Last month, General Motors announced a Voluntary Separation Program (VSP) for the majority of its U.S. white collar employees (and some of its global employees). The buyout option gave employees about two weeks to decide whether to stay with the company or accept severance pay that included health care 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 volunteer program to encourage people who might be closer to retirement or who just decided they wanted a career or lifestyle change to go, while doing everything we can to to avoid being involuntary or fired,” Jacobson told PBS.
A month later, the implementation of the VSP has already paid off: 5,000 of the company’s 58,000 employees accepted the buyout agreement. 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 announced it plans 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 wants to save, it plans to do so through other cost-cutting measures, such as cutting travel and marketing spending and reducing vehicle complexity, it told the outlet. .