Cost-cutting to make a business more profitable in the long run sometimes requires mass layoffs and restructuring.
Nestlé, a giant in the packaged foods industry, made a decision to cut its workforce by approximately 16,000 employees over the next couple of years.
One of their goals is to significantly reduce the increasing costs the company has faced. Nestlé’s new CEO, Philipp Navratil, is leading the effort to make the company more efficient.
This week, Navratil set a goal to save the company 3 billion Swiss francs (which is over 3 billion dollars when converted) by the year 2027.
Nestle, the world’s largest packaged-food company, is trimming its workforce by 16,000 over the next two years as it seeks to “substantially” reduce costs under its new CEO Philipp Navratil.
In the Thursday announcement, Navratil established a new goal to achieve cost savings of 3 billion Swiss francs by the end of 2027, which is higher than its previous target.
“As Nestle moves forward, we will be rigorous in our approach to resource allocation, prioritizing the opportunities and businesses with the highest potential returns,” Navratil said.
Navratil, who has been the CEO for approximately one month, wants to focus on faster growth for the company by utilizing investing and innovation.
Per Fox Business, “We are fostering a culture that embraces a performance mindset, that does not accept losing market share, and where winning is rewarded,” he said.
He added that the actions the company is taking, including reducing its headcount, “Will secure Nestlé’s future as a leader in our industry” while delivering shareholder value.
Nestlé had a difficult year when the previous CEO, Laurent Freixe, was fired over an inappropriate romantic relationship with an employee.
TGP reportedon that development in September.
In addition to former CEO Freixe, Nestlé had a prior setback with CEO Ulf Mark Schneider, who left by choice because the company was performing below standards.
Bloomberg discussed Nestlé’s round of upcoming job cuts.
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