Many people attribute most cons at Kraft Heinz to the management styles and organizational culture fostered by the executives, nearly all of whom are connected through 3G Capital, a Brazilian private equity firm. Those familiar with 3G’s culture through their other investment companies (AB InBev, RBI) will not be surprised by the cons below, but they are nonetheless important considerations for any potential new hires.
Two key things to note is that KHC, much like other 3G companies, values both EXTREMELY lean operations, particularly in the form of aggressive cost cutting and Zero Based Budgeting (ZBB), and results-oriented measurements (MBOs and KPIs). While having that cultural exposure provides a leg up on how to navigate a company where literally everything needs to provide value, it creates significant headwinds in the following ways:
Large Workloads, Large Turnover (Layoffs or Otherwise), and Large Experience Gaps - While employees are challenged and learn extensively about KHC’s business, in many cases this results in strong employee burnout from long hours and increasingly difficult expectations/MBO objectives. This burnout results in either layoffs or in resignations, as the workload involved becomes incongruous with the pay/target bonus allotted. This constant swirl of people results in experienced and intellectually valuable individuals to leave in favor of those willing to just work hard. In many cases, new hires may not always have the most relevant experience necessary for their current roles. In some cases, this is acceptable, but in many cases, it isn’t, creating low morale across the board.
Perceived Personnel and Promotion Biases - In addition to being leanly staffed, KHC, much like other 3G companies, demonstrates some preference towards promoting those who are loyal and (pun intended) drink the Kool Aid, but those who have been previously affiliated with 3G, either through the firm itself or through its investment companies. As a result, the glass ceiling starts and ends with Brazilian men, followed by men who’ve demonstrated the most alignment towards the 3G doctrine. This can exacerbate low morale.
Limited Resources -- As expected with ZBB, everyone at KHC learns to “do more with less.” In sales, this results in two significant problems towards business development: an inability to stimulate the business with appropriate promotional activity (since there is insufficient trade to spend on making the deal sweeter for customers and consumers) and an inability to get innovation in (again, partially related to trade, but innovation is also its own beast below). This puts employees in a position where targets are no longer feasible or reachable without additional resources, which is certainly frustrating.
Short-term Innovation - In the CPG world, long-term innovation and an ability to have a strong pulse on disruptive trends is imperative to stay relevant and grow the business. While this is an industry-wide problem, many companies (including private equity firms!) have made significant acquisitions in smaller companies that have that pulse and innovation. KHC, however, is focused on acquisitions of larger companies in order to consolidate the industry and allow access to larger, already established brands that don’t need to be cultivated with significant “non-ZBB compliant” investment (ex: the infamous failed takeover of Unilever). In turn, most new items in the market are line/brand extensions that attempt to squeeze as much value out of the brand as possible without necessarily considering what that value would ultimately be. Additionally, a lot of the short-term innovation puts KHC in the strategic position of being a market lagger, not a market leader, as the company is usually coming out with products that are seen as feeble attempts to attack more innovative players.
Complicated Bonus Structures - Bonuses are paid out as a multiplier of the performance of one’s geographic zone, as well as one’s personal performance (both tied into MBOs). This year, the company was informed that the US geographic zone did not meet their bonus this year, and would only be able to receive a fraction of their target based on their personal performance. This is somewhat convoluted, as it dilutes how much $$$ goes back to the employees and decays overall morale and company loyalty. This news becomes more difficult to swallow, as (in an unsurprising twist) most executives do receive bonuses due to their involvement in 3G and other 3G-backed business that may be performing well.
Limited Employee Engagement - Field Sales engagement opportunities are limited to what employees can contribute out of pocket (ex: only HQ gets a holiday party). Opportunities to network, both within the company or within industry, have been limited to executives or have been phased out entirely.
