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Ford cancels merit pay raises for 2011

Posted on January 17, 2011November 8, 2012 by dcadmin

Ford Motor Company’s salaried employees greeted the new year with changes to their incentives package. The automaker announced recently that they won’t be offering merit pay raises to their salaried workers this year.

The announcement falls right in line with other major companies, according to an article in Crain’s Detroit Business, which named General Motors, Pfizer Inc. and Boeing Co. among the businesses making the same decision.

According to the story:

Ford restored raises to its 20,000 U.S. salaried employees last year and will pay bonuses this year, Evans said.

Ford, the world’s most profitable automaker, earned $6.37 billion in the first nine months of 2010, the most since 1998 and more than any other automaker. The company will report 2010 net income of $8.2 billion, the average estimate of three analysts surveyed by Bloomberg.

At a time when it seemed the Michigan economy had started a path to recovery, this move seems an opposite sign. However, Ford’s president of the Americas Mark Fields insisted it was an effort to keep the company salaries competitive.

Ford remains the only U.S. automaker that has not filed bankruptcy. The company is set to negotiate a new contract with the United Auto Workers union, the story noted. The UAW field a grievance last year when the automaker reinstated raises for salaried but not hourly employees.

What are your thoughts on the decision to withdraw merit pay raises for the year? Do you believe merit pay raises impact performance? Why or why not? Share a story about your business in our comments section below.

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