Unilever to cut 1500 jobs

Unilever will cut at least 1500 jobs worldwide whilst simplifying its structure. The measure should speed up decision-making within the company.

Five divisions

The FMCG giant will cut 15 per cent of its senior management positions and eliminate several layers to simplify the business. Concurrently eliminating one in twenty jobs in junior management, the cut will affect about 1500 jobs. The company will consult trade unions about the plans and stressed that factory workers will not be affected by the reorganisation.

The company is moving away from its current matrix structure and will organise itself around five separate business groups: Beauty & Wellbeing, Personal Care, Home Care, Nutrition and Ice Cream. Each business will have complete responsibility for its strategy, growth and profit development. Analysts also see the operation as a potential preparation for the divestment of the food business.

“Our new organisational model has been developed over the last year and is designed to continue the step-up we are seeing in the performance of our business”, CEO Alan Jope said in a press release. “Moving to five category-focused Business Groups will enable us to be more responsive to consumer and channel trends, with crystal-clear accountability for delivery. Growth remains our top priority, and these changes will underpin our pursuit of this.”

New leadership team

Along with the new structure, Unilever will also make several changes to its leadership team from 1 April. Fernando Fernandez (currently EVP Latin America) will become President Beauty & Wellbeing. Fabian Garcia (President North America) will become President Personal Care, while Hanneke Faber (President Foods & Refreshment) will become President Nutrition. Peter ter Kulve and Matt Close will remain in charge of Home Care and Ice Cream, respectively, although the latter will now become a business in its own right.

COO Nitin Paranjpe will also take on a new role as Chief Transformation Officer and Chief People Officer, overseeing the business transformation and the HR department. Sunny Jain, currently President Beauty & Personal Care, has decided to leave the company.

Under pressure

The changes at Unilever have not come out of the blue. Chief executive Alan Jope has been under pressure for months to revive sales growth after the company failed to meet its targets. In the past few days, it also came to light that the American activist investor Nelson Peltz had taken an interest in the group. On the London stock exchange, the Unilever shares immediately jumped more than 7 per cent up, the strongest rise in eighteen months.

In recent weeks, Jope tried to acquire the consumer division of GSK, holding brands such as Sensodyne and Aquafresh. However, his offer of 50 billion pounds (60 billion euros) was deemed unsatisfactory by GSK. By doing this, he also provoked anger among many investors, after which the executive was forced to abandon his interest in the GSK division, writes The Guardian.

Afterwards, Terry Smith, founder of Fundsmith and one of Unilever’s largest shareholders, said that management needed to focus on improving its core business or resign. Smith had previously said that Unilever had “lost the plot” and accused management of pursuing sustainability at the expense of business results.