CEOs are pulling out all the stops to boost productivity—ditching remote work , setting up AI war rooms , and now, tightening the purse strings on bonuses.
Ford told staffers that only half of 3,300 middle managers will get stock award bonuses that are normally granted in March and vest over three years. These supervisors oversee the $56 billion American automaker’s 76,000 international employees—and the company anticipates it will actually boost culture and productivity.
“We are focused on driving a high-performance culture that recognizes and rewards employees for their business contributions,” a Ford spokesperson said on Tuesday.
Ford’s performance-based pay isn’t limited to stock awards either. The company-wide bonus is tied to key metrics like vehicle quality, total earnings, and EV sales—meaning when the business falls short, so do employee payouts. These cuts may be Ford’s way of pushing employees to hit key targets and secure their full bonuses next year. In 2024, workers earned just 69% of their potential bonus due to missed targets, sources told Reuters .
“We’re focused on closing our competitive gap over the next few years,” Farley told analysts during the company’s fourth-quarter earnings call this month. “We’re changing our culture to be more focused on quality and with accountable measures for all of our engineering teams and leadership.” A huge part of this means retaining the right people, and streamlining operations, the company reasons.
The move could make employees quit
Although Ford hopes that employees will be incentivized to work harder, sources familiar with the matter told the AP that this is CEO Jim Farley’s strategy to reduce inflamed costs.
For years, Farley has described needing to consolidate the company to compete with Chinese competitors and EV automakers like Tesla . The company’s stock dropped 23% over the past year, which compounded with uncertainty surrounding Trump’s tariff policies.
Financial benefits like Ford’s stock incentive help retain employees, so this could be seen as a headcount-reduction tactic. Staffers flee when they’re underappreciated , and when anticipated bonuses are stripped away, morale can fall. Making concessions based on performance could also drive a wedge among supervisors hitting their KPIs. And Ford isn’t the only one making cuts in the name of performance.
Ford didn't respond to Fortune's request for comment.
Performance-based cuts are sweeping the workforce
There are many employers slashing staffers or bonuses, pointing the finger at low performers. Some workers are questioning the real motive.
Earlier this month Meta laid off 3,600 employees, described as the “lowest performers.” CEO Mark Zuckerberg said in a memo that he wanted to raise “the bar on performance management” and that “extensive performance-based cuts” were on the horizon. Fired staffers went to LinkedIn , to complain that they were befuddled by being in that group of poor performers.
Microsoft also culled employees last month based on performance. It affected a small percentage of roles and was rolled out in the aftermath of other headcount reduction efforts.
“At Microsoft we focus on high-performance talent,” a Microsoft spokesperson wrote in a statement to CNBC. “When people are not performing, we take the appropriate action.”
Performance was also a factor in Amazon’s massive cuts—the company fired 27,000 workers between late 2022 and March 2023. In the months leading up to the slew of layoffs, a large number of employees were also put on performance improvement plans (PIPs). It was funneling thousands of staffers into the program every month, which many workers see as a warning sign to being sacked.
Employees may have raised their eyebrow at the timing of the PIPs with mass layoffs, and view the move as an underhanded workforce trimming. But Amazon was quick to refute the idea.
“To conflate the two is simply wrong, because role eliminations reflect the business need for a specific type of position,” an Amazon spokesperson told Fortune in a statement. “That’s unrelated to our performance management process which is in place to help individual employees who need support to meet expectations.”
Other employers have long used performance as the metric for annual layoffs. Goldman Sachs fired a few hundred low-achieving staffers last summer, raising the bank’s total workforce reduction in 2024 to about 3% to 4%. The business said that this practice is routine—it usually sheds around 1% to 5% of employees every year. But ultimately, Goldman Sachs has continued to thrive as one of the top-performing banks.
