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Why is Heinz offering to buy out hundreds of workers?

Heinz's new Brazilian management feels their current workers might not fit in
Heinz's new Brazilian management feels their ... 01:55

H.J. Heinz (HNZ) is offering buyouts to its Pittsburgh employees, according to KDKA-TV. Heinz's worry is that workers might not fit in with its new "results-driven culture" and new management team, which is primarily Brazilian. Last year, Berkshire Hathaway (BRK.A) and Brazilian investment firm 3G Capital purchased Heinz in a reported $23.3 billion deal.

People who choose to leave will receive a severance package including a minimum of six-months pay. The amount goes up with the length of employment. But some people worry that the move is a first step in reducing headcount or possibly relocating corporate headquarters.

According to KDKA, a memo went out to 775 employees explaining that "our new culture may not be for everyone" and that the company wanted "to make sure that every employee feels truly invested in the culture and our business plan."

Any employee can take the offer, which has an acceptance deadline of April 21.

In an email to CBS News, Michael Mullen, Heinz senior vice-president of corporate and government affairs, indicated that the company plans to replace all employees who decide to take the buyout. It has no target or quota, and none of the employees are union members. A prepared statement said the following:

Heinz is offering its Pittsburgh-based employees a Voluntary Resignation Program. There is no requirement for any employee to participate in the program. Heinz realizes that its new dynamic and results-driven culture, focused on efficiency and meritocracy, may not be the perfect fit for every employee. Consequently, we have decided to provide a generous opportunity for eligible employee to leave Heinz with enhanced severance benefits.
According to a KDKA interview with Point Park University business professor Elaine Luther, a power shift is occurring at the company. "When you do something like this, you're really saying we're shifting the power from the employees to management, and it almost sounds like a veiled threat," she said.

Luther also didn't buy the claim that all positions would be filled. If it were a change in corporate culture, she argued that the offer would have been extended beyond the Pittsburgh office, and that the outcome could well be a workforce reduction.

When private equity firms are involved in corporate acquisitions, they often institute significant expense controls, including headcount reductions, to make the investment pay off.

Last week Amazon (AMZN) discussed a pay-to-quit plan in which workers at its fulfillment centers are offered from $1,000 to $5,000, depending on tenure, to leave their jobs. As CEO Jeff Bezos explained to shareholders, he wanted to "encourage folks to take a moment and think about what they really want. In the long run, an employee staying somewhere they don't want to be isn't healthy for the employee or the company."

Amazon said only a "small percentage" of employees take the deal, but given that much of the work in its fulfillment centers is performed by temporary or subcontracted workers, it isn't clear what percentage of them would be eligible in the first place.

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