications’, said Belinda Stronach, president and CEO of the $11 billion company. According to Stonach, a comprehensive incentive programme helps motivate its 72,000 employees to be creative. ‘We slice up the pie of profits before it’s baked’, she said. Six per cent of profits are distributed to Magna’s management team, all of whom 3 Stronach included 3 receive low base salaries. ‘Employees receive 10 per cent of profits, of which a portion is in shares and a portion is in cash’, she notes. ‘We’re all motivated to generate profit because we receive a percentage, and we’re also required to hold shares so that we look out for the long-term interests of the company.’ Aware that profit incentives alone won’t deliver innovation, Magna also encourages creative thinking and idea sharing by promoting open communications and a sense of security among employees. To facilitate dialogue and collect ideas, for example, each division holds monthly meetings between employees and the general manager. ‘We recently created an employee advocate position 3 an individual jointly selected by the employees and by management who cannot be fired by management, only by an employee ballot vote 3 to foster communications between employees and management’, Stronach said. ‘The mandate is to facilitate communications, keep employees happy and bring forward new ideas.’ ‘Without safeguards, employees will not have the confidence or the motivation to come forward with new ideas’, she added. ‘We found that by making employees stakeholders and providing the right entrepreneurial environment, incremental innovation is a by-product.’