Ryan Hogg

Faced with huge debt, the impending expiry of a crucial patent, and ongoing litigation over a horror acquisition, Bayer CEO Bill Anderson made a bold move a year ago to get his damaged company back on track: do away with managers and have employees self-organize.<div class="paywall-selector"></div><div class="paywall">



Nearly 12 months later, green shoots may finally be appearing following a desperately dark time for the German group that invented aspirin.



Bayer announced plans earlier this year to secure €2 billion in <a href="https://fortune.com/europe/2024/04/11/pharmaceutical-giant-bayer-ceo-bill-anderson-rid-bosses-staff-self-organize-save-2-billion/">cost reductions</a> by 2026, which has involved around 5,500 layoffs, mostly in managerial positions.



In place of managers, Bayer got rid of annual budgets and asked staff to organize themselves into 90-day “sprints” in self-directed teams. Anderson promised the vast majority of his staff would be operating under this model by the end of 2024.



“Rather than a lumbering corporation, Bayer will emerge as agile and bold as a startup—but one with operations in more than 100 countries. I’m convinced that this dramatic change will accelerate and unlock the value creation in each of our businesses,” Anderson wrote in a commentary piece for <a href="https://fortune.com/2024/03/21/bayer-ceo-bill-anderson-corporate-bureaucracy-19th-century-leadership/">Fortune in March</a>.



The initial batch of teams that rolled out this structure in the summer of 2023 were “racing ahead and doing great,&#8221; Bayer <a href="https://www.businessinsider.com/bayer-ceo-bill-anderson-annual-budget-process-alternative-90-days-2024-12">told Business Insider</a>, while other groups were &#8220;still stuck in the starting blocks.&#8221; More important, he added that voluntary attrition had declined in the last year amid rising layoffs.



&#8220;We all know that the belly of the beast of bureaucracy is the budget process, right,&#8221; Anderson told BI. &#8220;Everybody knows that. Everyone hates it.&#8221;



Bayer will need more than a change in management structure to turn around its fortunes in 2025.&nbsp;



In March, Anderson said Bayer was “badly <a href="https://fortune.com/europe/2024/03/06/bayer-ceo-bill-anderson-pharma-fractured-leg-skateboarding-broken/https://fortune.com/europe/2024/03/06/bayer-ceo-bill-anderson-pharma-fractured-leg-skateboarding-broken/">broken</a> in four places,” comparing the group’s state to his condition after he fractured his leg skateboarding.&nbsp;



Bayer’s market cap has fallen more than 44% this year.



The group’s $63 billion acquisition of Roundup weed killer parent Monsanto in 2018 has proved disastrous for Bayer, as it faced wave after wave of lawsuits over claims the product contributed to customers developing cancer. The group has seen recent successes in battling these lawsuits.



The exclusivity for Bayer’s blood-clot medication, Xarelto, its bestselling drug, is set to expire in 2026, allowing competitors to come to market, likely affecting Bayer’s ability to profit off the drug.



These structural issues come alongside overwhelming €34.5 billion debt levels, close to the company’s annual sales. The <a href="https://www.fitchratings.com/entity/bayer-ag-85884073#ratings">ratings body Fitch</a> hasn’t updated its review of Bayer’s debt since downgrading the group to a BBB rating in March.&nbsp;



Bayer’s new structure, labeled &#8220;dynamic shared ownership,” sees Anderson reallocate budgets every 90 days to reduce bureaucracy and speed up efficiency.



Anderson pointed to Bayer’s pharma division outside Milan, which had cut release time by 50% in the third quarter of 2024.</div>

Bayer told workers to self-organize last year as part of a plan to save €2 billion in costs by 2026.

Bayer CEO says attrition has fallen after getting rid of bosses

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Bayer

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A year after Bayer got rid of bosses and asked staff to self-organize, its CEO says attrition has fallen

Bayer CEO says attrition has fallen after getting rid of bosses | Fortune Europe

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