GM Introduces New Rating System for Employee Performance
General Motors is updating performance evaluations of salaried employees and the way this impacts compensation. The automaker will now offer bonuses of up to 150 percent for the top 5 percent of its staff. However, employees deemed to be under performing will be placed under additional scrutiny to step it up or take a hike.
The industry has been considering novel approaches to employee compensation and scheduling lately, with some brands even examining the benefits of shorter weeks and longer hours. But most just seem to be looking, with the only real changes coming after last year’s UAW strike. Detroit automakers offered up sizable pay raises and the restoration of formerly eliminated benefits, encouraging other brands to follow suit.
Overall employment within the industry saw a monumental decline from 2000-2009, with the layoffs being at their steepest toward the end of the period. While the next decade likewise saw rolling layoffs, hiring managed to outpace losses and brought the overall employment number back up. However, it did not manage to reach a point where the United States saw the domestic employment figures seen prior to 2007.
The 2020 pandemic likewise resulted in many people going on extended leaves never to return. Despite many employees returning to work since then, the industry is still running rather lean and that appears to be the way automakers want it. Many brands are intentionally running lean and hoping to utilize a part-time workforce whenever possible to keep down overhead.
Reuters has come across an internal memo from General Motors stipulating that the company will begin rewarding the top 5 percent of employees with 150-percent bonuses. By offering more potential money than ever before, the business believes it can attract and retain the talent needed to “achieve its goals in the cut-throat automotive transformation to electric vehicles” and likewise put some added pressure on under-performing employees.
"To ensure GM has the talent needed to achieve our ambitious goals, a more intentional process is required that sets clear expectations for performance and holds people accountable," states the document.
From Reuters:
Legacy automakers like GM and Ford Motor Co. have been tweaking their performance evaluation systems for U.S. salaried employees to better compete with the stock-heavy pay packages of EV rivals like Tesla Inc. and Rivian Automotive Inc.
GM's new performance ranking system evaluates employees on a five-scale system, from "significantly exceeds expectations" to "does not meet expectations." Employee bonuses are tied to their ranking. The company has about 53,000 salaried employees in the U.S.
“GM is proud to have a culture where we foster and reward high performance, which will help us attract and retain top talent in a competitive industry environment. That includes everything from ensuring employees know what is expected of them, providing feedback so they can develop, and rewarding them for their performance," a GM spokesperson said.
GM employees will be evaluated on the updated rankings during their year-end performance review, the spokesperson said.
One item that the UAW harped upon during last year’s contract negotiations was the fact that CEO compensation had ballooned exponentially while the wages of regular employees languished. Union leaders wanted a fairer system and automakers have responded by trying to tie compensation to the overall performance of both the company and individual employee — putting more money on the table while simultaneously trying to get more labor out of the workforce.
"We've learned that the right talent is not sufficient. Over the last two years, it's been imperative that we go to a right performance management system. It's a fundamental change in the way we're running the company," Ford CEO Jim Farley stated earlier in the year.
Changes made by GM will take the old three-tier employee ranking system and add two more. Before, staff members were either partially meeting, achieving, or exceeding expectations. Now they can also be doing even better or even worse than that. Doing better puts one on track for large bonuses, whereas doing worse could result in punitive action being taken — including being fired.
The automaker expects roughly 70 percent of employees to fall in the middle category, with only 5 percent slotting into the top or bottom brackets.
[Image: General Motors]
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Consumer advocate tracking industry trends and regulations. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied, he pivoted to writing about cars. Since then, he has become an ardent supporter of the right-to-repair movement, been interviewed about the automotive sector by national broadcasts, participated in a few amateur rallying events, and driven more rental cars than anyone ever should. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and learned to drive by twelve. A contrarian, Matt claims to prefer understeer and motorcycles.
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In 33 year of my professional career, I've seen employee performance programs come and go. The most egregious was a Forced Ranking where someone in your group ( no matter how big or small of a group) was required to have a bad ranking. Senior leadership saw this as a way to force out low performers and bring in new talent. Of course, the program didn't apply to those in the C-Suite. This was prior to class action and sex discrimination law suits. However, there was such an uproar, that the program was dropped in the subsequent year.
Others programs bread mediocracy because no one wanted to be at the bottom, nor at the top for that made you a threat to your bosses' position. My forte was to do the projects that no one else wanted to do or were capable of doing. When it came time for ranking, the response would be, "he does the s**t no one else wants to do, we need to keep him!"🚗🚗🚗
"The 2020 pandemic likewise resulted in many people going on extended leaves never to return." - not the pandemic but mismanagement of pandemic.
On another track - do these people listen to their next president? This is about same outcome, the equity. One performs good, another performs bad but the pay must be the same. People must catch up. GM is in trouble with White House as I understand it.
Oh! I can edit my comment. Progress.