Novartis Flip Flop: Cuts 1,400 Jobs Only Days After Denying Layoffs
The announcement of 1,400 layoffs at Novartis (NVS) yesterday came just days after the company denied it would do exactly that. The move is the third different and contradictory signal Novartis has given investors and its own employees about its plans to cut jobs, suggesting that CEO Joe Jimenez does not quite have all his internal communications ducks in a row. Inexplicably, Jimenez seems to be angry at a competitor, Roche (RHHBY), for making his company's flip-flops look bad.
Here's the timeline:
- Nov. 3: Novartis says it will continue "trending down of sales and marketing costs." Most of those costs are, de facto, sales rep salaries and benefits.
- Nov. 17: Novartis tells investors that it "will continue to optimize its marketing and sales (M&S) spending by re-allocating resources geographically as well as simplifying current processes." The company does not specifically say there will be any job cuts. In an unrelated move, Roche announces 4,800 layoffs.
- Nov. 18: I note that the above statements from Novartis ought to be interpreted as an impending round of layoffs at Novartis.
- Nov. 21: Novartis spokesman Eric Althoff tells Reuters, "We do not plan a programme similar to Roche's."
- Nov. 23: I note Novartis' own employees do not believe the company's statement. Some workers predict 1,600 staff will go.
- Nov. 26: Reuters reports that Jimenez is angry that Roche announced a round of 4,800 job cuts on the same day (Nov. 17) as he was telling investors about his planned cuts for Novartis' sales divisions.
- Dec. 1: Novartis tells Bloomberg it will lay off 1,400 people.
Why Jimenez is angry at Roche is anyone's guess. He ought to be angry at himself for allowing his communications staff to send the entirely false message that no layoffs were planned, and for being distracted by Roche's unrelated announcements. (Roche's announcement was actually good news for Novartis in the sense that it made Novartis look better by comparison.) This is one of those situations where CEOs often blame the media for misquoting them or taking their words out of context -- except in this instance the media got the context correct from the get-go and Novartis only confessed the truth belatedly.Novartis' Althoff did not immediately respond to a request for comment on why he gave out false information on Nov. 21. told BNET, "The quote to Reuters does not state that no layoffs were planned. ... the question I was asked was whether we were planning a cost cutting program as announced by Roche." When I put it to Althoff that the most "similar" element between the Roche and Novartis cuts were the mass layoffs, he responded: "not really."
Althoff may have Jimenez to blame for this onion-peeling exercise if Pharmalot is right about Jimenez denying there would be layoffs on his internal company blog. Either way, this screwup is Jimenez's fault. Either he gave out bad information himself, or he wasn't transparent enough with his lieutenants -- and everyone's credibilty got damaged as a result.
Related:
- Novartis CEO Denies Layoff Rumors, Staff Still Worried
- With Sales Up and Costs Down, Novartis CEO Rewards His Staff With Layoffs