McDonald’s conducts layoffs; GM’s buy-out offers, and more!

In our news round-up this week: McDonald's packs staff off home to fire them virtually, while 5,000 GM workers agree to be paid to leave the company:

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Apr 7, 2023
This article is part of a series called The Most Interesting HR Stories of the Week.

McDonald’s tells staff to work from home to fire them virtually

Burger giant, McDonald’s, took the cowardly option, by asking staff to work from home this week between Monday-Wednesday, so it could fire people virtually. According to a report that first appeared in The Wall Street Journal, an internal email was sent to office-based staff requesting that they work from home and cancel all in-person meetings as it started to “communicate key decisions related to roles and staffing levels across the organization.” The firm is reportedly undergoing a big reorganization and growth plan (dubbed ‘Accelerating the Arches 2.0’), and this week individuals found out whether they’d be let go or not, or be moved to new teams. The aim of the restructure, said CEO Chris Kempczinski, in his email to staff, was to enable the company to “move faster as an organization, while reducing our global costs and freeing up resources to invest in our growth.” It added: “We will look to our strategy and our values to guide how we reach those decisions and support every impacted member of the company.” It is thought McDonald’s employs around 200,000 people in its corporate and other offices and company-owned restaurants. The ‘virtual’ layoffs follows a demand last week by Google staff to be laid off more humanely, and for any layoffs to be done in-person.

5,000 staff take GM’s buy-out offer

An offer by General Motors to pay people to quit their jobs has yielded a massive response. In January, the carmaker announced it would give staff a voluntary severance package worth one months’ pay for every year of service, plus a performance bonus and access to outplace services. The offer is part of plans by General Motors to save $2 billion, and in a little under two months, nearly 5,000 out of its 58,000 workforce have signed up to it. The response will cost GM around $1 billion in payouts during the next quarter, but according to analyst Dan Ives, the news is a positive one, because it “rips the Band-Aid off on costs ahead of a major EV transformation on the horizon.” Although the announcement saw GM’s share price drop 1.5%, the severance package means that in a single swoop, the company can achieve half of its targeted cost savings for this year and at least $2 billion in savings in 2024. Some commentators are worried, however, that the cull could come back to haunt the company. Departing staff represents a significant loss of experience, expertise and talent.

US job openings fall to lowest level in two years

Month-on-month employment gains have caused some economists to wonder whether a much-mooted recession really is looming. But, data out this week suggests that (maybe) predicted dark clouds are gathering. Seasonally adjusted numbers released by the US Bureau of Labor Statistics have revealed that the number of US job openings fell to 9.9 million in February, a decrease of approximately 632,000 or 6.0% compared to January. This means the number of openings is now at its lowest level for nearly two years. Meanwhile, the number of hires was little changed, at 6.2 million for February. Job openings peaked at over 12 million back in March 2022. Since that peak, the US economy has added 10.25 million new jobs. According to Yahoo! Finance “this slowdown in the number of open positions suggests the labor market is trending towards an equilibrium between supply and demand.” Experts expect today’s jobs report to show that 240,000 jobs were created last month.

Google’s bean counters targeting staff perks

It might well sound dramatic, but Google’s policy of free food and snacks has helped make the search engine company a go-to employer of choice. Well, potentially not for much longer, because free lunches could finally be coming to an end. In a memo send to staff by chief financial officer, Ruth Porat, a dramatic purge of perks is underway. From now on, perks will vary based on “office location needs,” meaning the company’s micro kitchens (which provide free snacks like cereal, espresso, and seltzer water), will be closed on days that typically have a significantly lower volume of people there. Meanwhile fitness class schedules will shift according to how they’re being used. The company added that it would also discontinue spending on personal equipment, like laptops. The memo said: “Because equipment is a significant expense for a company of our size, we’ll be able to save meaningfully here.” The company has already reduced its headcount by as much as 12,000 staff since the start of the year.

Texas city crowned king of the pay rises

The city of Midland, Texas – which has a population of less than 150,000 – has been crowned the best place in America for pay rises. The city, still famed for oil production, and which was founded as the midway point between Fort Worth and El Paso on the Texas and Pacific Railroad in 1881, offered employees an average wage rise of 13.9% in Q3 of 2022. The rises were well ahead of second-placed Kitsap County, Washington (where pay increased by an average of 12.7%) and Prince William, VA – where wage rises hit 12.6%. The rises in Midland represent a big turnaround for the city that last year infamously held the accolade of highest level of price inflation anywhere in America (where prices were rising at 10%). Perhaps (not surprisingly), in separate news, the US Bureau of Statistics this week revealed that of the 135 metropolitan areas that saw nonfarm payroll increases in the last 12 months, the largest over-the-year percentage gains in employment occurred in…yes you guessed it, Midland, Texas (+11.4%).

Tesla racial discrimination payout downgraded to $3.4 million…

First it was $137 million; then it got reduced to $15 million, and now, the final payout amount has been downgraded again – to $3.2 million. Yes, the verdict for how much Tesla should pay to a former black employee – Owen Diaz – for race discrimination has finally been given. Diaz rejected the $15m offer last year, opting instead for a further trial, but this is a decision he could now regret. The jury on Monday awarded him $175,000 in damages for emotional distress and $3m in punitive damages designed to punish unlawful conduct and deter it in the future. Bernard Alexander, the lawyer acting for Diaz, had urged the jury to offer $160 million in his closing statement, but Tesla’s lawyer, Alex Spiro, countered this by arguing that Diaz was a confrontational worker who had exaggerated his claims of emotional distress, and said his lawyers failed to show that any serious, long-lasting damage had been caused by Tesla. After the first award was decided, a US district judge cut it to $15m, deciding the award was excessive. This was due – the judge said – to Diaz having only worked at the factory for nine months and because he had not alleged any physical injury or illness.

…as half of staff working in ‘toxic cultures’ plan to quit

What’s the cost of having a toxic workplace culture? Well, according to latest research by TalentLMS, it’s potentially half of the workforce quitting. Research it conducted amongst tech workers revealed that 45% of staff who say they experience a toxic work environment plan to quit their job because of it. Additionally, it finds toxic cultures have already pushed 45% of employees towards ‘quiet quitting.’ Respondents also said that a toxic work environment negatively affected their performance at work (48%); their physical health (48%), while 46% admitted to suffering from burnout because of it. Commenting on the figures Joel Davies, senior people scientist at Culture Amp said: “In their most extreme form, these toxic behaviors can put the mental health of employees seriously at risk. But even moderate levels of these behaviors can severely impact organizational performance by undermining employee motivation, diminishing the strength of the employer brand, and increasing employee turnover.” Worryingly, the data revealed that when faced with toxic behaviors or situations, almost half (49%) of surveyed employees said they don’t do or say anything about it because they’re too nervous about the consequences.


This article is part of a series called The Most Interesting HR Stories of the Week.