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Company Culture Ford

Ford is changing its policy for underperformers (Photo by JEFF KOWALSKY/AFP via Getty Images)

By Tyler Hummel Leaders Staff

Tyler Hummel

Tyler Hummel

Tyler Hummel is a news writer for Leaders Media. He was the Fall 2021 College Fix Fellow and Health Care...

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Nov 1, 2022

Last Chance For Underperformers 

Ford Motor Company is changing its approach to managing underperforming employees by paying them to leave. 

Key Details

  • While-collar employees who are declining in performance will be given the choice of a severance package or a four-to-six-week training program to enhance their work. 
  • The company announced the internal change in an October 4 company email to managers, having gone into effect on October 1.  
  • “The changes in its talent-management policy mostly focus on employees who have eight or more years of service and whom the company has identified as demonstrating a pattern of declining performance,” says The Wall Street Journal. 
  • Employees who chose the program and still decline are at risk of being let go without severance.

Why it’s Important 

Ford is currently in the process of reassessing its internal management as the company goes through changes in the lead-up to its rollout of new electric vehicles (EVs). It recently laid off 3,000 salaried and contract employees in August. It says it is overstaffed in some areas and needs to cut back on some positions and reorganize.

“Across the auto industry, executives are preparing for a potential downturn in business, taking steps either to reduce staff or freeze hiring,” says The Journal.

The company has 30,000 salaried employees, who will be the most affected by the severance policy change.  

“The changes are intended to simplify how managers confront poor performance and provide an alternative to the improvement plan, which can be an intense period of work for employees, the Ford spokesman says,” The Journal continues. 

Notable Quote 

“Ford, in a separate email sent in September to employees, said that because of rising interest rates, the rate applied to the lump-sum pay for U.S. salaried workers who elect to retire is going to change as of December 1. After that date, interest rates could reduce the overall lump-sum cash-outs by about 20% to 25%, the email said … potential retirees have until the end of November to decide if they want to retire by December 1 and cash out their pensions before Internal Revenue Service segment rate increases affect their retirement calculations,” says The Wall Street Journal. 

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