Raley's Completes Restructuring

ELLIOT ZWIEBACH

WEST SACRAMENTO, Calif. — The restructuring process at Raley's Supermarkets here has concluded, Michael J. Teel, president and chief executive officer, said.

After eliminating 153 corporate office positions earlier this month — just days after announcing it would eliminate five top executives — Teel said the company does not plan any more cutbacks.

The layoffs are not the result of a financial crisis, he told SN. “Cash flow is very strong, and these moves are strategic, to preempt a crisis,” he said.

“Over the last decade, we were building the company for growth, and once that growth came to a halt, we realized we couldn't sustain our administrative expenses in today's economy — no one can — so we took a preemptive action.”

The cutbacks affected people in operations management; sales and merchandising; information technology; finance; human resources; real estate and construction; asset protection; marketing and advertising; and legal and risk management. Raley's also consolidated eight districts down to six.

All those who qualified — personnel with at least eight years at Raley's — were put on a leave of absence for 60 days, with full pay and benefits, Teel said. He also said everyone who has previously worked in the stores will be given the opportunity to return to the stores.

In announcing the layoffs, Teel said he had elected to take a 50% decrease in his own salary “because I believe that organizational change must begin at the top and that leadership should not be immune to its impact.”

Last Monday, Raley's held a rally in its lobby and at its distribution center “so everyone could start fresh and not look back,” Teel told SN. The rally was also an opportunity for people to ask questions and address their concerns face-to-face with Teel, he noted.

In a written message to employees on the day of the layoffs, Teel said streamlining the workforce was “the last and perhaps most painful step in this restructuring process. This was one of the most difficult business decisions I have made, and I would never take this action lightly if I didn't believe it was absolutely necessary for the long-term sustainability of our business.

“Change is never easy, and this has been one of the hardest things I have had to accept, let alone do. But it is because I care about being part of a solution that I am undertaking this difficult but necessary reorganization.”

Teel said the cutbacks will make it easier for Raley's to react more quickly to competition; to operate more efficiently with less corporate overhead; and to transform the way it does business “to be lean, swift to move and innovative. Achieving these goals will not be easy, and it could not be done with our current organizational structure.”

Raley's informed corporate staff about the cutbacks on the morning of April 16 in group meetings.

As people filed out of the room, Teel told SN, “I shook hands with people who wanted to say goodbye, and I was surprised at the number who thanked me for the opportunity to work for Raley's and who said they understood the competitive nature of the marketplace and the economy that prompted these changes — which I think speaks to the quality of the people we have.”