General Motors CEO, Mary Barra, informed staff on March 9 that additional job cuts will be made, but this time it will be voluntary. The announcement came about a week after GM abruptly cut several hundred jobs to help it reduce costs and build a top-tier workforce to help it transition to an all-electric car company.
GM will provide a voluntary separation program to all U.S. salaried employees with five or more years of service and to all worldwide leaders with two or more years of employment with the carmaker. According to Barra, the goal is to “accelerate attrition,” and she claimed that by taking this action now, “the possibility of future involuntary acts” will be avoided.
Whereas, the package must be picked up by the staff by March 24. The email stated that GM International will continue with “limited business rationalization and performance monitoring as required” and that GM Korea will give a voluntary separation package to be disclosed locally. According to the memo, personnel in Canada, Europe, Mexico, and China are not eligible for the program.
The memo’s contents were verified by GM spokesperson David Barnas, who added that it was “part of our strategy to accelerate attrition and achieve $2 billion in cost reductions by the end of 2024.” However, he did not specify a target quantity for the number of voluntary separations GM expects to achieve.
Following such reductions, some white-collar staff members claimed they felt deceived by senior executives because GM CFO Paul Jacobson had assured Wall Street in January that there would be no layoffs at the company even as he revealed cost savings were on the way. GM justifies the action by claiming that the separations were performance-based rather than layoffs.
In addition to reducing vehicle complexity and increasing the usage of shared technologies between its internal combustion engine and future EV programs, GM intends to speed fixed cost reduction initiatives:
- GM is concentrating its investment in growth projects to hasten near-term rewards.
- By attrition, GM is reducing its salaried workforce, mostly in the United States.
- All U.S. salaried employees with at least five years of service are entitled to COBRA health insurance benefits and one month of salary for every year of service up to a total of twelve months. In addition to having access to outplacement services, they will get a performance incentive that is prorated.