Are the GM bonuses out of line?
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UPDATED: Mar 13, 2020
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GM Factory worker on the production line. (Photo by CNBC.com)
As reported by USA Today, General Motors has unveiled a performance-based bonus payout for each of the 45,000 hourly production employees with an average payout above $4,000 for each of them.
A number of pundits are calling GM’s plan to pay its hourly and salaried workers profit-sharing bonuses misguided or worse. Since GM took on substantial funds in from the U.S. government as part of its bankruptcy and bailout, and it hasn’t paid them completely back, the bonuses shouldn’t come until all of the loans from the government have been settled.
The U.S. government recouped the majority of these funds when the “new” GM exited bankruptcy and held an IPO. However, a small amount of debt still exists. Despite this debt, the federal government still retains 25% ownership in General Motors, so its equity and ownership stakes are quite significant.
Another factor that pundits seem to gloss over is General Motors is not only earning a significant profit, but they’re also back in the top spot in U.S. car sales, a position they regained in January, 2011.
With such impressive results, it’s no wonder that General Motors is looking to reward its employees based on performance. The last bonus paid out to employees by General Motors was in 1999. And it goes without saying that a happy workforce is not only a productive workforce; it’s also a workforce that will be engaged enough to focus on issues every car manufacturer faces, like quality and taking pride in their work.
GM employees willingly shared the pain of the bailout and bankruptcy. They should also share in the post-bankruptcy success of General Motors. It’s good for local economies where these manufacturing facilities exist, the continued performance of General Motors, and our national economic results as well. We should celebrate their success rather than find flaws where none exist.