General Motors is reshaping its salaried workforce as it competes for software engineers, technology specialists, and other employees needed to develop its next generation of vehicles.
The Detroit-based automaker is using a five-tier performance-rating system that differentiates high achievers from employees judged to be falling short of expectations. At the same time, GM’s U.S. salaried workforce has reportedly declined from approximately 53,000 employees in August 2024 to around 40,000 by October 2026.
The changes reflect a broader transformation in the automotive industry, where established manufacturers must control costs while developing electric vehicles, software-defined cars, and advanced driver-assistance systems.
However, the system has also attracted criticism over fairness, employee morale, and the risk of discrimination claims.
How GM’s Five-Tier Performance Rating System Works
GM introduced its revised performance evaluation system in 2024, replacing a three-category structure with five ratings ranging from “significantly exceeds expectations” to “does not meet expectations.”
The company said the changes were intended to establish clearer expectations and improve accountability and reward employees whose contributions stand out. The ratings also influence employee bonuses, making performance reviews more consequential for salaried staff.
Under the system described in an internal memo reviewed by Reuters in August 2024, GM expected approximately 5% of employees to fall into its highest performance category. Those employees could receive bonuses equal to 150% of their target amount.
At the opposite end, around 5% were expected to receive the lowest rating, potentially facing corrective action that could include termination. Approximately 70% of employees were expected to receive the middle rating of “achieves expectations,” qualifying them for their full target bonuses.
This approach resembles what is commonly called forced ranking, in which an organization differentiates employees by placing a specified proportion into particular performance categories.
The term can be controversial because it suggests that a fixed share of workers must receive low ratings even when the entire team performs well.
The precise operation of GM’s system depends on its internal review procedures, but the reported distribution has raised questions about how managers assess employees and whether individual performance can be separated fairly from wider business conditions.
For GM, the stated rationale is to identify and retain employees whose work contributes most directly to the company’s objectives.
A more differentiated system can help management allocate bonuses and identify where additional support or performance improvement may be needed. It can also make expectations more explicit than a system in which most employees receive similar ratings.
However, performance reviews can be difficult to standardize across a company as large as GM. Engineers, software developers, manufacturing specialists, finance employees, and corporate managers do not necessarily have the same responsibilities or measurable outputs.
Some projects take years to complete, and their success may depend on decisions made by several departments. A rating system must account for those differences if it is to provide a meaningful picture of employee contributions.
The lowest rating also carries consequences beyond a smaller bonus. If it can lead to termination, employees may view the annual review as a direct assessment of job security. That can encourage greater accountability, but it can also create pressure if performance expectations are unclear or managers apply the criteria inconsistently.
Why GM Is Changing Its Workforce as Automotive Technology Evolves
The performance-rating system is being introduced as GM faces a major shift in the skills required to develop modern vehicles. Automakers are no longer competing only on engine performance, manufacturing efficiency, and vehicle design.
Software, computing platforms, automated-driving technology, connected services, and electric powertrains increasingly influence how vehicles are developed and updated.
GM’s investment in software-defined vehicles and advanced driver-assistance systems requires employees with expertise that overlaps with the technology sector. These skills are also sought by companies such as Nvidia, Qualcomm, Tesla, Rivian, and Waymo.
Automotive consultant Tu Le told CBT News that competition for this talent has expanded beyond traditional automakers to major technology companies and Chinese manufacturers.
For GM, attracting skilled employees is only part of the challenge. The company must also retain people who can deliver complex programs while controlling labor costs and allocating investment across competing priorities.
A performance system that rewards highly rated employees more generously could help the automaker compete for experienced engineers and technical specialists, particularly when technology businesses can offer different compensation structures.
The five-tier system also gives management more categories for distinguishing performance. Under the earlier three-tier approach, employees were grouped into broader categories, including partially meeting expectations, achieving expectations, and exceeding expectations.
Adding more levels creates additional distinctions between employees who meet requirements and those whose contributions exceed them substantially.
GM’s approach reflects a wider transformation in the traditional automotive industry. Established manufacturers are investing in electrification and digital technology while facing pressure to improve efficiency and respond to changing customer expectations.
Ford has also revised aspects of its performance-management approach, with company leadership describing a closer connection between employee rewards and business results.
A key challenge for leaders is finding fair ways to assess individual performance when complex projects depend on cooperation between teams and departments.
A software engineer may contribute to a platform that takes years to reach production, while a manufacturing specialist may improve a process whose benefits are spread across several facilities. Short-term ratings may not fully reflect the long-term value of such work.
This is particularly relevant in automotive engineering, where product development can involve multiple departments, suppliers, and regulatory requirements.
Delays may result from budget changes, technical problems, or decisions beyond an individual employee’s control. A fair review process needs to distinguish those external factors from an employee’s contribution.
Workforce Reductions Raise Questions About Fairness and Retention
The reported decline in GM’s U.S. salaried workforce adds another dimension to the new rating system. CBT News puts the number at approximately 53,000 employees in August 2024 and around 40,000 by October 2026, a reduction of roughly 13,000 positions, or about one-quarter of the earlier total.
These figures indicate a substantial change in the company’s white-collar workforce, although they do not establish that every departure resulted from the performance-rating program.
GM had already offered buyouts to many salaried employees in 2023, before introducing its five-tier system.
The automaker has therefore been managing its workforce through multiple measures, including voluntary departures, organizational changes, and performance-based decisions. Treating the entire reduction as a direct consequence of forced ranking would overlook that broader context.
The system has nevertheless attracted criticism because a predetermined distribution can create pressure to place employees in lower categories even when their teams perform well.
According to CBT News, GM’s reported distribution assigns 5% of employees to the highest category, 10% to the next, 70% to the middle, another 10% to the category below expectations, and 5% to the lowest category.
If applied rigidly to a team of 20 people, that model would imply one person at the bottom and one at the top, regardless of how well the team performed collectively.
Management specialists argue that companies can reward high performers without requiring a fixed percentage of employees to receive poor ratings. The concern is that forced distributions may encourage competition between colleagues rather than cooperation, especially when employees work on shared projects.
They may also discourage workers from taking on difficult assignments if a failed experiment could affect their ratings, even when the project provides valuable lessons for the business.
Legal concerns have also emerged. CBT News reported that at least two former GM employees have filed age-discrimination lawsuits alleging that the rating system disadvantaged older workers.
One former engineer, Tuan Le, claims older employees disproportionately experienced reduced or eliminated bonuses and faced potential layoffs. These are allegations, not established findings, and the existence of a lawsuit does not by itself demonstrate unlawful discrimination.
For GM, the challenge is to show that its evaluation system measures relevant performance consistently and that employees are judged fairly. Clear criteria, documented feedback, manager training, and a meaningful process for challenging ratings can help reduce the risk of inconsistent decisions.
The company’s ability to attract new technical talent will also depend on whether experienced employees believe they can build long-term careers within the organization.
The workforce changes have implications beyond GM. Other automakers are also trying to recruit software specialists while managing the costs of developing electric vehicles and connected technologies.
If performance-based compensation becomes more common, companies will need to balance incentives with collaboration, employee retention, and fair treatment.
GM’s five-tier rating system is intended to reward strong contributions and address underperformance, while the reported contraction of its U.S. salaried workforce reflects a wider organisational shift.
Whether the approach succeeds will depend on more than the number of employees who receive each rating. Its long-term effectiveness will be measured by GM’s ability to retain the right skills, develop competitive vehicle technology and maintain a performance culture that employees consider fair.
