GM Restoring White-Collar Pay Element of Auto Maker’s Reinvention

General Motors Co. is restoring most salaried workers and executive pay from cuts earlier this year, when the company was hoarding cash ahead of bankruptcy.

GM made the cuts, which range from 3%-10% depending on an employee’s pay level, May 1. With the Sept. 1 payroll, all 27,000 workers will see their salaries restored. The auto maker estimates it saved about $50 million.

“It was an emergency, cash-conservancy move,” GM spokesman Tom Wilkinson says.

Fresh out of bankruptcy and surviving on more than $50 billion in taxpayer loans, GM is lifting the pay cuts not necessarily because it is back on its feet but as an attempt to improve morale and retain employees.

“We need to make sure we have the best people and they are motivated and that we can recruit and retain people,” Wilkinson says.

The decision was made earlier this week during a 2-day meeting of GM’s new board of directors. In the first of a series of viral videos released today, GM Chairman Ed Whitacre says rebuilding GM’s reputation starts within the auto maker.

“There has to be a buzz in the employee body – management and non-management – that something is about to happen here, (that) this is good stuff,” the plain-spoken and former AT&T Inc. boss says during the 2-minute, 20-second spot.

GM Chairman Ed Whitacre sets sights on improving employee morale.

“That kind of word spreads through the communities, through the industry. It is a function of morale, and we have to be really high in the morale category,” Whitacre says. “I know sometimes it is difficult to pick yourself up and do that, but it can be done.”

With 1,900 U.S. salaried employees taking a buyout earlier this month and news another 1,000 white-collar jobs will be eliminated in September as the auto maker adjusts its payroll to reflect its shrunken operations, spirits among those workers have been unsurprisingly low and anxiety high.

This year’s cuts also included paring back benefits for salaried workers and came after four years of attrition work that trimmed its white-collar workforce from 47,600 to 35,200. By the end of this year, GM will have 26,250 salaried employees in the U.S.

But Wilkinson tells Ward’s a sense of anticipation has existed since upper management confirmed this last round of cuts would finally right-size the company. GM also has been conducting a number of employee drives at its Detroit headquarters and nearby Warren, MI, technical center to rally the troops.

“The product as much as anything is improving morale,” he says. “If we didn’t have the pipeline full coming out of bankruptcy, it may be a different story.”

GM is in the midst of rolling out the Chevy Camaro sports car and redesigned Chevy Equinox 5-passenger CUV. The launch of its redesigned Buick LaCrosse premium sedan, aa-new GMC Terrain premium CUV and Cadillac luxury CTS Sport Wagon and SRX CUV are just beginning.

Next year comes products such as the CTS Coupe, a new Buick midsize sedan and small CUV, the Chevy Cruze compact car and the Chevy Volt extended-range electric vehicle.

However, the salaries of the company’s top executives, such as President and CEO Fritz Henderson and Vice Chairman Bob Lutz, are not being restored to their former levels.

Henderson slashed his salary 30% and will receive $1.3 million in compensation this year. Lutz, as well as fellow Vice Chairman Tom Stephens and Chief Financial Officer Ray Young, took 20% cuts. Young is rumored to be leaving the auto maker this month.

The wages of these executives and other members of GM’s remaining 5-member executive committee are under scrutiny by the U.S. Treasury Dept., which ultimately will determine salary levels.

Last month, Henderson told journalists that receiving compensation-guidance from the government was an imperative. “We need to get definition to how we can pay people at the top of the company. We don’t have that,” he said.

“Until you know how you pay people, (it’s) difficult, if not impossible, to hire from the outside to the top of the organization. It’s a high priority for us, whether it’s hiring from the outside or retaining talent on the inside.”

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