Unilever has undergone significant change in recent times, with some impressive results. Craig Donaldson caught up with Geoff McDonald and Peter Slator to discuss Unilever’s unique approach to HR, employee engagement and how to build a high performance culture
Unilever has undergone significant change in recent times, with some impressive results. Craig Donaldson caught up with Geoff McDonald and Peter Slator to discuss Unilever’s unique approach to HR, employee engagement and how to build a high performance culture
The fast moving consumer goods industry is one of the most competitive in the world. Unilever has established itself as a market leader across dozens of categories with brands such as Continental, Rexona, Sunsilk, Dove, Lipton and Flora, just to name a few.
In early 2000 the company announced a five-year strategic plan focused on fewer, stronger brands to promote faster growth. This involved the revision of some 1,600 brands down to a portfolio of around 400. These brands currently represent 93 per cent of total sales (compared to 75 per cent in 1999), which is expected to increase to 95 per cent by the end of the year.
Such a drastic decrease in brand numbers also saw major organisational restructuring. This has resulted in a much leaner Unilever, accompanied by a drive to simplify processes and reduce the amount of non-value-add work for employees.
Working smart
Unilever introduced a program called ‘Work Smart’, which was designed to simplify the organisation for employees at three levels, according to Geoff McDonald, human resources director for Unilever Australasia. The program provided employees with a number of tools to simplify their work and better manage their time on the first level, while the second level focused on how they operated within the business at the team level and the third level simplified work in terms of organisational processes and employee engagement.
Unilever’s HR function also came in for a major rework, which is now structured into three HR components. “There was a degree of complexity in our HR model which we’ve taken out and we’re still working on simplifying it more. It’s about finding the balance between control and simplification – it’s very important that you don’t go overboard and throw out all the controls when simplifying.”
The first component of the HR function comprises shared services, which manages day-to-day transactional issues within Unilever. The second component comprises ‘centres of expertise’, which are centralised units within the business with expertise in areas such as learning, remuneration, management development and organisational development. The third component comprises a group of HR practitioners called business partners. Their role is to partner with the business and work with the centres of expertise to develop and deliver HR solutions to solve particular business issues.
“So all the transactional HR issues have been delegated to a shared services group, which has freed the business partners to focus in on the transformational side of HR, with a close partnership with the centre of expertise,” McDonald explains.
“So we have a business partner, for example, who works with the heads of brand development and that business partner is responsible for understanding the HR implications for what they want to do in marketing. Once they understand the issues in a business context, they work with their centre of expertise partner to develop and implement a learning solution, for example, that will help marketing achieve its business goals.”
Organisational alignment
This three-tiered approach to HR also assists in strong organisational alignment with business strategy, according to McDonald. His experience is that HR can play a critical role in helping to drive business strategy forward by having its finger on the pulse of organisational capability through people.
“For example, execution is critical for us to be able to deliver our business strategy. So we have to be able to determine the capability of our people in terms of their ability to execute at an organisational level – their skills, their mindset or whatever the case might be,” he says.
“There might also be a structural issue within the organisation which impedes execution. Maybe we’ve got two layers that don’t allow people to work efficiently or execute because of the process they have to go through for decisions. So we have to be aware of the ability to execute on the structural level as well.”
Peter Slator, chairman for Unilever Australasia, agrees. He says HR plays an integral role in establishing whether the business has actually got the capabilities to carry out its plans. “As you go down through every level of the business you would find a HR representative actively involved in the discussions about what we’re trying to achieve. At the end of the day, even when you’re clear on what it is you’re trying to achieve, it only happens when people engage and really execute it,” he says.
Emotional engagement with strategy
Another area where HR plays a critical role in driving business strategy is emotional alignment, according to McDonald, which is about establishing and securing personal commitment to a business strategy.
“So we’ve got this strategy, and we know what we have to do and maybe how to do it in our minds. But do we really have everybody’s commitment to get there? Often you can get 100 per cent agreement to the strategy but only 60 per cent commitment. And I think our role in HR is to get that 100 per cent commitment. In fact, if we can get 100 per cent commitment and 60 per cent agreement, we will deliver that strategy,” he asserts.
In recognition of this, Unilever has established a process for gauging and ascertaining emotional commitment across the organisation. Originally a four-day process designed for the company’s executive ranks, it has since been expanded and tailored to cater to all levels of the company, however the original design and concept remains the same.
At the board level, for example, one day is set aside for allowing members to get to know one another, because “at the end of the day, the board’s going to be driving the business”, McDonald states. This day provides an opportunity for board members to understand how to deal with conflict with one another and explore their hopes and fears in terms of business goals. The next two days focus on “the real hard issues” and determining the “must win battles” and how the board, individually as members and as a whole, will deliver those. The final day is dedicated to securing the emotional commitment needed to win such battles.
Slator believes it’s important to explore these hopes and fears, even though such emotional language is very different to the language normally associated with the business strategy. “You get a completely intellectual response by looking at the upsides and downsides, which is how you would normally couch it,” Slator says.
“But that doesn’t go to the heart of the person concerned – what they really hope for, what could be better for them and what they’re personally prepared to commit to in order to achieve that. And then there’s their fears – what concerns them if we go down this path, what’s going to gnaw away at them when they go home at night about why something might not work. So it’s about getting the real concerns on the table as opposed to just the intellectual problems.”
Building a performance culture
Such processes have improved openness and honesty around business dialogue considerably, Slator believes, as real issues are placed on the table quicker for quicker resolution as a consequence. This is in line with Unilever’s wider strategic plan, in which the culture has shifted from being overly analytical (sometimes leading to paralysis) networked and quite comfortable, to a more action-oriented one where you “just get out and do it”, McDonald says.
“Yes, we need to do the analysis and we’re not going to lose the intellectual horsepower that’s required to do it well, but we want to execute better and do what we say we’re going to do. I think with that comes a stronger performance culture.”
Slator says Unilever’s performance culture has come about by establishing clear expectations and then empowering people to deliver. While it’s great for their career if they do succeed, he says it’s equally important to be prepared for the consequences if they don’t succeed.
“You hold people accountable for their performance, but make sure you have all the information before coming to a decision. Was it the market circumstances, for example and nothing to do with the individual? Or was it to do with their own performance? First of all you help them to improve that performance, but if it can’t be helped, then you have to accept that the best thing for the individual and the organisation is a separation.”
Striking a balance between drawing a performance line and retaining a level of care for the individual is also important, McDonald says. “We’ve gotten better at telling people when they’re not performing [and] that maybe it’s better to go and work somewhere else. But at the same time I think this care for the human being, this care for the individual is a real strength of Unilever’s and that’s something we don’t want to lose.”
The competencies of management
In building a performance culture, Unilever has introduced a new set of competencies for assessing management effectiveness and performance. These competencies provide a yardstick for managers to measure not only what but how they deliver results, and play a critical role in Unilever’s succession planning process. While the 11 specific competencies are for internal use only, they’re based around the broader clusters of driving the agenda for growth, creating a growth vision for people and building commitment to growth.
“If you want to grow a business as opposed to just delivering profit within the business, you’re looking for a different profile of leader,” Slator explains. He acknowledges that there has been a mixed response to the leadership competencies, ranging from alarm at being unable to hide in terms of unclear responsibilities and accountabilities, to others embracing it as a “fantastic opportunity”.
“We’ve actually lost quite a number of leaders who haven’t been comfortable with the new leadership model. But at the same time those who’ve exited from senior positions provide an opportunity for some really good talent to come up from the level below. When people have been left in their jobs for too long then I think sometimes talented individuals decide to move on,” says Slator. “So as we become more performance oriented, more honest and able to tell people when they’re not performing and that it’s maybe time to move on, talent begins to flow through the organisation.”
A testimony to the strength of Unilever’s management development is that it’s become “a bit of a fishing ground”for other reputable organisations, says McDonald. “It’s quite a lot easier to fish out of our pot, so our turnover levels at that level are probably a little higher than I would like them to be.”
HR and stepping up to the plate of credibility
Slator says HR has played a critical role in defining the competency model for leadership capability and has supported it with training, coaching programs and whatever’s needed to develop leaders for the future. And HR needs to demonstrate this kind of performance in its own function in any organisation, he believes.
“They have to be truly regarded as an outstanding leader of their own function first and foremost, so that there’s no question about their capability and their track record of success in multiple challenging roles,” Slator affirms.
“Having secured that credibility, they need to do other things along the way. One of the most important moves they can make is into other functions at key stages of their career, which will provide them with a greater breadth of understanding of the operational challenges that the business faces on a day-to-day basis. If you’ve got broader business experience and not just a pure HR track record, it’s much easier to establish credibility within a business.”
