Motorola - America in Israel

How many workers are employed at the company in Israel, and what does their professional profile look like?
Yehuda Porat: Motorola Israeli has some 3,500 employees. About 800 of them work at the subsidiary, Mirs, which generally operates as an independent entity. About half of Motorola Israeli workers are employed at the development center in Tel Aviv, numbering some 1,300 workers. Many of these workers are engineers and programming experts. The remaining workers are employed at the factory in Arab and the service network at service stations scattered around the country (about 600 workers).

Why do you define Mirs as part of Motorola Israel? Is Motorola Israel not just the owner, but also involved in its management?
Motorola Israel executives serve on Mirs’ executive council. There is also joint activity between the two companies - the subsidiary and the parent company - such as benefit programs, participation in the company newsletter, etc. But from the customer’s perspective Mirs is positioned as a separate company.

Unlike other Israel companies that are part of global companies, your organizational culture is more American. Do you agree with that statement?
Although Motorola is an American company in essence, but it is gradually turning into a global company. The difference is that a global company allows greater freedom of activity and localization of the branches in various countries at the expense of the American characteristics.

For example, at truly global companies (whether management is located in the US or anywhere else on the globe), quintessential headquarter functions such as human resources or finance are directly subject to the local manager and receive professional guidance alone from human resources or senior finance officers at company headquarters.

On the other hand, at an American company like Motorola these functions are still directly subject to the finance/human resources offices abroad. This transition process to global work patterns was somewhat halted following the Enron affair and the Sarbanes- Oxley Act in matters related to proper reporting and finance reports. Therefore the company’s international management went back to requiring subsidiaries to follow the kind of work patterns practiced in the US. But this is a temporary halt. The process of transforming into a global company seems unavoidable.

What impact does this have on the company’s day-to-day operations?
Motorola Israel’s ties to its parent company do not create special complexities in the company’s day-to-day operations in Israel. In any case most activity is done with coordination and consent. But the influence of the company’s global management systems can definitely be felt on the Israeli branch. As big as it may be, it’s not entirely independent.

Take human resources, for example. The performance assessment apparatuses, the policy of contributing to the community and compensation patterns are all based on principles formulated at the parent company using the sophisticated systems it developed. Also, although it’s not totally independent, Motorola Israel is free to act [according to its own decision-making processes] and is, to a large degree, autonomous.

Motorola Israel is a large, veteran company in a young and volatile market in which the vast majority of companies were founded in the 1990s or later. How does this influence Motorola Israel’s conduct in the employment market?
We constantly have to compete with young, dynamic and small companies to win the hearts of good workers. Unlike a small company, which can respond quickly to changes, a large company cannot react in the same way. For example, a small company can offer a Motorola employee higher pay or an enticing job title like Vice President of Technology to persuade him to join their ranks.

But Motorola cannot do so because this kind of change in pay or rank cannot be severed from the work environment in which that employee operates. Such an offer could influence the salary and promotion policy for many other workers at the company. That’s the nature of a large company.

Do you see this as a limitation?
From a certain standpoint that may be true, because a large company cannot function any other way. But there are also advantages to the large size, such as the possibility to work on large, sophisticated projects, including global projects that place the workers at the forefront of world technology.

Likewise we make efforts to offset the relative lack of flexibility through other means, such as the attempt to create a sort of mini-startup within the units – a work environment that places emphasis on staff cohesiveness. Also prominent is the latent promise of working in a company like this. It has real advantages as well, such as a wide horizon of professional development along with job security and stability.  

During the two years of rapid expansion in high-tech before the bubble burst in 2002, you suffered the loss of many employees who received captivating offers from startups.
All of the large, veteran companies suffered from it. We were abandoned by people who went to work at other companies that had sold them a dream. Sometimes it was very tempting. One of our development engineers who worked as part of a team on a project that was supposed to end two years later was suddenly offered a job as Vice President of a startup and an opportunity to work on the future development of a product that would conquer the world.

People were tempted and left their jobs. But after the bubble burst many of them wanted to return to the companies they had left. Feeling betrayed, a good number of employers refused to take them back. We didn’t do that. We embraced them when they asked to return – even employees who had left us in the middle of a project.

What is the rationale behind compensation at the company?
First and foremost Motorola Israel wants to provide its workers fair pay, above the average in the Israeli job market. The rationale: on one hand this salary level makes it possible to recruit very good employees, which is very important to the company. On the other hand maintaining a reasonable salary level makes it possible not to raise labor costs so high that the parent company decides it’s not worthwhile to send development projects to Israel, but prefers other Motorola subsidiaries around the world.

Are these your competitors - Motorola’s subsidiaries in other parts of the world?
Yes. Motorola Israel’s central activity is development. When the parent company decides to develop something new they have to decide which subsidiary is best for the job. Thus Motorola Israel is essentially competing with the company’s other development setups around the world.

How is the employee’s salary level set?
Motorola Israel has eight levels of management - from production worker to vice president/division manager. Every level and every job has a salary range within which the salary is set according to the employee’s work profile. For example, in the field of engineering much weight is given to the engineer’s experience. Once a year the company holds salary meetings. Although the salary is also set according to the worker’s performance, the salary level is assessed in comparison with similar jobs and professions in the market.

So even if the worker’s performance is satisfactory but his current salary is above the market average (maybe because the previous year he received a generous raise) he won’t necessarily receive another raise.

That means even if he does excellent work he won’t get a raise. Doesn’t that cause disappointment? Isn’t it liable to harm motivation?
Even if he anticipates a raise he won’t necessarily be disappointed because the raise in salary is just one component of the compensation package. His wages might increase because of another compensation component, such as the annual bonus.

What makes one eligible for an annual bonus?
First of all, it’s important to note every Motorola Israel employee is entitled to a bonus. The key to receiving it lies in the performance level reflected in his performance assessment.
The decision to grant a bonus depends on the parent company’s performance. Generally these performances permit giving out bonuses. Still, there have been less successful years in which funding wasn’t earmarked for this purpose. During those years Motorola Israel management allocated its own funding for this purpose, so company employees have received bonuses every year.

How do you allocate the amount of the bonus for every employee?
The workers’ performance assessment data is stored on the parent company’s computers. Based on an analysis of the data a sum is allotted for every subsidiary in the world, such as Motorola Israel. The monetary allotments for each organizational unit are executed in a similar way. It trickles down to the sub-units until it reaches the lowest unit level, where a bonus is allotted for every worker.

Are the bonuses determined from above, or is there an assessment by the various unit managers, too?
The decision is made by company management; every managers has a certain amount of flexibility in the monetary allotment of the bonuses in the units under his supervision. But because every decision has ramifications for the company’s overall system, the managerial decisions on bonus allotments at various levels are evaluated in a collective manner by company management before final approval is granted for their distribution.

What is the policy on offering stock options?
The company grants options to managers above the middle management level. But following the tax changes in this area [which have made this compensation tool less worthwhile - S.S.] it appears their use will diminish. Still, hundreds of employees at the company receive options.

Which employees are entitled to a company car?
Everyone who holds a managerial post from department manager and up, and every manager and programmer. All of our programmers have college degrees and many of them have degrees in computer sciences and their rank is equivalent to engineers.
Company cars are also given to anyone who needs a car for his work - primarily sales and service people. The terms of usage for these workers vary somewhat from that of the managers. It comes out that there are some 1,800 Motorola Israel cars on the roads in Israel.



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