GM culture could be tested in buyouts
As General Motors Co. navigates buyouts and possible layoffs amid good times and strong profit margins, experts say the Detroit automaker will have to prioritize company morale.
GM offered six months pay and six months health care beginning in February to North American salaried employees and global executives with 12 or more years of experience. The deadline to accept the offer was Monday, but company officials refuse to characterize the number of takers because individual department managers still must assess whether prospective buyouts will help them meet cost-cutting targets — or not.
"This is a really tough challenge and there are no easy answers," said Harley Shaiken, a professor specializing in labor issues at the University of California at Berkeley. "The value of morale in a company that is increasingly a player in a high-tech universe is critical. This isn't simply a money-saving decision, it’s about what’s GM's culture going forward."
The buyout GM is offering is already the company's maximum severance package, and it's likely a similar or the same package that would be offered in the event of layoffs, according to two sources familiar with the situation. Employees offered layoffs also likely would qualify to collect unemployment compensation.
Employees have to be with the company for at least 12 years to qualify for the maximum severance. And a layoff program — which GM has said it will have to consider if the current buyout program doesn't reach an undisclosed cost-saving target — could be more wide-reaching than the targeted buyouts, one of the sources said, and offers would likely be based on years served with the company.
"In a way there is no standard (for buyouts). It all depends on the context and the alternatives the employee believes she or he has," Shaiken said. "But in a good economy, six months pay is not a lot."
At the same time, these buyouts are offered at a time when unemployment is at a 49-year low. That bodes well for GM employees who were already thinking about making a career change.
"When the unemployment rate is really low like it is now, it makes sense for companies who can afford it to offer buyout programs," said Andy Challenger, vice president of Challenger, Gray and Christmas, a Chicago-based employment firm. "Inevitably, these people are getting headhunted, finding their own jobs or even thinking about starting their own business."
And GM has so far taken the right steps to communicate to its staff why these actions are necessary, Shaiken said.
"People understand economic realities even when they are painful," he said, pointing out that GM's buyout offer makes the most sense for workers already close to retirement. "The best thing a company can do is be transparent about these decisions and why they are making them."
Given GM's commitments to an autonomous, emissions-free future, Shaiken says the company's efforts to overhaul the workforce shouldn't come as too much of a surprise to the people impacted.
"GM is publicly embracing the new realities they see," he said. "It's clear the company is seeking to cut in areas they are strong, but also where right now the writing is on the wall."
The Detroit automaker has said its future is driverless and electric, and it has backed up that claim with big bets in those areas. GM is planning to spend $1 billion this year on its GM Cruise LLC operation, the company's self-driving vehicle development arm. And $500 million of that will be spent largely on hiring in the fourth quarter, CEO Mary Barra told investors after the company released its third-quarter earnings.
"We must acknowledge that there is still much more to do in transforming General Motors into the automotive company of the future," Barra wrote in a memo sent to employees on Halloween. "We are accountable for how we run our business, both in the day-to-day and in anticipating the road ahead. Today, our structural costs are not aligned with the market realities nor the transformational priorities ahead."