India - Hindustan Unilever - The CEO factory (V.G.Read)

When it rains it pours and in 2003, the adage was coming home to Hindustan Unilever (HUL). For two years, the company had been tossed around by intense competition, price wars and growth was in low single digits. Morale was at its lowest and HUL’s reputation as talent’s dream destination was starting to unravel, what resulted later in some of its star performers leaving, people like D Shivakumar now with Nokia, Uday Khanna for Lafarge, Anand Kripalu for Cadbury and VS Sitaram for Dabur. HUL’s leadership culture needed to be re-energised, fast.

What the company could really benefit from was some introspection. The problem was that the UKbased leadership coaches who were identified would cost “an arm and a leg”, at a time when businesses themselves needed fire fighting. That didn’t stop HUL from putting 70 of its top leaders through some serious soul searching.

It is with some pride that CEO Nitin Paranjpe alludes to this example to illustrate the company’s focus on people issues. “It would have been easy to say ‘forget the coaching, let’s focus on business’. But we didn’t,” he says.

Gurdeep Singh — then Management Committee member and executive director HR — was chief among those who pushed for the gamble. “The introspection was hard but we knew it was time to formalise a shift in culture,” he recalls. Some of these shifts were bitter pills to swallow. In 2004, the 360 degree process of performance appraisal was institutionalised. “It was a huge cultural transformation. Some were big enough to deal with it, others struggled enormously,” says Paranjpe.

Soon after, mid-year reviews were made mandatory. “Your self-image gets shattered pretty fast with 360 degree reviews,” says Sanjiv Kakkar, now Chairman, Unilever Russia, Ukraine and Belarus (RUB). “You get the message about your performance gaps loud and clear.”

Fast forward to today, and HUL’s enterprise building culture is at its energetic best. Everyone in its new management commitee is in their early 40s and Nitin Paranjpe is the youngest ever occupant of the corner office. Two HUL alumni — Vindi Banga and Harish Manwani — are now on the eight-member Unilever Executive team. More emphasis today is laid on real delivery and performance accountability and HUL has moved to a far more aggressive performanceskewed rewards system.

Inheriting the role of Miss Clean-Up from Singh, is Leena Nair, HUL’s feisty HR executive director and the youngest of its eight-member managing committee. Although she’ll have you know repeatedly, that the basic values behind the three decade-old leadership development practices remains largely untouched. The kind of values, that, Kakkar recalls, back in 1995, allowed senior leadership to empower him — a marketing “rookie” — with a blank cheque to fight off a competitive battle in haircare on his own, no questions asked. “It was an immense amount of trust and that builds you very quickly as a leader,” he says.

That those merits of trust and empowerment are intact is what anybody in the salt-tosoap transnational will zealously claim. “In HUL, we always had the mantra that if the manager was good enough there was always a job for him somewhere. HUL leaders have always believed in placing people in stretched roles and giving them big goals to achieve and then empowering them to get on and deliver,” said Dadiseth in an earlier interview with CD. However, what Nair will admit is that recently a lot of the processes designed to attracting and then differentiating talent, have become far more dynamic. “It’s about innovating, not re-inventing the wheel,” seconds Singh.

The new mantra of transparency is the sweet spot on Nair’s sweep of reform. HUL has been called many things, but candid and reactive weren’t among them. That’s changing. For more than a decade, Paranjpe was kept in the dark about being a “lister” — Levers jargon for its star performers. While he doesn’t need that affirmation today, if he were a young sales manager, he would not only be told he was a lister, but would also be given a ‘capability card’ that told him where his future potential was, what his next job was likely to be and what his development action plan should be. “In my day, your performance appraisal meant your factory manager would give you a sealed white envelope and a company calendar,” jokes Singh, who spent over eight years in Levers.

Today the transparency extends across the shaping of careers. While employees can ill afford to shoot the messenger that brings the message, today they can certainly add to the message. There is an entire section in the PDP (Performance Development Process) where employees can write reams about where they see their careers heading. A Unilever open job posting allows employees to apply for jobs abroad, where according to Nair both participation and conversion is high. “Earlier you trusted the company to make the moves for you. Today we give people the responsibility for their own careers,” says Paranjpe.

For Nair, nowhere is this renewed lure of HUL as a preferred employer more evident than on b-school campuses. After the shocker of being upstaged by i-banks and consulting firms and falling to Day One status (from Number One on campus until 2002 to 14 in 2007) the company has clawed its way back to Day Zero. For a leadership development framework that has its bedrock in “making and not buying” talent, getting a certain quality of talent into its doors is critical. An AC Nielsen tracker suggests campus goodwill scores have moved up by 50%. “The way to fight is not by being something you are not,” says Nair.

Not that HUL’s reputation as a fount of managerial talent was ever damaged irreparably. Around 450 of India Inc’s CEOs today are Levers alumni. The first stop for headhunters recruiting general managers has always been Levers and according to Preety Kumar, managing partner Amrop International India, that isn’t likely to change: “In terms of experience in thinking, building and leading scale there is no competition from a consumer company,” she says.

Uday Khanna, CEO Lafarge India having left HUL in 2003, agrees. While he jokes that it was a natural progression from roti and kapda to makaan, he says, “Levers offers you global exposure and scale, but more importantly the values, ethics and governance systems — critical for assuming any senior leadership position.”

It is for these reasons that Kumar still advises talent to cut their teeth in Levers. Unfortunately, HUL has had to contend with the reality that young talent has other priorities. “Whether we like it or not they are looking for money, the global footprint and what’s in it for them in the next five years,” says Nair. What has worked in HUL’s favour has been the process of ‘Unileverising’ that began in 2005, a move to harmonise all of Unilever’s global subsidiaries. Today HUL plays up its global footprint and even sends its management trainees on global exposure stints during management training, earlier unheard of. “I never got to go on expatriation, leave alone in the first 15 months,” says Kakkar.

“Product issues” — issues regarding templated and therefore restrictive career movements and non-competitive compensation structures — have also been radically corrected. Listers are now called “hot people” and chummeries are serviced apartments — a sign of changing times. Some things, though, remain uncompromised. Like the rigorous rural stint in the famed 15-month management trainee program, now tellingly re-christened Business Leadership Training. “We still put them through the wringer,” says Paranjpe.

Today, there is greater emphasis on matching the ‘hot people’ to the ‘hot jobs’— the top 7-10% jobs identified by the management committee for impact to business. For senior managers, this labyrinth of system-fulfilment means that 40% of their time is spent on identifying, differentiating and grooming talent, something that Dadiseth said is a culture which has been embedded in the fabric of the company since the day he joined in 1972. For someone like Paranjpe, it means, among other things, squeezing in lunch sessions with young managers every 15 days.

That commitment is non-negotiable. Three years ago, HR introduced the six Standards Of Leadership (SOL) in a bid to embed the culture of leadership. One of those standards, that every employee from white collar supervisor to chairman gets appraised against, is how well they “build superior talent”. SOL has become the language of every manager’s behaviour. “We’ve always had a leadership competency framework,” says Paranjpe, “but in the last few years we’ve had to sharpen our tools.”

A large chunk of this “sharpening” has taken place over the last three years; leveraging technology to strengthen systems is one such development. “Today you can carry out dipsticks every week,” says Singh. Nair groans when asked to put a number to the dipsticks and surveys carried out annually. “We take a lot of time to listen to people,” is her answer. Thankfully, all of this “paperwork” is now e-enabled. By the end of this year a “One Unilever” electronic performance management system will be deployed across over 100 countries to build better alignment of individual goals with Unilever’s global strategy.

This process of harmonisation is being carried out by the HUL expertise team, a global HR sub-division formed three years ago to work on policies on compensation, talent and learning. Earlier every Unilever subsidiary had the flexibility to design its own systems. Today, say HUL’s HR team, it is structured globally and “works like clockwork”.

It isn’t just the HR operating framework that has been restructured. Accommodating a generation of talent looking for accelerated career growth has put an enormous amount of pressure on the organisation structure. “They want it here and now, not twenty years later,” says Kakkar. Nair says there is grudging acceptance of younger people in bigger roles.

The structure has also been redesigned to marry the earlier focus on general management to the present need for specialists. “We need a large number of people at the cutting edge of what they do,” says Paranjpe. So where there were only two highways to general management — sales and marketing — today there are several cuts like customer management, advertising and brand development. Even more significant are the changes being made at the regional and global level. What started in 2004 as global restructuring, with combinations of businesses, new roles for Unilever’s management team and new regional demarcations, Kumar says has continued to help create more room at the top for talent. “Unilever has created complex, highquality roles that pan across regional and global locations that might be less visible but are just as strategic as the top 8-10 jobs,” she says.

One criticism of HUL remains — it’s still too resistant to “buying” top talent. Parent Unilever is doing its bit to counter that, starting with Sandy Ogg, chief human resources officer, who came from Motorola, and now Paul Polman, formerly of Nestle, to take charge as the first outsider CEO of Unilever. For HUL though, even though the return of Gopal Vittal, a deeply regretted loss to Bharti Airtel two years ago and now back to head Home and Personal Care, is cause celebre, it is a case of the prodigal son returning home.

To sustain the cultural change, Kumar believes strongly that HUL must be more open to bringing in talent diversity. “People are wary to go in if there is no history of integrating senior management.” It’s a touchy topic for Paranjpe who, insists they don’t have an “ideology” about this, but, like others in HUL, is clearly in favour of consistency over diversity. “We want the right man for the job so bringing someone in means he’s pitted against two potential and competent successors in the pipeline,” he explains.

But that too could change. As Kakkar says, “There’s a feeling that HUL is a big monolith and moves slowly and yes, sometimes we have responded slowly to changing markets conditions. But when responsiveness is really needed, there isn’t a bigger elephant that can dance as fast.”