BMO7000 Human Resource Case Study Unilever Corporate Restructuring

This management concept identifies with the change brought about in the organization with

respect to structure, culture, strategy, operations, methods, technologies and employees to

bring about a positive change in the organization and lead the company to a higher platform

of performance (Armstrong, 2008)

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Abstract

But gradually John realized it was becoming very difficult and cumbersome to continue in

the same structure and model. Hence there was a need to undergo complete corporate

restructuring which would establish a new structure and hierarchy to consolidate and streamline

the entire business. Corporate restructuring means reorganizing the entire legal, operational,

structural system for the purpose of making it more streamlined and profitable and become

better than the current position (Luthans, 2005). John experienced it always involves

reorganizing some aspect of the organization whether structure or marketing or financial or

strategy and should lead to bringing in some kind of competitive advantage for the company.

Unilever brought about this change in the organization to modify the existing structure and

develop the new structure which was SBU based. John was told SBU stands for Strategic

Business Units which the company created by consolidating products which have similarities

into one SBU like Foods & Beverages, Soaps & Detergents, Personal Grooming, Dental Care,

etc. Each SBU required a reshuffling of the brands, products, employees, offices to be

remodeled into a new setup. The SBU was supposed to work as an individual entity with its

own CEO, budget, competitors, customer segments and a set of employees. And every SBU

was responsible for its own performance and profitability (Holbeche, 2009).

Everyone at the company said this is supposedly a major change in the organization and

would be brought about in a planned and systematic way and also time-consuming. It also

meant a complete change in each employee’s job profile, team, senior and subordinate and

work area.

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Organizational Change at Unilever- a case of Corporate Restructuring

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Contents

Introduction to the Case ......................................................................................................................... 4

Organizational Change ............................................................................................................................ 4

Change Management in the company .................................................................................................... 5

Challenges to Change Management ....................................................................................................... 5

Impact of the Change .............................................................................................................................. 7

Change Management Process at Unilever .............................................................................................. 8

Conclusion ............................................................................................................................................. 10

Case Study Questions & example answers: .......................................................................................... 11

References ............................................................................................................................................ 13

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Introduction to the Case

The experience is about Unilever Inc which is an Anlgo-Dutch FMCG conglomerate

from the UK. The company has a presence in more than 190 countries and has more than 500

brands serving the various needs of its consumers (Unilever.com, 2015). Their products range

from soaps to detergents to food & beverages to personal care to dental products and other

consumer products. The company has established its name all over the world for its superior

quality products and strong marketing strategy.

It was understood that due to the global presence of the company it became very

critical for the company to shift their focus from non-core areas to their core areas of

business. Their continuous expansion for decades together had made their business so vast

and large scale that now they felt a situation has arrived that some consolidation is required.

John realized in order to grow exponentially the company kept on launching new products

under each segment and now the entire product portfolio had become huge and

unmanageable.

Organizational Change

This management concept identifies with the change brought about in the

organization with respect to structure, culture, strategy, operations, methods, technologies

and employees to bring about a positive change in the organization and lead the company to a

higher platform of performance (Armstrong, 2008). This concept is interdisciplinary in nature

and takes cues from various fields like management, economics, psychology and social

Commented [A1]: The scope and content of work if mentioned would complete the introduction

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sciences. It also related to a smooth transition of organization, companies, and teams to the

desired state in the future.

Change Management in the company

The company is multinational in consumer goods and has divisions like soaps &

detergents, personal care, dental care, foods & beverages and much more. John came to know

that earlier the company was following a functional based structure. The structure is the

hierarchy or departmentalization followed by a company to divide their activities into similar

tasks and then group them together to form verticals (Robbins & Judge, 2007). Hence

organizational structure would develop and create authority and responsibility structure

within the organization in each vertical so that work can get done.

A functional-based structure which the company was following was divided into

various functions of the company like marketing, sales, operations, human resource, finance,

etc (Boxall et al, 2007). All the brands of the company were being managed by everyone

under each vertical. For example, the marketing team was managing the marketing and

branding of all the brands whether in any category. This was possible to manage before the

company went on global expansion as they had fewer brand then.

Challenges to Change Management

But gradually John realized it was becoming very difficult and cumbersome to

continue in the same structure and model. Hence there was a need to undergo complete

Commented [A2]: Appropriately referenced

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corporate restructuring which would establish a new structure and hierarchy to consolidate

and streamline the entire business. Corporate restructuring means reorganizing the entire

legal, operational, structural system for the purpose of making it more streamlined and

profitable and become better than the current position (Luthans, 2005). John experienced it

always involves reorganizing some aspect of the organization whether structure or marketing

or financial or strategy and should lead to bringing in some kind of competitive advantage for

the company.

Unilever brought about this change in the organization to modify the existing

structure and develop the new structure which was SBU based. John was told SBU stands for

Strategic Business Units which the company created by consolidating products which have

similarities into one SBU like Foods & Beverages, Soaps & Detergents, Personal Grooming,

Dental Care, etc. Each SBU required a reshuffling of the brands, products, employees, offices

to be remodeled into a new setup. The SBU was supposed to work as an individual entity

with its own CEO, budget, competitors, customer segments and a set of employees. And

every SBU was responsible for its own performance and profitability (Holbeche, 2009).

Everyone at the company said this is supposedly a major change in the organization

and would be brought about in a planned and systematic way and also time-consuming. It

also meant a complete change in each employee’s job profile, team, senior and subordinate

and work area. It is human tendency to resist change of any form (Avey et al, 2008). And a

similar thing happened at Unilever. Moreover, this was not just a simple change in work or

team. Every employee would have to retrained and reoriented towards the new job and

responsibility which now he was entrusted with.

As John and others expected, this change brought about an uproar in the company

because change management is a very critical process in any company. And this company is

Commented [A3]: Stating definition of the main theme of work is always

Commented [A4]: Well referenced

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Unilever which is itself a multinational found it more difficult to execute it at such a large

scale. The employees started raising their voice against the change, few became so frustrated

they thought of resigning (Furst & Cable, 2008). The productivity of the employees started

to decline as were not accepting their new jobs and teams. The purpose for which the SBU

based structure was created which was to consolidate business and boost profitability did not

happen.

Impact of the Change

In fact, initially, the sales and revenue for all the divisions started to decline. This

happened mainly because of the demotivation which set in the employees because of which

morale was down. No one had the enthusiasm to work and contribute towards the company’s

goals. They all felt insecure in their new positions and were not able to match up to the other

team member’s style of working. They also felt bad as their informal groups broke and which

affected them emotionally.

After seeing these repercussions the company was forced to look into the matter. They

realized that the change management process was not properly executed and the rules to set

in changes was not followed(John & Fellenz, 2010). The company set up the task of

involving employees at all levels to bring in the final change from a functional based to an

SBU based structure. As this required major transformation of the people and their mindset.

Majorly the change in the thought process had to be brought in to bring a change in the

employee’s outlook.

Commented [A5]: Minute points have been considered

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Change Management Process at Unilever

In order to bring about the change effectively and reduce the challenges being faced

by the company, the senior manager suggested following Kotter’s model of change

management to be followed (Jones, 2010). John also felt a systematic approach would be

more desirable to imbibe this change in the company. Kotter’s eight step change model was

utilized by the company to bring the change effectively:

Step 1: Create Urgency- in order to bring about the change more subtly, the top

management created a sense of urgency among the employees that this is needed due to the

dire circumstances. John saw the senior people having an open and honest dialogue with

other employees and explaining them about the conditions in the marketplace.

Step 2: From a Powerful Coalition- effective change leaders were searched to help people

understand the need. The change coalition was formed and started building the momentum

around the entire process. John realized such people try to build emotional commitment with

other employees first.

Step 3: Create a Vision for change- developing a vision as to how people are doing it and

why it is required cleared all doubts of the employees. A shared vision is always helpful John

understood (Storey, 2007).

Step 4: Communicate the Vision- John realized that the vision was being talked about in

every interaction possibly to remove all doubts and anxieties.

Step 5: Remove Obstacles- any resistance was taken up as a challenge to eliminate it.

Actions were taken to bring in change agents and reward people who adopted change eagerly.

John experienced two groups were formed who were on either side of the change.

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Step 6: Create Short-term Wins- the entire task was divided into smaller tasks in order to

show to other employees the benefits accrued to the company through the change process.

John himself realized the short victories happening inside the company.

Step 7: Build on the change- when it started to give results, the company built more on the

outcomes and bring in continuous improvement which John could also understand deeply.

Step 8: Anchor the changes in the corporate culture- continuous improvement and its

adoption within the company’s culture is what the company achieved at (Luscher & Lewis,

2008).

Commented [A6]: The steps are detailed well

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Conclusion

The entire process of bringing in the change of structural execution was a major

revamping at Unilever. John was able to experience the entire journey of moving from

functional to SBU based structure at the company and also the challenges it had to undergo

with it. The most difficult part is to make people understand why it is being adopted. The

company initially tried many ways to make it happen but later resorted to a more model-

based and systematic approach to John Kotter’s change model of eight steps. This helped

them accept and adopt the changes and they also realized the benefits which the company

was able to get.

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Case Study Questions & example answers:

1. Explain how the change leaders can play a role in change management at the

company?

Every company and its employees show resistance to change when a new

change is introduced. This is a general human tendency and has to be managed. In

order to initiate structural change at Unilever which is a company-wide modification,

very strong and effective change agents or leaders should be appointed. The main task

of such leaders would be to collaborate the top management perspective with the fears

of the employees in bringing about the change in the company. A change leader can

be an external consultant who will have a fresh and new perspective to how it should

be done. But an internal senior change leader would be desired as he understands the

company and the expectations of the employees. And internal agent would be easily

accepted and listened to. He can tackle the concerns of the general employees with

respect to the change and also explain the company’s vision behind it. People within

the company would be more open to listening to him as they already have a trusting

relation and rapport among each other. This change agent can take everyone along

with him in the change process and focus on the positives of the change. He can play

a very critical role in guiding the employees in general about the concept, reason,

effects and long-term impact of the change.

2. How can change management be linked to strategy and profitability?

Unilever has planned this change for the overall benefit of the organization in

terms of streamlining and profitability. The change is a thought out strategy of the

company to create synergies among verticals and businesses and brands in order to

take it to a higher level. This change management in the corporate structure is a long-

Commented [A7]: The answer is okay but would have needed appropriate backing based on theories. Added references would have been appreciated

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term strategy of the company to focus on core brands and functions in order to grow

further. This vision towards a more efficient business has long-term objective to

increase revenues and hence profits from the business. So both the strategy and

profitability are closely interlinked and will impact the long-term business of the firm.

The same concept has to be explained to the employees at all levels so that they

realize that this change is being brought about for the growth purpose and

development of the company from its current position to what it desires to achieve in

future.

Commented [A8]: Well written

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References

Armstrong, M., (2008). Strategic human resource management: A guide to action (4th ed.).

UK: Kogan Page Publishers.

Avey, J. B., Wernsing, T. S., & Luthans, F. (2008). Can positive employees help positive

organizational change? Impact of psychological capital and emotions on relevant attitudes

and behaviors. The Journal of Applied Behavioral Science, 44(1), 48-70.

Boxall, P., Purcell, J., and Write, P. (2007). Human resource management: scope, analysis

and significance. Oxford: Oxford University Press.

Furst, S. A., & Cable, D. M. (2008). Employee resistance to organizational change:

managerial influence tactics and leader-member exchange. Journal of Applied

Psychology, 93(2), 453.

Holbeche. L (2009), Aligning Human Resources & Business Strategy, Routledge Publishing

John, M., Fellenz, M. (2010). Organizational Behaviour & Management (4th ed.).

USA:Cengage Learning EMEA

Jones, G. R. (2010). Organizational theory, design, and change. Pearson.

Lüscher, L. S., & Lewis, M. W. (2008). Organizational change and managerial

sensemaking: Working through paradox. Academy of Management Journal,51(2), 221-240.

Luthans, F. (2005), Organizational Behaviour, Mc Graw Hill Publishing

Robbins, S.F & Judge, T.A. (2007). “Organizational Behaviour”. 12th edition. Pearson

Education Inc., p. 551-557

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Storey, J. (2007). Human resource management: a critical text (3th ed.). UK: Cengage

Learning EMEA

Tutor Comments: The work done is good. The case study section is well done and nicely

backed up with theories. The answers would have needed better theoretical support,

especially the first answer.