The Margin Game

When I read these words below (excerpt from an announcement to lay off folks at KraftHeinz) they say one thing to me. Margin.

“We have developed a new streamlined structure for our organization to simplify, strengthen and leverage the company’s scale,” spokesman Michael Mullen said in a statement. “This new structure eliminates duplication to enable faster decision making, increased accountability and accelerated growth.”

The corporate mandate is typically about increasing profit margins and, increasing productivity to do so. In this case, KraftHeinz announced that they are letting 2,500 workers go.

Within the margin game, it is important to acknowledge that there are at least two truths. When you consolidate brands, it’s feasible to consolidate roles, thereby narrowing margins. The very good reason for doing this is to streamline operations, improve working conditions and create overall efficiency and happiness. This is something that future leaders are doing — transforming the definition of success and refocusing on people, not margin$. The second truth, and one I suspect to be at least half the reason for this decision for KraftHeinz, is that corporations have oft times focused more on the happier shareholders than workers, hence increasing margins for a select few and sacrificing the standard of living for the thousands of worker-bees. Theirs is a short-view, not a long-view of a healthier society.

So I ask, do you agree that this type of leadership is becoming obsolete? Given what Howard Schultz stated on the Jon Stewart show a while back about employees being our shareholders, will these types of companies and decision-makers within them eventually become irrelevant and lose out to disruptors or activist investors?

Times are changing and there is already a demand for fairness and balance to the margin equation in the future. Hopefully large MNC’s will continue to trend in the right direction sooner rather than later, before it’s too late for everyone.