Bayer reaches deal on shedding management layers

Bayer employees

After lengthy negotiations, Bayer has reached a deal with union representatives that will result in a sizeable reduction in managerial roles, part of a cost-cutting drive implemented by chief executive Bill Anderson last year.

“Bayer is currently in a difficult situation for various reasons,” said executive board member Heike Prinz in a statement on the deal, which includes a stay on compulsory redundancies until the end of 2026.

“In order to make rapid, sustainable improvements to our operational performance and our room to manoeuvre, far-reaching measures are necessary,” added Prinz.

Bayer maintains that the new ‘Dynamic Shared Ownership’ structure will reduce management hierarchies, eliminate bureaucracy, and speed up decision-making in the group, which is labouring under high levels of debt, lacklustre cash generation, and the hangover of its $63 billion acquisition of agrochemical company Monsanto that has exposed it to liability litigation.

Last year, Anderson said the plan to strip out management layers would result in “95% of the decision-making [shifting] from managers to the people doing the work.”

News of the agreement came as Bayer's Central Works Council, chaired by Heike Hausfeld, reiterated the workforce’s commitment to ensuring that Bayer’s current structure of the three operating divisions – pharmaceuticals, agrochemicals, and consumer health – remains intact.

Earlier this week, Germany’s IG BCE union said it would resist any attempt to break up the group, as it would lead to job losses and poorer working conditions and make the individual components vulnerable to takeover that could shift their focus to other countries.

Splitting up the group is seen by some industry observers, however, as a good way to unlock value within Bayer, and would be very much in keeping with a prevailing trend among big pharma to spin out non-core assets.

“With a heavy heart, we have agreed to further cuts,” said Hausfeld. “In the negotiations with the employer, however, we have succeeded in making the forthcoming job cuts as socially responsible as feasible within the existing possibilities.”

The deal includes offering employees severance agreements staggered according to age, with those losing their jobs offered a “reflection period” of six months in which they will be supported to find new employment outside the group, plus the potential for additional training for up to 12 months.

Employment contracts of employees whose jobs have been lost and who have not left the company by the end of 2026 will be terminated as of 31st December 2026, said Bayer. The group currently employs 22,200 people in Germany, accounting for about one-fifth of its 101,000 global workforce.

18 January, 2024