Business Case Studies, HRM / Organizational behaviour Case Study, GM's Employee Separation Plan,Overwhelming Response from Employees

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Case Title:

GM's Employee Separation Plan: Overwhelming Response from Employees

Publication Year : 2006

Authors: Rudrajit Mishra, Abhijit Sinha

Industry: Automobiles

Region:US

Case Code: HRM0035K

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
General Motors Corporation (NYSE:GM), the world’s largest automaker was founded in 1908 in Flint, Michigan of US. In 2006 GM was in a horrible tangle as the company lost $10.6 billion in the previous year (2005). To counter this GM had initially planned for organizational restructuring. As a part of the organizational restructuring the company planned 30,000 job cuts and close down of 12 plants by 2007. The plan of manpower reduction comprised with the hourly workforce reduction of 6,500 hours in 2005 and estimated replacements, including Delphi flow backs. GM management declared its plan expecting to reduce 30,000 blue-collar jobs by Jan.1, 2007 which was about two years ahead of schedule. On Monday, 26th June, 2006 GM’s management announced that 35,000 workers had already opted to leave the company voluntarily, surpassing initial targets and allowing the automaker to increase its targeted savings to US $8 billion annually by the end of 2006. The overwhelming response of the employees for the accelerated separation plan surprised many people, including GM’s management

Pedagogical Objectives:

  • To analyse the problems faced by the world’s largest automobile maker
  • To understand the efforts made by GM to turnaround itself
  • To get an overview of the global automobile industry
  • To debate whether GM’s efforts would pay off.

Keywords : General Motors (GM), Organisational restructuring, Manpower rationalisation,HRM Case Study, Early separation, Delphi flow backs, Voluntary retirement, Accelerated separation, Detroit, Lay-off, Other post employment benefits fund (OPEB), Pension and benefit fund, Automobile industry, The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), International Union of Electronic, Electrical, Salaried, Machine and Communication workers of America (IUE-CWA), Blue-collar

Contents:

  • Introduction
  • Company background
  • Industry overview
  • Gm's job cut: part of revival strategy

    • Early separation plan
    • Overwhelming response from the employees
    • Unions reaction
  • Road ahead

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