In order to maximize productivity, redundant jobs could be eliminated at the corporate level.
The prospective merger between Kroger and Albertsons will have repercussions not only for the two firms, but for the whole retail industry as a whole, including Kroger and Albertsons’ competitors as well as its suppliers and business partners.
The previously disclosed $24.6 billion merger between Kroger and Albertsons is expected to close in the first quarter of 2019, assuming permission from the FTC.
The employees of both companies worry that the merger will put them out of employment, and this is a major source of unease regarding the agreement. No stores would be closed as a result of the merger, Kroger and Albertsons have said, but hundreds of outlets could be sold off to a new owner.
In addition, numerous high-level positions at both firms will be lost when redundant tasks are combined, although this process of layoffs will probably take some time.
“Kroger’s history with acquisitions has always been that they’ve taken it very slowly in terms of changes in the workforce,” said Jose Tamez, managing general partner at Austin-Michael, a grocery retail-focused executive search firm based in Golden, Colorado. To put it another way, “I think they’ve done that consciously to make the integration process go much more smoothly.”
The prospective merger between Kroger and Albertsons will have repercussions not only for the two firms, but for the whole retail industry as a whole, including Kroger and Albertsons’ competitors as well as its suppliers and business partners.
The previously disclosed $24.6 billion merger between Kroger and Albertsons is expected to close in the first quarter of 2019, assuming permission from the FTC.
The employees of both companies worry that the merger will put them out of employment, and this is a major source of unease regarding the agreement. No stores would be closed as a result of the merger, Kroger and Albertsons have said, but hundreds of outlets could be sold off to a new owner.
In addition, numerous high-level positions at both firms will be lost when redundant tasks are combined, although this process of layoffs will probably take some time.
“Kroger’s history with acquisitions has always been that they’ve taken it very slowly in terms of changes in the workforce,” said Jose Tamez, managing general partner at Austin-Michael, a grocery retail-focused executive search firm based in Golden, Colorado. To put it another way, “I think they’ve done that consciously to make the integration process go much more smoothly.”
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Still, he expects the corporations would address the issue “on a case-by-case, regional-by-region, and brand-by-brand basis,” despite the fact that there will be significant overlap in senior-level positions.
The merger would likely result in the redefinition of several corporate-level positions with new duties and the relocation of some employment as the newly created corporation seeks to generate operational efficiency.
According to Tamez, “the employee will have the option to accept the new position or a severance package.” “For instance, if someone is offered a restructured role in another city, but the new position will be located in Cincinnati, the individual may choose to take the severance package rather than relocate to Cincinnati,” the author writes.
Mergers frequently include the consolidation and possible relocation of job activities, and corporations typically handle these changes “in a very professional and fair-handed way,” as stated by Tamez.
He predicted that “this deal will have a number of situations like that.” “I think you’ll see more and more people moving on by choice, or as their function or territory or region is redefined, as the integration continues,” he said.
Corporate advisory company Lotis Blue Consulting’s principal partner in the business transformation and behavioral science disciplines, Aaron Sorensen, agreed that the merging companies would restructure corporate workforce in order to increase efficiency.
His examples included human resources, finance, marketing, information technology, and supply chains: “There will be no need to have two versions of the systems that enable core business processes.”
“The combined companies should be looking to realize accretive value from this merger by taking out costs by consolidating technologies and costs mid- and senior-level management roles,” added Sorensen.
Some corporate-level employees may become anxious about the impending merger and start exploring alternate employment options, as stated by Tamez.
He remarked, “That happens in every merger and integration.” Uncertainty will cause people to try out the market. No matter how reassuring Kroger or Albertsons try to be, there will always be people who are checking out other opportunities and updating their resumes.
Some of the ideas for keeping important management on board have already been discussed, he said, and he anticipated the companies to pay retention bonuses to encourage employees to stay on during the merger.
Opportunity for competitors
Sorensen, meantime, speculated that other supermarket chains could benefit from the impending merger by hiring former Kroger and Albertsons employees.
He predicted that as the plan developed, more qualified people would enter the job market. As such, “competitors should be looking to take advantage of this opportunity to fill skill gaps they have in key functions.”
He claimed that, contrary to popular belief, mergers do not necessarily result in the loss of the most qualified workers.
To paraphrase what he said: “The assumption that competitors are picking off the scraps that were left behind is a false assumption,” adding that “politics and bias” are typically larger drivers of which employees stay with the newly established company.
Tamez remarked that it is possible for outside influences to force Kroger and Albertsons to move more quickly than they would want in integrating the two companies, despite the fact that they are likely to take a slow and careful approach.
While he acknowledges that Kroger’s gradual approach to integration would likely result in a more seamless transition, he warns that the company could be exposed to competition pressures if it takes too long to fully integrate. Because the industry evolves so rapidly these days, “a full and expedient integration can be a positive.”
A gradual integration in the Dallas-Fort Worth area, for instance, is fundamentally a good thing, according to Tamez. But if H-E-B plans to open more traditional stores in the area at the same time, a gradual integration in Dallas-Fort Worth could be less than ideal.
Some store-level jobs in question
Tamez and Sorensen both thought that the merger would have little effect on front-line employees at stores.
Tamez argued that unions exist to prevent disruptions like this because “at the store level, you obviously need to have personnel to run the stores.”
However, opposition to the merger has come from the United Food and Commercial Workers union.
Kathy Finn, president of UFCW Local 770 in Los Angeles, told SN that the merger might have a negative effect on workers since it would give the combined company more leverage in labor negotiations.
By eliminating one of the top union employers in most of the areas across the country, the planned mega-merger between Kroger and Albertsons poses a threat to the collective bargaining process, she said. “Kroger’s power at the bargaining table would be unprecedented, and it would unfairly tilt the table in Kroger’s favor.”
Salary increases are warranted in light of the recent prosperous periods at both Kroger and Albertsons, she argued.
She argued that both businesses should make significant changes to their employees’ pay and working conditions. Fewer employment opportunities at a single large supermarket will make it harder for employees to demand higher pay, better benefits, and safer working conditions.
The impending store divestment was also a source of concern for her, which both Kroger and Albertsons admitted.
She warned that “massive worker layoffs,” decreased hours, and the loss of health care and retirement benefits would result from store closures. There will be a loss of good union positions with secure wages and benefits for retirees.
According to a Kroger representative, the merger will be beneficial to staff members. A spokeswoman told SN, “We will invest an additional $1 billion to increase wages and expand our industry-leading benefits beginning on the first day following close, and we expect to provide new and exciting career growth opportunities for many associates.” A representative for the companies argued that by creating a more competitive alternative to major, non-union stores, the merger ensures the long-term viability of union jobs.
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