Britannia sacks 42 executives in one day

MUMBAI: Biscuit maker Britannia Industries pink slipped 42 executives in a single day signaling that FMCG companies, faced with soaring costs and hyper-competition, were cracking the whip on under performers. The development took place last week and came quite abruptly, said some of the employees who have been laid off. Britannia said it sharpened performance parameters for the staff this year differentiating them into "great, good and gone" and rewarded the top performers with bonuses as high as 150%, something not very common in the industry. Sources said Britannia decided to let go executives who had underperformed in two out of the last three years. All 42 employees, including some managerial staff, who have been asked to leave will be given their salaries for the next two months, but have been asked to go on leave immediately. These employees were from the manufacturing, sales, packaging and quality control teams, said a person aware of the development. While the percentage of employees who have been asked to leave is about 3% of the company's total strength of around 1,400, the haste with which the move was executed shocked many staffers. But the company said the affected employees were put on notice for some months now. "This is part of the ongoing performance management process, which differentiates the great, good and under-performers and has nothing to do with any other factor. Each year, under-performers (usually 20 to 30) are put on a performance improvement plan and progress is consistently and carefully monitored. In those cases, where the level of performance continues to be below the acceptable benchmark and there is no noticeable improvement, employees are transitioned. There is no surprise for the employee as it is discussed in advance as part of the performance review and happens every year," said the company spokesperson in an emailed statement. Some of the sacked employees said the development came as a surprise. "A senior management team accompanied by the Human Resource team had come down to Kolkata and asked us to put in our resignations. They simply said that this decision was taken in light of our performance," said an employee from the company's Kolkata unit, who did not want to be named. This employee has been with the foods major for over two decades and was given a salary hike last year. "I didn't get a salary hike in 2009 and 2011. The HR asked me to resign last week saying that my performance was not up to the mark. The management has asked officers who haven't got two salary hikes in the last 3 years to resign for under performance," said a production officer, who did not want to be named. A retired Britannia employee, on conditions of anonymity, added: "This is very unlike the way Britannia functions." Industry experts believe that companies like Britannia are bound to get tougher on performance expectation from employees with increasing competition in the marketplace. Britannia has been facing stiff competition from ITC, Kraft and Parle and also some regional players. The Rs 4,600-crore Britannia, which has 250 managers, has been growing at strong double digits every year for the last four-five years. It has consistently stepped up brand investments as well to support and maintain its market shares. Most companies in the FMCG space, including Hindustan Unilever (HUL) follow a performance appraisal system where employees are segmented into different levels of delivered performance every year. Those who fall in the lowest bracket are usually mentored for a certain period of time to upgrade their performance. The level of strictness observed in weeding out the bottom 1-2% employees may vary from company to company. However, no FMCG company has yet admitted to following a policy of laying off under-performers. Some companies like Procter & Gamble India (P&G) have in the past followed good practices of "outplacing" surplus employees based on their interests. On the flip side, however, there is also a war for talent in the FMCG industry which has an annual attrition rate of 18-20%. Companies like HUL, P&G and Godrej Consumer Products, which try to maintain a pipeline at ever managerial level, are constantly on a recruitment drive. Axe falls Britannia has categorized performance as "great, good and gone" this year It has rewarded the top performers with bonuses as high as 150% Sources said Britannia decided to let go executives who had underperformed in two out of the last three years ( With inputs from Shilpa Phadnis in Bangalore )