Ford Motor Company's CEO, Jim Farley, has communicated to employees the need to accelerate improvements in quality and cost reduction. Executive bonuses will now be significantly reduced to 65% of the total bonus pool unless these benchmarks are met.
A company spokesperson highlighted that when Ford achieves or surpasses these goals and fulfills its ambitious Ford+ objectives, the team will be rewarded. The focus remains on reducing costs and enhancing quality to ensure that Ford becomes a faster-growing, more profitable, capital-efficient, and resilient enterprise. These bonuses may be adjusted based on the company's fourth-quarter performance and individual assessments.
Jim Farley has recently implemented a new performance system designed to revolutionize Ford's 121-year-old company culture by holding employees more accountable. Under this system, bonuses are directly linked to progress on key goals.
Earlier this year, during an earnings call, Farley described the new performance system as a fundamental change in company operations, emphasizing recognizing and rewarding outstanding employee performance. This marks a significant cultural shift within the organization.
Despite his pride in the progress made, Farley acknowledged that Ford is far from satisfied with its current achievements. The company executives disclosed that Ford would only meet the lower end of its annual financial expectations during the third-quarter financial report. Following this announcement, Ford's stock (F, Financial) dropped over 10% and declined another 1.3% to $10.34.
In a similar move earlier, General Motors revised its employee compensation plan to compete with companies like Tesla, incorporating corporate stock into the compensation package. GM now offers a 150% bonus to its top-performing 5% of employees, while the bottom 5% face "appropriate measures," including potential dismissal.
