The Golden Valley-based food maker is cutting jobs at headquarters and streamlining business units as the outsized sales it saw during the pandemic come to an end.

By Kristen Leigh Painter

June 4, 2021 at 2:19PM

General Mills is restructuring its biggest operating unit, leading to job reductions at its headquarters in Golden Valley. Nearly all its corporate employees have been working remotely since March 2020. (David Joles, Star Tribune/The Minnesota Star Tribune)

General Mills is downsizing its workforce to gird itself for post-pandemic changes in the ways people buy and eat food.

The Golden Valley-based food maker just finished its 2021 fiscal year, which was on pace to be one of its best for sales after people, forced to stay home by the coronavirus, ate more of its ready-made or easily prepared products.

But that burst in sales could reverse as the pandemic ends. General Mills executives are moving to lower costs, including cutting jobs, on the expectation that the company will return to the slow growth that was normal before the pandemic.

General Mills, which first told investors about the restructuring last month, on Friday said it was expected to cost $170 million to $220 million, chiefly for severance payouts. It was only last week that it became clear to employees that the restructuring, dubbed "Accelerate" internally, included layoffs.

"I know this isn't easy and that there are real world personal impacts in us making this shift. And last week was especially hard as we shared that reshaping our organization meant that many of our colleagues will be leaving General Mills," Jeff Harmening, the company's chief executive, told employees in a memo Tuesday.

Executives and directors learned their fate — be it a promotion, layoff or status quo — just before Memorial Day weekend, according to internal memos. Some were told they were losing their job at the same time their successor was named, employee e-mails showed.

The rest of General Mills' U.S. and Canada employees will find out whether their jobs will be saved or cut by the end of this month. International workforce cuts are targeted for the fall.

"I also want to be transparent: there are more hard decisions yet to come," Harmening wrote in the memo earlier this week. "Please know, none of these decisions are made lightly — and we are striving to do all of this quickly and respectfully."

The company declined requests for a specific headcount reduction or cost-savings target.

"We are making organizational changes to ensure General Mills continues its momentum," Mollie Wulff, a company spokeswoman, said via e-mail. "The goal of this initiative is to free up resources from parts of our organization and redeploy them in more growth-focused areas, such as digital, data & technology, e-commerce, strategic revenue management, and other capabilities that are critical to our future success."

Harmening told investors at a conference in mid-May that the restructuring plan included changes to his leadership team. The company's Asia and Latin America segment president, Sean Walker, will also be responsible for Europe and Australia. Dana McNabb, who currently leads Europe and Australia, is being given a newly created title of chief strategy and growth officer.

Longtime chief supply chain officer John Church – who led the unit through one of its most challenging years — is being given a new title of chief transition officer and enterprise services officer.

Through the first nine months of the fiscal year, a period that ended February 28 and is the latest data available, General Mills' revenue was 8% higher than in the comparable period a year earlier. Typically, the company, which has around $17 billion in annual revenue, is considered to be having a good year when sales are up 1% to 2%.

The infusion of revenue during the pandemic allowed General Mills to reduce its debt. And the rise of grocery shopping and in-home eating brought sales from consumers who were new to its foods or those who hadn't eaten its products in awhile.

"We've come out of this pandemic stronger in a number of ways … We are in a much stronger financial position," Harmening told investors last month.

Harmening told the investors he's "not really the main driver behind the reorganization" but called it "not simply a cost-cutting exercise." In the next month, General Mills will file an updated notice to securities regulators with financial details about the changes, he said.

North America retail, the company's largest and most important business that accounts for more than 60% of overall sales, is consolidating its five operating units into three. It is also closing its offices in Berkeley, Calif., and Austin, Texas, which have been home to two of its successful acquired brands, Annie's and Epic.

"While decisions like this are always difficult, the natural & organic space remains a strategic priority," Jon Nudi, president of North America retail, told employees in a memo last Friday.