Bayer’s New CEO to Cut Management Jobs in Bid for Turnaround
Bayer AG said it has agreed with employee groups on a plan to cut a “significant” number of jobs as the company looks to streamline operations and improve its performance.
(Bloomberg) -- Bayer AG laid out plans for sweeping changes including significant job cuts in its managerial ranks, as new Chief Executive Officer Bill Anderson seeks to revive the crisis-rattled company.
Workers supported the establishment of a new operating model that will mean eliminating “many managerial employees,” with the job cuts beginning in the coming months and ending in 2025, according to a statement late Wednesday.
Bayer shares were down 0.7% in early trading Thursday. They’re down nearly 70% since the disastrous purchase of agricultural company Monsanto for $63 billion in 2018.
Anderson joined Bayer in April and took over the CEO role at the troubled conglomerate in June, with a mission to turn it around. From the start, he has pledged to revamp Bayer’s culture to make it faster and more customer-focused — something that he’s said all along would entail a large number of management job cuts.
Until now, though, it’s been unclear whether he would be able to push that new approach through Germany’s rather worker-friendly environment. Labor unions remain strong in Germany, and large companies like Bayer are filled with employee groups that offer workers a significant say in decision-making.
Shares Tumbling
Bayer’s situation is so precarious that even the company’s leading worker representatives are now willing to cut many jobs, according to the statement.
“In the company’s strained economic situation, the programs and measures already underway are not sufficient, which is why, with a heavy heart, we have agreed to further cuts,” said Heike Hausfeld, a Bayer worker and deputy chairwoman of the supervisory board, in the statement.
While the cuts are a central aspect to Anderson’s turnaround efforts, the announcement leaves open the other major question: Will Anderson split up Bayer’s conglomerate model? He has vowed to answer that at a capital markets day in early March and has spent months reviewing options that could involve separating either Bayer’s consumer health or crop science division.
Anderson has ruled out a simultaneous three-way split and hasn’t said anything about the possibility of separating the company’s pharma operations.
Importantly, Hausfeld said she’s “vigorously campaigning” for the continued existence of Bayer’s conglomerate structure.
Another Blow
Bayer has fallen deeper into crisis since the Monsanto acquisition that former CEO Werner Baumann spearheaded just weeks into his tenure. Bayer inherited an avalanche of legal troubles with the deal, mainly over claims that the weedkiller Roundup causes cancer, which Bayer denies. The company has pledged to spend as much as $16 billion to put those legal problems to rest, but it’s still failed to put a lid on the lawsuits.
In November, Bayer was dealt another blow when the antithrombotic medicine asundexian, its most promising experimental therapy, failed in a key late-stage trial. With a dearth of promising drugs in development and others that are already on the market facing patent expirations, it’s unclear whether Bayer’s pharma unit will be able to expand sales much through the rest of this decade.
“The pipeline is weak,” said Markus Manns, a portfolio manager at Union Investment in Frankfurt and a shareholder. “Bayer actually needs to acquire new medicines.”
Faced with all these challenges, Anderson has repeatedly stressed that Bayer — along with most big businesses — needs to radically cut out bureaucracies. He’s argued that layers of management limit people’s ability to do their jobs well. He’s said that power needs to be pushed down to workers — many of whom are top scientists or ambitious salespeople — who are closest to customers so that decisions can be made faster and workers find their jobs more rewarding and fun.
Anderson implemented many of these approaches while head of Roche Holding AG’s pharma division — including getting rid of traditional annual budgeting processes and introducing 90-day cycles where workers are judged on how they spend the company’s resources.
More: Bayer to Change Operating Model; Announces Staff Cuts
(Updates with investor comment in 12th paragraph, shares in third paragraph)
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