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HR Restructuring at Coca-Cola & Dabur
1. HR Restructuring
CASE:
The Coca Cola & Dabur Way: The
Leader Humbled
2. As Human Resources quickly introduces new and
complex HR solutions, it goes under the pressure to
restructure itself to be fully aligned with the business
functions and with the business strategies of todays
competitive business world.
The HR Strategy should be the leading document to
drive the HR restructuring.
3. The restructuring of Human Resources is a very difficult
task, as it always includes changes in both the job
profiles of HR employees as well as it includes changes
in the organizational structure of Human Resources.
This affects the way, how employees do their jobs, and
this impact sometimes lasts for years.
4. During the restructuring of HR, the entire company gets
affected, as all employees are always sensitive to
changes.
They can expect changes to come their way and alter
their very working conditions.
HR always sets the main principles on how the
employees are evaluated in a company.
Therefore changing HR will definitely lead to changes
in all other functions of an organization.
5. Human Resources should act as a role model for
Change management in the company.
Change management and restructuring are always about
the people, and it is a common view that HR
Professionals would be the right people for the job.
But ..
6. When planning the restructuring of HR, it is always
important to find a strong project manager.
A strong project manager will be able to minimize the
damages caused by the constant and quick changes
introduced in the HR Processes and Procedures during
HR Restructuring.
These project managers are able to manage and drive
the process side of the HR Restructuring and are thus
able to lead and manage the people aspect of the HR
Restructuring.
7. The restructuring of Human Resources is not
simple, but it can bring huge benefits to the organization
that adopts it.
It can help to introduce strong and competitive Human
Resources to the organization.
The benefits of the restructuring are always higher, than
the costs paid during the restructuring process.
8. Coca-Cola
As part of the restructuring plan, Coca-Cola took a strategy level
decision to turn itself into a people-driven company
Coca-Cola also undertook a cost-reduction drive on the human
resources front.
9. Dabur
As for Dabur's restructuring efforts, they started
showing, when the company hired consultants
McKinsey & Co at a very high cost to deal with
competitive FMCG sector.
McKinsey introduced a three-fold recommendation for
Dabur.
10. Dabur
One of the most important changes that took place on
adopting restructuring principles in the company was
of Handing over all the day-to-day management to a
group of professional managers for the first time in
Dabur's history.
The Burman family managed to confine themselves to
strategic decision making.
11. • Dabur began to introduce Concepts like,
-customer satisfaction,
-increased sales and reduced costs,
-cycle-time efficiency,
-return on investment and
-shareholder value were all introduced for performance appraisals
• The focus of appraisals thus shifted to what a person had
achieved, as much as on what he was capable of.
• Dabur also adopted certain employee friendly initiatives
• The new structure introduced was, the performance-oriented
compensation and the new performance appraisal system.
12. HR Restructuring benefits are-
• Both Coca-Cola and Dabur had to accept the fact that a major
change on the human resources front was inevitable
• Besides improved morale and reduced employee turnover
figures, the strategic, structural and operational changes on the
HR front led to an overall 'feel-good' sentiment in the
companies.
• Coca-Cola hoped to break even by the end of fiscal 2001 and
This year was also a milestone in Dabur's history, as the
company crossed the Rs 10 billion mark in sales turnover for
the first time
13. WHAT LED TO THE ORGANIZATION
RESTRUCTURING?
• Four CEOs within 7 year
• A huge loss of US $ 52 million in 1999
14. HR Restructuring :
The Coca-Cola Way
• The merger of 1999 increased the significance of the
human resources at Coca-Cola
– Coca-Cola India and Coca-Cola Beverages
– Doubled the number of employees at Coca-Cola
• To ensure the smooth acceptance of the merger Coca-
Cola went for massive restructuring.
15. • The restructuring was brought CEO
Alexander Von
about by: Bohr
– Creating a new organization
Structure Vice President
Operations
Sanjiv Gupta
– Creation of more number of
regions in the country Regional Heads
1-6
– Coca- - Cola also declared VRS Area General
at the bottling plants Manager
16. • The merger resulted in
– Caused dilution of several central jobs
– Downgrading of many jobs at the center
– Resignation of junior level and middle level managers
including some senior personnel.
Strategic Restructuring Plan
– Introduced a career planning system
– Regional general managers would meet the top
management twice a year to identify fast-track people and
train them for more responsible positions.
– Overseas internship program
– Sending flowers and cards to employees on their birthdays.
17. • Cost reduction on the human resource front
– Executives shifted to less expensive apartments.
– No hiring new cars or vehicles.
– Bought a new property in Gurgoan.
– Salary Restructuring
• Wrong Doings in the North India Operations
– Coca-Cola appointed Arthur Anderson to inspect the
accounts of the North India operations for a fee of Rs 1
crore
18. • Results of North India Wrong Doings
– Performance appraisal exercise for 560 managers.
– This led to resignations and company sacked some
employees.
– The performance appraisal exercise was termed as
“witch-hunt” by the sacked employees.
– Alexander personally met the finance heads in
every territory and made the company's credit
policy clear to them.
– Launched a major IT initiative
19. Improved Results
• In 1999, Coca-Cola reported an increase in
case-volume by 9% after restructuring.
• Volumes increased by 14% and market share
increased by 1% after the regionalization
drive.
• There was a 18% rise in sales in the second
quarter of 2000.
20. Strategies adopted by Dabur
• Formulated a new vision
• company hired consultants
concentrate on a few
businesses
Improve the supply chain
and
procurement processes
reorganize the appraisal
and
compensation systems.
21. Conti…….
• Structure was redesigned .
• Day to day Management was handed over to a group of
Professional Managers-
Ninu Khanna
CEO
Deepak Sethi Ravi Sivaraman Yogi Sriram
Vice President Vice President Vice President
22. Appraisals more objective by including more
measurable criteria-
Reduced
costs,
Shareholder Customer Cycle-time
value satisfaction efficiency
Return on
investment
23. Conti………
• Dabur's employee friendly initiatives include –
1.'work-and-play' aspects for better employee morale
and performance
2.cash incentives
3.club their leaves and enjoy a vacation.
24. To increase employee satisfaction levels
• KPA’s
• Employee Training
• Two-way communication channel
• ESOP
25. New structure helped Dabur-
• Efficiency and morale
• Meeting higher sales targets
• The Rs.10 billion mark in sales turnover for the
first time.
26. • Dabur Coca cola
• Focus on developing skills of • Emphasis on cost reduction
employees to become and sacking of employees .
player in FMCG
29. Key strategies highlighted in FMCG
Companies
• Revamping the organisational Structure
• Cost Reduction
– Internal recruiting process
• Developing a employee friendly culture
• Better incentive systems and Compensation system
• Hiring and Firing.
30. • Performance Appraisal System to be driven towards
the objective of the company to be fulfilled by the
employees.
• Decisions were financial/operations driven.
– Coca Cola – merger of four bottling operations
– Dabur- Vision of becoming an FMCG major
31. Will the strategies be suitable for Bank
Merger?
• Yes, Some of the strategies!
32. Cases
• HDFC Bank Acquires Centurion Bank of Punjab (CBoP)
(May '08)
– For HDFC Bank, this merger provided an opportunity to
add scale, geography (northern and southern states) and
management bandwidth.
– The combined entity would improve productivity levels of
CBoP branches by leveraging HDFC Bank's brand name.
33. • Standard Chartered Acquires ANZ Grindlays Bank (November
'00)
– Standard Chartered aimed at becoming the world's leading
emerging markets bank and it thought that acquiring
Grindlays would give it a well-established foothold in India
and add strength to its management resources.
34. Motives behind a Bank merger
• Growth - Organic growth takes time and dynamic firms prefer
acquisitions to grow quickly in size and geographical reach.
• Synergy - The merged entity, in most cases, has better ability
in terms of both revenue enhancement and cost reduction.
• Managerial efficiency - Acquirer can better manage the
resources of the target whose value, in turn, rises after the
acquisition.
35. • Strategic motives - Two banks with complementary business
interests can strengthen their positions in the market through
merger.
• Market entry - Cash rich firms use the acquisition route to
buyout an established player in a new market and then build
upon the existing platform.
The problems eventually led to Coca-Cola reporting a huge loss of US $ 52 million in 1999 , attributed largely to the heavy investments in India and Japanspent Rs 1500 crore for acquiring bottlers, who were paid Rs 8 per case as against the normal Rs 3accommodation in farmhouses for executives and foreign trips for bottlers.
The first task was to put in place a new organizational structure that vested profit and loss accounting at the area level, by renaming each plant-in-charge as a profit center head.The country was divided into six regions as against the initial three, based on consumer preferences. Each region had a separate head (Regional General Manager), who had the regional functional managers reporting to him. All the Regional General Managers reported to VP (Operations), Sanjiv Gupta, who reported directly to CEO Alexander Von Bohr (Bohr). The 37 bottling plants of Coca-Cola, on an average six in each region, had an Area General Manager as the head, vested with profit-center responsibility.All the functional heads reported to the Area General Manager. Coca-Cola also declared VRS at the bottling plants, which was used by about 1100 employees.
