GM is one of many car companies to start transitioning into EV manufacturing. This endeavor has led to the company needing to reduce its staff to cut costs. General Motors is offering its employees cash in exchange for leaving to avoid layoffs later on.
Getting Paid to Leave
Employees were notified of the offer through an email sent by General Motors CEO Mary Barra. It states that the company shared its plans to reduce $2 billion in structural costs for the next two years in an earnings call.
The car company then initiated what they called the "Voluntary Separation Program" or VSP, which offers the majority of its US team an "attractive compensation" as well as a healthcare package to leave of their own volition.
The company states that the program is a way for the employees to explore a new industry, make a career change, further their personal business venture, or even retire early, according to a letter shared by news reporter Dylan Dulberg on Twitter.
To qualify for the program, an employee must be based in the US between levels five to nine, and have five years of service under their belt by June 30th, 2023. Although, global executives which are directors or in a higher positions may qualify with just two years of service.
General Motors based in Korea will also participate in the Voluntary Separation Program but will offer a different package that will be communicated locally. Employees from Canada, Mexico, Europe, and China are not included in the offer.
If an employee qualifies, they will be receiving an email from the company's HR with details about the package for compensation. The VSP offer will be available until March 24th, 2023 to provide employees with enough time to make a decision.
Why is GM Cutting Costs?
For one, General Motors plans to shift to manufacturing electric vehicles, which is not something that will cost the company a huge sum. They also aim to bring down the structured cost to improve the company's profitability and further compete in the vehicle market.
They are also reducing vehicle complexity expand the use of subsystems between combustion engines and future EV programs. GM has also been affected by issues brought on by the pandemic, as well as the semiconductor and supply chain shortages.
This has been an issue for other tech companies as well, seeing that the harsh macroeconomic environment has caused the layoff of countless employees. Despite that GM announced that it had a record income of $14.5 billion for 2022.
The VSP might cost the company $1.5 billion on compensation alone, and another $300 million in pre-tax, non-cash pension curtailment charges, according to The Verge. A similar tactic has also been used by GM before.
Back in 2018-2019, General Motors also initiated a separation compensation program and laid off thousands of factory workers and office employees. They also close many of their plants and stopped manufacturing the Chevy Volt.
