On March 9, Mary Barra, the CEO of General Motors, announced to her staff that further job reductions would occur, but this time the cuts would be voluntary. The announcement of this voluntary separation program came approximately a week after GM swiftly cut hundreds of jobs to streamline expenses and assemble a high-performing team to facilitate the company’s evolution into an entirely electric car company.
5,000 General Motors employees have elected to take the buyout offers, said CFO Paul Jacobson during a BofA Securities presentation on April 4. Jacobson further stated that the company anticipates incurring expenses of $1 billion over the quarter due to the program. The reduction in headcount is part of GM’s strategy to lower structural costs by $2 billion by the end of 2024 and help the organization avoid broader layoffs.
“It’s important that we were willing to pay for the voluntary program to incent people to go who maybe were closer to retirement or had just decided they wanted a change in career or lifestyle, at the same time to do everything we can to try to avoid involuntaries or layoffs,” he said. “And I think we’re in a position where we’re going to be able to do that.”
Previously, GM had not revealed the specific goals for its voluntary severance package. The buyout program was designed for salaried employees who have worked at GM for a minimum of five years, and they will be entitled to receive one month of pay for each year of service, up to a maximum of 12 months.