BMW severance pay program - stopped
I was thinking … is there a sum of money for which you would cancel willingly your contract? It seems that there is and a lot of people were satisfied with what BMW was offering.
We are living in the age of layoffs. Every major company is blaming the rise of AI for the need to cut it’s costs, laying off hundreds if not thousands of workers. There is almost a pattern that can be seen across industries, the most affected one, being the automotive industry. As Germany has a long history with producing cars, there are a lot of jobs which were, are and will be on the line with the shift of producing electric cars and the rise of artificial intelligence.
One very interesting fact, is that there are situations where such programs, don’t bring people in the streets, like we have seen in the last months. There are programs which are almost embraced by the employees, the sheer number of registrations crashing the portal and with it, effectively “forcing“ the company to put everything on pause, like in the case of BMW. Reading this news brought a smile to my face as for once, management is surprised by their own measures. I would assume, on paper the plan was looking good.
Laying off a few thousand employees, with the promise that it won’t be from the production line, but from administration, sales and development, meanwhile seems like almost like a reasonable thing to do, as there are no alternatives. It is no secret that German car industry is currently going through many challenges and letting people go seems that it is the agreed measure across companies. If that will solve all problems, I would beg to differ, but only time will tell. The funny part, in the case of BMW, is that they weren’t expecting the huge demand in their voluntary severance pay packages. There are a few reasons why I believe this happened:
The severance package was too good to miss. While this is debatable how much money one would consider enough it seems that the sum offered from BMW was so comfortable that many thought such opportunity cannot be missed.
Living in München is not cheap … one might go through the money pretty fast, but there is one part which I believe the employees have learned from other companies which adopted similar strategies over time, from IT sector for example. When a company is starting laying people off, the first wave is usually the most lucrative for the wage-earner, successive waves offering less money on the table.
We are living in difficult times, and people are tired. Having such programs might have been considered as the break one needed to rethink their priorities and way of approaching work in general.
By 2035,one quarter of Germany's population will be aged 67 or over . Don’t have the numbers from BMW, but this might have been a factor why so many people logged in to check their options.
What are the alternatives of laying of people? There are a few which come to mind.
a. Invest more money in Research and Development and rise above the competitors through innovation. Companies like BMW already have the brand built around the German quality. Why not focus your energy in bringing new products on the market that enrich customer experience first?
b. Stop comparing prices with Chinese producers. This is an uphill battle which cannot be won and it makes more sense not to fight it at all. People were paying the premium price for others features, not how cheap the production of cars was done in the background
c. Related with b. , stop chasing stakeholder numbers and start following upon shareholder value. I understand that bringing more profit is currently how companies are being build, but that needs to change in the future. Why not use the difficult times, to reinvent yourself into something better?
Regardless of what was the reasoning behind it, the situation is currently being analyzed by BMW Management. And it should be … because crashing the severance pay portal is no easy task to do.
Pe data viitoare, TFG
