- Experts say that GM wants its white-collar workers to produce at a higher level.
- To accomplish that, it’s adjusted several aspects of white-collar work at the company.
- While not a direct cost-cutting move it could affect the bottom line in a positive way.
During this year, General Motors has revised the way it determines bonuses, how it evaluates salaried employees, how large and where its global headquarters is, and revoked work-from-home privileges for some workers. According to industry experts, the message is a clear one: to step up and be more productive. Those who can’t meet the new standards will be asked to leave.
GM already bought out some 5,000 jobs last year and then announced last month that it would cut a further 1,000 to 1,500 jobs. Of those more recent cuts, some 600 jobs were evidently located in Detroit. These moves all contribute to GM’s goal of cutting $2 billion worth of costs by the end of this year.
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“The car companies have to reshape their cost structures to face lower margins per vehicle sold,” Erik Gordon, a professor at the Ross School of Business at the University of Michigan, told Freep. “They have little control over the cost of materials or blue-collar labor, so they will get tough on white-collar expenses. They can use their review and bonus systems to encourage their least productive workers to leave without doing expensive mass firing.”
Another person familiar with the matter within GM said that the moves aren’t directly related to cutting costs but that could be a secondary benefit. A slimmed white-collar lineup could in theory cost less while producing better products. Whether or not that’s the case is yet to be seen though. GM is currently in the midst of a huge shift toward electrification while much of the EV market cools.
This year, it’s beginning to use the success of several programs to determine white-collar bonuses. It’s also moving to a much smaller building and changing the way it evaluates employees there. All of these moves allow it to potentially compete with brands like Tesla which have an unquestionably more exacting work environment. Of course, in Tesla’s case, it doesn’t use unionized employees, something which could change in the future.
“Being a union shop going up against some non-union players like Tesla, it’s a challenge,” Dan Ives, managing director of Wedbush Securities said. “But I think GM is a better company to work for today than it was two years ago, five years ago or 10 years ago. So those who stay will be rewarded. But GM has to rip the Band-Aid off and make tough decisions to get to where they’re going.”