Sacked Nestlé CEO leaves successor with mega reputation rebuilding challenge
The sacking of Nestlé CEO has created a major reputation and revenue challenge for the world’s biggest food maker that needs addressing urgently to reverse current decline.
Nestlé chief executive, Lauren Freixe, has been removed from office after just one year in post and 40 years with the company. The reason: he broke the company’s code of conduct by having a relationship with a colleague. But this is only part of the story of what is happening at the Swiss food giant – there is a reputation issue it must address, and fast.
Just over 12 months ago, Nestlé – the world’s biggest food maker – sensationally dismissed its CEO, Mark Schneider, after a period of sluggish sales volumes and underinvestment. This is despite Schneider recording significant growth during the pandemic when all others struggled to maintain operating margins.
But, like Premiership football managers, you are judged on your current performance rather than past glories and when the company hiked prices in the face of major rises in supply chain costs, all momentum was lost. By 2024, hit by the rising cost of living, customers were pushed towards cheaper alternatives which saw sales plummet.
Lauren Freixe was appointed in August 2024 to halt the decline and “focus Nestle on organic growth rather than acquisitions.” However, his tenure has now been cut short. Growth remains sluggish for the company but the nature of Freixe’s departure is a prickly one from a PR standpoint.
Public image implications for Nestlé following Freixe’s sacking
I have said time and time again; the personal profile of the CEO is critical important. In fact, I would go so far as to say that it is more important than the organisation they represent. To be compelled to dismiss the company’s most senior executive for breaching its code of ethical conduct and values is damning. It puts the organisation under scrutiny and in the spotlight for all the wrong reasons.
Lack of trust
There is a perception that the company and those leading it lack integrity. Customers, both internal and external, partners, investors and other stakeholders expect leaders to live by the rules they set and values they hold up to be exemplars of best practice.
Freixe clearly broke these rules even going so far as to promote the woman he was having a relationship with. Trust is the issue here, or lack of. People will be questioning Nestlé’s ethical compass and the pressure on Freixe’s replacement, Philipp Navratil, to win back trust will be significant.
Internal dissent and bottom-line implications
Lead by example is the mantra that has dominated management texts forever and a day. Yet when one’s leaders fail to do this, employees can feel a sense of betrayal and loss of confidence in the whole of the leadership function. This can have major consequences for the organisation.
If morale drops, staff retention (and attraction) becomes difficult and arguably more expensive if it leads to a higher turnover, motivation dips, and productivity levels fall which in turn leads to a further decline in output and sales. Navratil will need to act fast to rebuild employee morale if Nestlé is to stand any chance of steadying the ship and reversing its declining share price.
Get out there!
Philipp Navratil needs to use September to get himself out there as much as possible. So far, the narrative around his name is focused on the reasons for his unexpected appointment. That is understandable given that Lauren Freixe’s departure has just been announced. But from next week, there can be no standing on ceremony.
Customers and all stakeholders will seek assurances that the new leadership will right the wrongs and double-down on promoting and living the values the organisation has claimed it holds so dear.
He has no time to faff – Nestlé’s share value, sales and current reputation are on the slide, and he needs to reverse this as quickly as possible. And he can, but it will be hard for him given the financial pressures the company is facing and the urgency to affect a relatively rapid turnaround in fortunes.
Case for Boards to have a permanent CCO
The Lauren Freixe case is another example of the need for organisations to have a Chief Communications Officer (CCO) on their Boards.
Although Nestlé have been clear in their communications around the dismissal of Freixe, there is an information gap between what has happened and what the next step is – not in terms of appointing his replacement but in terms of ‘why’ Navratil will be the right person to lead the company forward.
- Why him?
- What does he bring to the table?
- What are his views and values?
- What will he do differently?
- How will he go about shifting the momentum away from one of reputational and bottom-line decline?
These answers will need to be clearly communicated in the coming days. Nestlé’s reputation and revenues depend on it.
Email me directly if you need advise on successfully navigating a challenge to you or your organisation’s reputation. I am on paul@clearlypr.co.uk
