When new CEO Richard Brasher took over Pick n Pay this year, pundits declared
he could turn the business around. Competition from Walmart's South African arm, Massmart, had Pick n Pay shareholders worried.
Instead, Brasher saw a third of Pick n Pay's profits drop this year and is now retrenching
hundreds of employees.
reports the retailer is giving staff until next Wednesday to accept voluntary retrenchment packages. This applies to the head office and each regional head office.
As a company, Pick n Pay is planning to cut costs by trimming the fat in its workforce. But are retrenchments the best way to go when it comes to improving the bottom line?
As a general rule, the less money you spend the more money you have left over for profits. But, as Pick n Pay is very much a grassroots company, the question becomes: Will their service get worse because of less staff?
Since supermarket prices are so competitive, service is often where customer loyalty lies. If Pick n Pay wants to get its costs under control, it will need to do more than simply cut down staff.
The voluntary retrenchment deal will be one week's salary for each year worked at the company. If that's enough to send employees resigning in droves, Pick n Pay has a bigger problem than inflated costs. A mismanaged and unsatisfactory workplace will never function as well as a streamlined one.
That's a business lesson Pick n Pay will learn the hard way.