Most Salaried GM Workers Receive Merit Pay Awards : Autos: Just before announcing it will lay off 74,000, the company hands out a reported $80 million in year-end bonuses to 80,000 of its 91,000 white-collar employees.
General Motors Corp. paid its salaried employees millions of dollars in merit bonuses before it announced plans to close 21 plants and slash its work force by 74,000 last week, the company said Tuesday.
Spokesman John Maciarz said the bonuses, part of a white-collar compensation package announced at the beginning of the year, were distributed this month to non-executive professionals such as engineers, supervisors and clerical employees who had demonstrated extra effort over the year.
“We promised our employees a compensation package for 1991, and we kept our promise,” Maciarz said. “There was pain across the ranks of GM employees this year. Each individual employee felt the sacrifice.”
Critics said the bonus payments, approved even as the No. 1 auto maker struggled to stem losses expected to total $2.6 billion in 1991, sent a signal that some sacrifices were more equal than others.
“It’s another example of poor timing by GM,” said William Steele, an analyst with Dean Witter in San Francisco. “It’s an ill-considered move to hand out bonuses when you’re announcing that 74,000 people are going to lose their jobs.”
The Oakland Press of Pontiac, Mich., said the white-collar bonuses totaled $80 million, but Maciarz declined to confirm the amount. He said the merit fund represented about 8% of GM’s salaried payroll.
According to the Press, the company had set aside $140 million in 1991 incentive pay, but lowered the amount to $80 million. The newspaper said the bonuses, averaging $1,000, went to 80,000 of GM’s 91,000 U.S. salaried employees.
As GM stumbles toward its worst financial year, hourly workers--who rebuffed company requests to give up their $600 Christmas bonus--will not receive profit-sharing payments, salaried workers will not get profit-sharing or a Christmas bonus, and executives will not receive incentive pay. That pay, Maciarz said, accounts for one-third of executives’ annual compensation.
Salaried workers said they were relieved at last week’s announcement by GM Chairman Robert C. Stempel that no white-collar layoffs were expected as the sweeping cutbacks take effect. An estimated 15,000 white-collar jobs will be cut through GM’s restructuring plan, but the company hopes to accomplish the reduction through early retirements and attrition.
“I thought we were going to have to take a pay cut, and I was ready to do that--it’s better than losing your job. But that wasn’t coming, so when I saw that, I felt, ‘God, we squeaked by again,’ ” said Ian Lau, senior engineer at GM’s Technical Center in Warren, Mich.
GM has good reason to try to keep its engineers happy: They are in small supply and high demand. The premium on automotive engineers has been driven up in recent years. As Japanese auto makers expand their research and development presence in the United States, they have begun to hire away engineering talent that domestic auto makers need to design and build new vehicles.
The world’s largest auto maker has been criticized for its unwillingness to cut deep enough into its unused production capacity and layers of white-collar workers to become as “lean and mean” as it needs to be to compete in its increasingly crowded home market.
“This is not exactly the mother of all restructurings,” David Garrity, an analyst at the Nomura Research Institute in New York, said of GM’s latest plan to bring its work force and production capacity in line with the realities of today’s U.S. auto market.
Some analysts defended the merit payments as vital for morale at a time when uncertainty is running high.
“(GM) carried out a commitment they made a long time ago,” said Joseph Phillippi, an analyst with Shearson Lehman Bros. in New York. “I have no problem with that.”
The United Auto Workers, who will see close to 60,000 GM jobs eliminated by 1996, declined to comment on the bonus payments.
Phillippi, anticipating a hostile response, said the company and the union should “stop throwing rocks at each other” over issues like this.
“The union is going to use this as another opportunity to slam the company, when what they ought to do is get together with management and figure our how to fix it,” Phillippi said. “Arguing over things like this is not going to make people buy GM cars.”
