GM Offers Employee Buyouts

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To cut costs, General Motors is offering voluntary severance packages to 18,000 employees. The company is taking this path before mandatory layoffs, which could happen if not enough people leave voluntarily.

GM Cruise.jpg

To receive an offer, employees must have been with GM for at least 12 years and be on salary (not an hourly wage), which means more senior-level employees will be leaving. Typically, these employees are in managerial positions and are paid more highly, so the move means more savings.

The company is focusing on its most profitable regions and already cut salaried staff from about 90,000 to 77,000 after selling off its European divisions. At the same time, GM is staffing up technology functions to compete in the self-driving car market. Through its Cruise division, GM is planning to introduce a ride-sharing, autonomous vehicle in 2019.

Office image source. Cruise image source.

Discussion:

  • Why would a company choose a voluntary severance model instead of mandatory layoffs?

  • What factors should employees consider before deciding to take a package?