No more participation trophies. No more gold stars just for showing up. Such is the new rule at Ford, as CEO Jim Farley has implemented a new performance-based bonus plan. Great! But, um, shouldn’t this have always been the case?
Amidst drops in quality, disgruntled dealers, dissatisfied shareholders, and sluggish sales, Farley announced during a recent town hall meeting that company bonuses would be based directly on whether key performance metrics were met. According to Reuters, managers, in particular, could see their extra checks slashed by as much as 65 percent.
“I’m proud of the progress, but we’re not satisfied at all,” Farley said during an earnings meeting earlier this week. Shares were down by as much as 10 percent but settled at a 1.3 percent drop by Thursday afternoon.
FoMoCo executives said the company would meet only the lower end of its full-year profit forecast. As a result, bonuses may change based on how the company does during the fourth quarter in addition to an employee’s individual performance.
“It’s a fundamental change in the way we’re running the company,” Farley said during an earnings call back in February. “We now truly differentiate and reward excellence at Ford. It’s a massive culture change.”
Sounds like a fair plan. Don’t be that guy who doesn’t contribute during a group project. Accountability begets action, and hopefully, employees will be rewarded (or not) based on achievements and merit. Considering the current volatility of corporate life, losing a bonus is less of a burden than losing a job.
