GM Demands More From White Collar Workers Or Face The Axe

GM’s Push for Increased Productivity

• 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.

Changes in GM’s Work Environment

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 clear: to step up and be more productive. Those who can’t
meet the new standards will be asked to leave.

Cost-Cutting Measures

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.

Expert Opinions

“The car companies have to reshape their cost structures to face lower margins per vehicle sold,” said Erik
Gordon, a professor at the Ross School of Business at the University of Michigan. “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.”

Potential Benefits

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.

Competing with Tesla

This year, GM is 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.

Conclusion

“Being a union shop going up against some non-union players like Tesla, it’s a challenge,” said Dan Ives, managing
director of Wedbush Securities. “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.”