Last month, General Motors announced a Voluntary Separation Program (VSP) for the majority of its white-collar workers in the U.S. (and some of its global employees). The buyout option gave employees around two weeks to decide whether to stay with the company or accept a severance package that included healthcare and other benefits.
CFO Paul Jacobson told Yahoo Finance that the VSP was “a tool to get us to really accelerate the attrition curve.”
“It’s important that we were willing to pay for the voluntary program to incent people to go who maybe were closer to retirement or had just decided they wanted a change in career or lifestyle, at the same time to do everything we can to try to avoid involuntaries or layoffs,” Jacobson told PBS.
A month later, implementing the VSP has already paid off: 5,000 of the company’s 58,000 workers took the buyout deal. It will save GM nearly $1 billion a year as a result.
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The savings will account for about half of the $2 billion the company had stated it intends to save by the end of 2024, PBS reported.
“The steps we are taking will allow us to maintain momentum, remain agile, and create a more competitive GM,” the company said in a prepared statement, per PBS.
As for the rest of the $2 billion the company is aiming to save, it intends to do so through other cost-cutting measures such as reducing spending on travel and marketing as well as reducing vehicle complexity, it told the outlet.
