In case you missed it, Hasbro gave about 1100 of its
employees an early Christmas present by announcing their layoff off last
Monday. (See “Hasbro
to Lay Off Another 1100 Employees”). From the lists of those laid off I
have seen, it looks like a lot of design staff from the Dungeons and Dragons
and Magic the Gathering development and promotional area, which seems silly to
me since those departments are where Hasbro is currently making its
profits. Should you want to read it,
here is the email announcing the layoffs from Hasbro CEO Chris Cox (copied from
the Wall Street Journal):
“Team,
A year ago, we laid out our strategy to focus on building
fewer, bigger, better brands and began the process of transforming Hasbro.
Since then, we’ve had some important wins, like retooling our supply chain,
improving our inventory position, lowering costs, and reinvesting over $200M
back into the business while growing share across many of our categories. But
the market headwinds we anticipated have proven to be stronger and more
persistent than planned. While we’re confident in the future of Hasbro, the current
environment demands that we do more, even if these choices are some of the
hardest we have to make.
Today we’re announcing additional headcount reductions as
part of our previously communicated strategic transformation, affecting
approximately 1,100 colleagues globally in addition to the roughly 800
reductions already taken.
Our leadership team came to this difficult decision after
much deliberation. We recognize this is heavy news that affects the livelihoods
of our friends and colleagues. Our focus is communicating with each of you
transparently and supporting you through this period of change. I want to start
by addressing why we are doing this now, and what’s next.
Why now?
We entered 2023 expecting a year of change including
significant updates to our leadership team, structure, and scope of operations.
We anticipated the first three quarters to be challenging, particularly in
Toys, where the market is coming off historic, pandemic-driven highs. While we
have made some important progress across our organization, the headwinds we saw
through the first nine months of the year have continued into Holiday and are
likely to persist into 2024.
To position Hasbro for growth, we must first make sure our
foundation is solid and profitable. To do that, we need to modernize our
organization and get even leaner. While we see workforce reductions as a last
resort, given the state of our business, it’s a lever we must pull to keep
Hasbro healthy.
What happens next?
While we’re making changes across the entire organization,
some functional areas will be affected more than others. Many of those whose
roles are affected have been or will be informed in the next 24 hours, although
the timings will vary by country, in line with local rules and subject to
employee consultations where required. This includes team members who have
raised their hands to step down from their roles at the end of the year as part
of our Voluntary Early Retirement Program (VRP) in the U.S. We’re immensely
grateful to these colleagues for their many years of dedication, and we wish
them all the best.
The majority of the notifications will happen over the next
six months, with the balance occurring over the next year as we tackle the
remaining work on our organizational model. This includes standardizing
processes within Finance, HR, IT and Consumer Care as part of our Global
Business Enablement project, but it also means doing more work across the
entire business to minimize management layers and create a nimbler
organization.
What else are we doing?
I know this news is especially difficult during the holiday
season. We value each of our team members – they aren’t just employees, they’re
friends and colleagues. We decided to communicate now so people have time to
plan and process the changes. For those employees affected we are offering
comprehensive packages including job placement support to assist in their
transition.
We’ve also done what we can to minimize the scale of impact,
like launching the VRP and exploring options to reduce our global real estate
footprint. On that note, our Providence, Rhode Island office is currently not
being used to its full capacity and we’ve decided to exit the space at the end
of the lease term in January 2025. Over the next year, we’ll welcome teams from
our Providence office to our headquarters down the road in Pawtucket, Rhode
Island. It’s an opportunity to reshape how we work and ensure our workspace is
vibrant and productive, while reflecting our more flexible in-person cadence
since the pandemic.
Looking ahead
As Gina often says, cost-cutting is not a strategy. We know
this, and that’s why we’ll continue to grow and invest in several areas in
2024.
As we uncover more cost savings, we’ll invest in new
systems, insights and analytics, product development and digital – all while
strengthening our leading franchises and ensuring our brands have the essential
marketing they need to thrive well into the future.
We’ll also tap into unlocked potential across our business,
like our new supply chain efficiency, our direct-to-consumer capabilities, and
key partnerships to maximize licensing opportunities, scale entertainment, and
free up our own content dollars to drive new brand development.
I know there is no sugar-coating how hard this is,
particularly for the employees directly affected. We’re grateful to them for
their contributions, and we wish them all the best. In the coming weeks, let’s
support each other, and lean in to drive through these necessary changes, so we
can return our business to growth and carry out Hasbro’s mission.
Thanks,
Chris”
A couple of thoughts:
1.
While Cox does mention increased supply chain
efficiencies (which I bet still rely heavily upon southeast Asia) and increased
direct to consumer capabilities (i.e. promotion and sales) there is no mention
of any increase in focus on the retail part of the channel. We have already see
increase focus on B2C, with an increase in monthly Secret Lair releases and
Hasbro Pulse, so it will be interesting to see what else Hasbro moves into the
direct channel
2.
No use of the term firing anywhere in the
letter, just reductions and transitions.
3.
If a business needs to cut costs, letting staff
go is almost always the first option as payroll is always “low hanging fruit”
in an organization. The supply chain modifications mentioned by Cox usually
take years to make, hence why we saw no rapid shifts in distribution during
epidemic (“See
JIT, ROE and the Pretty Overblown Trucker Shortage”)
