Should investors be worried about Kellogg's management?
The food company Kellogg's faces backlash stemming from ongoing employee strikes -- how should investors judge management when investing?
Dec. 13, 2021

Kellogg's (NYSE: K) is one of the oldest food manufacturers still operating to this day, with the company opening its doors in 1906. It was in the media's headlights late last week amid protests and strikes concerning working conditions from its employees. 

Why are Kellogg's employees on strike?

Access to pensions, healthcare, 7-day workweeks, no paid sick leave, no compassionate leave for bereavement, lack of consideration for personal obligations, and income disparity among staff were some of the key troubles shared by employees.

To draw a comparison, CEO Steve Callihane earned $11.6 million in compensation in 2020.

What does it mean for investors?

Does Kellogg's prioritize shareholders? Sure. Does it come at the expense of affecting people's livelihoods? Yes -- and it's something I wouldn't be okay with, as I'm sure many investors and consumers wouldn't be either.

With plans to replace existing staff, Kellogg's appears to be adamant that its working conditions are fair, and that it can find willing job-seekers to fill the roles and continue business as usual. However, workplace relations issues tend to be ongoing disruptions for companies down the line. Toxic company culture can stem all sorts of future issues which can become nightmares for investors.

It's not just this that should be of concern though. Negative publicity on these topics can cause consumers to blacklist companies and their products because they don't agree with the company's stance. Whether it's now, or in the future, Kellogg's could see a downtick in sales as a result of these actions.

How should investors judge management decisions?

A company's management team is an essential factor to research when investing. Financial compensation is just one component of employee satisfaction, with benefits, training, and support among other functions that play a key role.

It's important for any company to not only innovate in relation to its core products and services but also to innovate when it comes to working conditions for the people that make it all possible. CEOs enact a company's goals, vision, and values; and maybe, in this case, Kellogg's was prioritizing its existing model that has been a success through the years.

But moreso, a CEO's responsibility is to lead, inspire, and get the best out of employees' work, which Kelloggs has clearly fallen short of here. The Kellogg's brand is as iconic as the likes of Coke and McDonald's so no, I don't forsee the company falling to smithereens. But it does put a spotlight on management's abilities, which consequently, could see many steer clear here.

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