STAFF RESTRUCTURING IN THE FMCG INDUSTRY: Balancing Employers and Employees Interest in a Merger, Acquisition and Divestment

Competition in the Fast-Moving Consumer Goods (FMCG) industry is intense. New products are introduced in the market everyday by both big and small players. This accounts for the industry being fast-paced and innovative, as every player wants to stay ahead. The goal of every FMCG company is to be the market leader or acquire the major market shares in the industry or attain financial growth. It is not sufficient to be a market leader in this industry, this position must be maintained. Restructuring is one of the ways players in the FMCG industry keep their competitive advantage. Intrinsic in the factor of competitive advantage that leads to a decision by FMCG companies to restructure include survival, expansion, going global, or even positioning itself for an acquisition.

Restructuring is a fundamental change in the composition of the company to achieve a particular objective. The structural change may be in terms of shareholding, business, or operational outlook of the company. Restructuring in the FMCG industry can take different forms. It can be a merger of two or more FMCG companies, an acquisition of the majority or the entire shares of an FMCG company, or a divestment.

The players in the FMCG Industry stand as one of the biggest employers of labour. The industry has varieties of employment options as it operates in foods, drinks & beverages, food & animal nutrients, tobacco, consumer electronics, toiletries, creams, cleaning products, office supplies, clothing, etc.  It thus offers job opportunities in factories, safety, product design, branding & advertising, project management, engineering, finance, supply chain functions, distribution, sales, regulatory & compliance, IT, legal, etc.

From the acquisition of raw materials to production, packaging, and distribution, the employees of an FMCG company are a fundamental part of its operations. They are also one of the most affected groups in any restructuring situation as a restructuring can lead to upsizing or downsizing of staff through redundancy, role realignment, demotion, promotion, termination of employment, and termination of contract with outsourcing companies. This will lead to tension and anxiety for employees and such state of apprehension tends to affect the morale and job performance of many employees. Some employees may even begin to consider other job offers to the detriment of the business of the company.

It is therefore critical for employers in the FMCG sector to understand the impact of restructuring exercises on their employees, with a view to complying with legal requirements and balancing the employees’ interests with those of the company’s. We shall in this piece, highlight the nature of merger, acquisition, and divestment in the FMCG industry, employee management in each model, and how employers can navigate such murky waters.

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