A TTAC Tipster writes:
According to one of my GM buddies, the May 1 pay cut is as follows: 10% for unclassified (executives); 7% for Levels 8 and 9 (managers, technical fellows, other senior folks); 3% for Level 7 and below. Levels 8 and 9 and unclassified enjoy the use of company vehicles. Last year, a lot of the Level 8s were forced to take demotions to Level 7: no pay cut, but they had to give up their company car, although they got some financial help in getting a new GM car.
All pay cuts are “temporary” and will be under reconsideration in December.
Last year, there was a merit increase effective June 2008. About 2–3% on average, as I recall. (The previous one had been in October 2006, and I think the one before that was 2004.) So Level 7s and below will see these increases negated. The Level 8s and above are seeing a net salary reduction of about 4%, compared to what they were making before the merit increase.
My old colleague at GM is a product development engineer and is performing a highly-visible and essential function, so he probably won’t be cut this time. He said that they might actually be hiring in that group.
The severance benefits from last year are apparently still in effect (1 month pay and benefits for every year of service, up to 6 months maximum), although he thinks that on March 1 this will be revised.
He says this move needs to be done, as well as some others, including the cutting of underperforming brands. He simply wishes to survive at this point, because for the folks getting laid off it will be very difficult to find a new job with comparable pay and benefits.
All true, except severance is 1/2 month for every year of service, not 1 month.
There was a hint that there would be many more demotions as well.
And the 14% headcount number won’t be just old folks and low performers.
And no one believes the pay cuts are temporary.
I agree with mikey610, Pay cuts are never temporary, they are permanent!
I would expect that some of the laid off workers in the White Collar field would be Designers and Engineers too, these people are not what GM needs to lose, its very tragic!
Half kidding, but why would a company with a six month supply of unsold cars gain anything by making the managers give up their company cars?
The ‘take away’ of the merit increase isn’t a bad solution to saving money from the perspective of a Compensation guy (me) and the previous raises of 3 percent (on average) were on average with most of American industry. 24 months between increases is longer than average but not unusual in a company that was in GM’s financial position (before the great bank robbery of ’08)
Lokkii :
Half kidding, but why would a company with a six month supply of unsold cars gain anything by making the managers give up their company cars?
If they weren’t made to give up their company cars, then the press could have a field day a la corporate private jet. And the sugarmen and sugarwomen in the Congress would be quick to pile on.
It’s not the best financial decision, but purely politically speaking, it seems most prudent to me to take away all perks from upper management as long as the company is in line for bailout bucks.
Well, maybe making them pay for a Pontiac G6 with their own dollars will make them view it differently…
“why would a company with a six month supply of unsold cars gain anything by making the managers give up their company cars”?
Those cars fall into a tax bracket that GM pays based on usage, its a chunk.
A 10% cut for executives? Maybe that’s why Lutz is retiring.
I will repeat this again, (being a 7 and under)…
GM should not be cutting across the board.
Finance/HR/Sales & Mkt should take the all the hits. Purch and Engineering are essential to keep GM moving forward.
At one time GM Finance and Purchasing had staff in Flint that were eventually moved to Pontiac, Troy, or Warren. I would guess that 60% of the old timer Finance guys should have been shown the door because they were useless. My point being is that a lot of these cuts should have been done 10 years ago.
Their severance, for at least the lower rank people, is a surprise.
At Ford, all employees with 0-3 years (think new engineers out of college) of company time got 1 month of severance (benefits end at the end of the month).
rofl at the picture selected to accompany the article. Two thumbs up!
“My old colleague at GM is a product development engineer and is performing a highly-visible and essential function, so he probably won’t be cut this time.”
what a novel idea. Guys who know how to make stuff NOT being fired ahead of paper shufflers. Too bad they didn’t do it 20 years ago and change the culture.
Love the picture of Danny Choo!
“Finance/HR/Sales & Mkt should take the all the hits.”
Even as a product guy I think that is a bit naive. As Dead Henry said, half of advertising is a waste of money, but he couldn’t figure out which half.