Bayer slashes middle managers to save $2.15Bn
LEVERKUSEN, GERMANY — German multinational pharmaceutical and life sciences giant Bayer is embarking on a significant overhaul, as CEO Bill Anderson plans to dismantle corporate bureaucracy and grant employees greater autonomy.
The restructuring initiative called “dynamic shared ownership” is designed to cultivate innovation and streamline operations within the global organization renowned for household names like Alka-Seltzer and Claritin.
Bayer CEO criticizes traditional corporate hierarchy
In an interview with Business Insider, Anderson criticized the traditional corporate structure, stating, “We hire highly educated, trained people, and then we put them in these environments with rules and procedures and eight layers of hierarchy. Then we wonder why big companies are so lame most of the time.”
Bayer, which employs nearly 100,000 people, has been criticized by employees for the difficulty of getting ideas approved and the cumbersome consultation process.
To address these concerns, Anderson plans to cut Bayer’s 1,300-page corporate rulebook by 99%. He also intends to reduce the number of middle managers and allow employees to choose the projects they wish to pursue. During a company training session, employees were encouraged to self-organize and collaborate on ideas that interested them.
This reorganization is expected to cut organizational costs by approximately €2 billion (US$2.1 billion). Bayer did not disclose the exact number of managers to be cut, but thousands of U.S.-based managers are expected to be reorganized into different positions. Meanwhile, other roles will be eliminated.
Bayer’s stock has dropped by over 50% in the past year. It is grappling with debt and massive settlements totaling €34 billion (US$36.4 billion) after its acquisition of Monsanto in 2018.
Expert weighs in on decentralized approach
Stanford University economics professor Nicholas Bloom believes a decentralized approach could benefit a struggling company. Bloom’s research found that decentralized firms can respond more quickly to rapid change, which is particularly valuable during uncertain periods.
However, there are also advantages to a more centralized structure. Studies have shown that middle managers significantly impact a company’s overall performance, and there are limits to how many people a single manager can oversee. Nevertheless, in times of uncertainty, Bloom argues that being agile is crucial.
As Bayer embarks on this radical transformation, it remains to be seen whether Anderson’s plan will successfully revitalize the company and empower its employees.
