Ford employees on Performance Enhancement Plan can now exit with severance package
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No, Ford has not begun a new round of job cuts, the company told the Free Press on Monday.
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But the automaker with about 30,000 white collar workers in the U.S. has added a key update to its employee handbook for those who are struggling to meet their job goals.
Ford has decided to sweeten the exit for these workers before they get placed on a formal Performance Enhancement Plan (PEP), allowing employees to leave the company with a severance and benefit package, instead of committing to weekly check-ins with bosses on the road to necessary improvement.
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Within corporate America, the Performance Improvement Plan (PIP) — or PEP in Ford’s case — is known both as methodical strategy to improve and measure performance as well as telegraphing aninevitable firing. In some cases, employees will look for jobs as soon as they get alerted to their PEP status because they know their days are numbered.
In Ford’s case, the company looked at market research and considered employee feedback before implementing this new feature at the start of this month, allowing managers to offer an exit package rather than drawing out a process that the employee may not be committed to and end up getting fired.
Marisa Bradley, a Ford spokeswoman, said she could not quantify whether an employee is actively on PEP now. But, on average, there are fewer than 100 such status assignments in a given year. Employees have been notified of the change implemented Oct. 4.
Overwhelming
“This is not a new target for job cuts,” Bradley told the Free Press. “This is about an employee’s personal objectives and progress they’re making. This is streamlining and trying to simplify a process.”
For some employees, the extensive review process that involves rigorous coaching can be overwhelming.
“They may know they weren’t going to improve or they’re not the right fit or they’re just checked out,” Bradley said. “This gives an employee the chance to say, ‘I don’t want to go through this and appreciate being able to opt out. I know it’s not working out and this allows me to avoid having to through that process.’ “
Ford is now offering a severance package that will include a financial payment based on years of service, temporary continuation of health care and job placement assistance, Bradley said.
“None of this would come to the surprise of an employee having a conversation around this situation,” she said. “They already would’ve been having coaching sessions if their performance is declining, one-on-one or quarterly check-ins that are tracking against objectives. This wouldn’t come out of the blue.”
Struggling to succeed
This is part of an ongoing established process of managing underperforming employees, Bradley said.”If you were an underperforming employee and struggling with performance, you’d always have the option to get coached by a manager. If things are continuing to decline, managers were required to put a performance enhancement plan in place. You had weekly objectives and met weekly with your leader. This would go on for six weeks. Previously, it could go on longer than six weeks,” Bradley said. “Are you really turning things around? If things still didn’t improve and employees are still struggling, a manager could separate you from the company.”
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This update allows the white-collar worker to opt out of the process and just leave.
“If you are realizing the writing is on the wall, realizing you’re not the right fit anymore, you can opt out and not go through that six-week type thing. This is helpful on both ends,” Bradley said.
Changing workforce
Ford announced in September 2020 a plan to offer severance packages to U.S. workers with a goal of shedding at least 1,400 of them. Then the company announced a buyout plan to trim 1,000 workers in August 2021. In March, Ford CEO Jim Farley said the company needed “totally different talent” to meet its goals. Earlier this year, the automaker cut another 580 jobs in talent overhaul. Ford has 176,000 employees worldwide and is the largest employer of hourly autoworkers in the country.
Ford reduced its salaried workforce in the U.S. and Canada, as well as its Ford Business Services operation in India, totaling about 2,000 salaried employees and about 1,000 outside agency personnel, Bradley confirmed Monday.
While Ford reported a vehicle sales upswing for third quarter, unexpected costs damped the earnings report. The company is ramping up shipments to dealerships, which have a plentiful supply of F-Series, Explorer and Escape.
As the company transitions from internal combustion engine (ICE) to electric vehicles, Farley is both hiring new talent and paring down other areas of the business with new hires, many coming from Silicon Valley.
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Contact Phoebe Wall Howard: 313-618-1034 or phoward@freepress.com. Follow her on Twitter @phoebesaid
This article originally appeared on Detroit Free Press: Ford employees on Performance Enhancement Plan can now exit with severance package