Lidl culls its bigwigs, but can't stop growing
In an unmistakable power shift from operations to the consultative committee headed by Gerd Chrzanowski (47) at HQ in Neckarsulm, top managers are often obliged to vacate their offices so abruptly that no immediate replacement can be found. Only three weeks ago, Patrick Kaudewitz, CEO of hypermarket subsidiary Kaufland, had to make his goodbyes; now it is the turn of Jesper Højer, CEO of discounter Lidl, to say his sad farewells.
Ignazio Paternò, a former head of Lidl Italia and currently deputy director of purchasing at Lidl Foundation in Neckarsulm, will assume Højer's role on an interim basis. The new supervisory body Schwarz Treuhand (SUT) is expected to make this arrangement permanent as early as this spring. But, at the current rate of survival, Paternò will last only two or three years.
We all love to moralise and journalists more than most people. It would be immensely satisfying to write how the arbitrary ruthlessness of Klaus Gehrig is ruining the company for good and all. But this would create a false causality. In fact, with sincere apologies to both idealists and the tender-hearted, the very opposite would seem to be the case...
Giant slayer: Looking somewhat avuncular, Klaus Gehrig could perhaps be mistaken at first glance for a harmless family man tending his cucumbers and pumpkins down at the local allotment in rural Swabia. That would, however, be a fatal mistake, if you happen to be a manager at Schwarz Group...
Lidl is also an international success story and now achieves more than two-thirds of its annual sales abroad. While Lidl Germany works on an estimated margin of 2.5 to 3 per cent (earnings before tax as a percentage of net revenues), numerous foreign operations make more than 5 per cent.
Meanwhile we have the strange case where the boss can't sack enough top people at a company that continues to go from strength to strength. What can we conclude from this counterintuitive phenomenon?
Klaus Gehrig: "The system is all, the individual is not so important"
What management consultants and retail experts might one day refer to as the 'Gehrig phenomenon' raises a number of interesting questions. Is he an inspired figure commanding one of the world's largest and most dynamic retailers or really Darth Vader in disguise? Will the actions of this giant slayer have negative results in the long-term not foreseen today? Could Schwarz Group have been even more successful without all these St. Bartholomew Day massacres in the C-suite?
Are Gehrig's regular culls only possible thanks to the solid efficiency of the Lidl concept and the strength-in-depth of its middle management? And should Dieter Schwarz hoist Gehrig by his own petard and sack him in the name of structural change despite the high sales growth achieved under his aegis?
A study in power: Schwarz Group's new organigramme
Perhaps one day it will all make for an interesting case study on the illustrious pages of the Harvard Business Review. By which time Schwarz Group will already have imploded like a dark star or surpassed Walmart...
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Read in German: "Viel Wirbel bei Schwarz" by Jan Mende on pages 1 & 3 as well as "Lidl wächst und wechselt die Chefs" by Hans Jürgen Schulz and Jan Mende in Lebensmittel Zeitung, no. 14, 05.04.19; "Erfahrung hilft nicht mehr" by Bernd Biehl on page 2 as well as "Schwarz-Gruppe stellt sich neu auf" by Jan Mende & Bernd Biehl on page 4 of Lebensmittel Zeitung, no. 12, 22.03.19; "Gehrig bestätigt Übernahmepläne für Real" by Silke Biester on page 6 of Lebensmittel Zeitung, no. 9, 01.03.19. Also available on LZnet: "Schwarz-Gruppe in Unruhe" (paywall).