Unilever and Proctor & Gamble

A Frenchman named Henri Fayol (1841-1925), although an engineer came up with a theory. He changed the thoughts of business administration and sculpted a structure of management that is practiced even now in this day and age by a vast number of companies worldwide. This theory of his, now commonly known as ‘The 14 principles of management by Fayol’ is going to be applied in two mega-organisations such as Uniliver and Proctor & Gamble (P&G): Proctor & Gamble and Unilever are two big multinational corporations that manufacture a large range of consumer goods such as beverages, food, personal care products, products for the home, etc. The former is an American multinational corporation while the latter is a Dutch-British multinational corporation. In around 1997, Unilever decided that it was time to start living up to its potential.

The new objective to increase focus and improve results, unsurprisingly become a priority. Clear direction was set and it was agreed almost unanimously that the company should direct its focus on specific tasks and products that mattered. For instance, the sale of the chemicals business in 1997, although considered as a very promising prospect, if having been allowed to remain in the portfolio would have resulted in a deviation of managerial attention, labour, funding, etc. This helped Unilever channel more of its time and energy into their other products as they didn’t have to worry about the chemical business anymore. This and other such instances eventually lead to a steep growth in the development for Unilever. In the 1990s, Unilever realized that it wasn’t developing and growing very fast – both in terms of profit and size. The chief of the many problems was that they focused a considerable amount of time and energy on too many tasks, most of which did not require that much attention. Eventually, Unilever realized that although they had the adequate knowledge and means to grow on a much faster and larger scale, not enough was done to exploit the economy to cause a serious and desirable growth spurt for them. A serious lacking of initiative was only but obvious.

Although there was creativity, there was no one to take up the baton and run with the idea. Initiative doesn’t stop at the idea. What makes it count is when the idea blazes into a reality through the sparks of execution. Since the start of the new century, ideas were executed and the steady growth was inevitable. And to encourage this, Unilever invested US$1 billion for the year 2001 dedicated for the purpose of research and development. It also added an extra US$ 5.7 billion for the marketing of its products. In an inspirational movie Remember the Titans (2000); the coach of a high school American-football team is faced with the task of uniting his players who are of both races, black and white. At that time, due to the circumstances regarding racism, to even think of equity between the two previously mentioned races as a possibility would be madness. And to add to the coach’s mountain of a situation, he needed acceptance into his team as he was an African American. But one line that doesn’t fail to speak to the heart of the viewer is when Coach Boone, standing on the same ground where the Gettysburg Battle was fought, expresses the desire for his team to develop the espirt de corps by crying out these words to his team, “If we don’t come together on this hallowed ground, we too will be destroyed!” Equity and esprit de corps go hand-in-hand.

And Unilever, recognizing that they were one of the most international companies in the world, ensured that by first settling the fact that each person was equal to another and nobody was higher than another by race, religion, sex or any other factor. Because without realizing equity, people cannot develop the espirt de corps which requires harmony and unity among people. Once Unilever had dealt with equality among the employees, it was easy to mix people into different teams and thus generate greater results as different perspectives and views were added to teamwork with the help of different backgrounds, vast experiences and diverse cultures from these employees. A very similar policy was followed and still is followed in P&G. P&G’s strive for respect to be shown throughout and on every level of the company hopes to ultimately see a complete abolishment of violence, discrimination, oppression, etc. and thus ultimately develop the esprit de corps for itself in harmony and unity. Many organizations consider the remuneration of its employees somewhat of a delicate hassle.

The actual struggle lies in finding the right balance between working hours, benefits, commissions and salaries that will benefit both the company and the employee. However, if this ‘balance’ is met, the chances of a company keeping its employees run tremendously high. In the case of Unilever, they had made a plan to keep their employees as long as they possibly could. They started out by first selecting the right people for the job. Generally, these were people who showed high potential. Once the person was selected, a good salary was given to him along with reasonable working hours and plenty of benefits. This resulted in a steady turnover from the employees and a stability of personnel as employees were happy with their working conditions and didn’t feel the need to find work in new pastures. It was also of benefit to Unilever as effectiveness and overall results turned for the better of the organization. By keeping its employees, Unilever was actually giving them much more experience in their particular field of work and also enhancing the chances of promotion within the company rather than outside hiring which usually turns out to be a more expensive and lengthy process.

P&G generally has the lesser amount of problems when it comes to remuneration and stability of its employees. As the employees are introduced into the company after seminars, development programs and leisure trips to the U.K. and Ireland, a comfort zone is unknowingly built for them. They are also given special attention and are made to attend several courses on the introduction and functioning of P&G. Besides a heavy salary, employees are awarded huge incentives and bonuses for completing tasks. Incentives are given to three categories of productivity: top performers (those who perform much better than the set target), key contributors (those who perform what they were asked) and those who perform below the target set for them. The company sets its pay on the same levels as that of other major worldwide companies but chooses to award high bonuses to encourage its employees to avoid absenteeism and slack in productivity. In 2001, Unilever found the need to divide work, after the procurement of top companies such as Bestfoods and Slimfast. These new methods of management split the focus from a very general view to a specific style of management. A separate department was set up to overlook the proceedings for food and another was set up to do the same for human and personal care. Each department had its own research team and business team.

Hence, different targets were set for each department so that each department would strive for excellence through a massive boost to its innovation and quicker decision making, which would result in a quickening in the implementation of those decisions. Unilever, with its long-term approach to management and growth, found that it is better for an individual to move from one operating company to another (within Unilever) so as to get the maximum experience he possibly can and to broaden his view on management itself. Although this may appear to be as a sign of uncertainty and unrest in the short-term, in the long run this is a policy has proven spectacular results as managers return back to the first branch as senior managers and company role models. Putting the general good of the company first means placing the organizational objective as priority over the personal goal. This doesn’t imply that the personal objectives of the employee are to be crushed and that they are to do just as the company orders.

What this actually means is that even though every employee has his/her own reason for joining the particular company, channeling those reasons in such a way that it is beneficial to the company and to the employee is what is desirable. P&G allows its employees to take extended vacation breaks and work lesser hours a week but on a condition that when the employees are working, there is a 100% productivity and effectiveness from their part. Even though it may seem as a though P&G is losing time because its employees are working less compared to those in other companies, it is actually the solution to their high productivity rates. When it comes to ‘calling the shots’, the people in higher positions with the greater authority make the decisions. Authority is the right to give orders and to obtain obedience. There are mainly two ways in through which these decisions are taken: centralization or decentralization. Most organizations use a mixture of both systems. Centralization is when the decisions are made at the head of the firm. Although considered as parent companies, both Unilever N.V. (Netherlands) and Unilever plc. (U.K.) operate a lot as a single entity.

A committee of seven members, led by the chairmen of both branches in Netherlands and the U.K. are responsible for strategically leading the other smaller branches around the world. Ever since the 1970s, Unilever had been following such a structure. Although this may seem the best way to go about making decisions, it is actually a very time consuming and energy spending method. And because of this centralization, there was a massive failure when Unilever wanted to merge with other companies. Ever since 2005, the decision to decentralize power has proven to be the right step forward. Even though this is a long process that cannot be done overnight, and is still in the process of being completely realized, the benefits of this change are bearing fruit for Unilever. However, the scalar chain is still being respected in Unilever. This means that the higher up the chain the person is, the more authority and responsibility is granted to him. It also ensures that every person still has a boss to report to. As famously said by Uncle Ben to the main character Peter Parker portrayed by Tobey Maguire in the action movie Spiderman (2001), “With great power comes great responsibility!” so does the same apply to management. If a person has authority over another, then he is also responsible for the development of that subordinate.

Also if a person has a boss, then no one else is allowed to give him instructions that change the initial instruction given to him by his own boss. This means that there must be some sort of unity in command when it comes to instructing a person. A person cannot have two different superiors giving him instructions over one same matter. This will lead to heavy contradictions and confusion among the subordinates. Decentalisation is the kind of order that runs in P&G. Employees, unlike those in Unilever are allowed to make certain decisions within their boundaries drawn out to them. They are given much more authority but also on their plates, come a lot more responsibility. Despite P&G being an exceptionally large organisation, the communication that appears to be taking place between managers and employees is surprisingly very informal and social. Even though formal meetings, are held between a manager and his subordinate, in P&G a different type of communication is noticed. Here the senior manager is allowed to talk to a junior employee anytime he feels like even to the extent that a casual lunch is permissible and frequent.

In addition to that, employees are encouraged to submit suggestions on a quarterly basis to the HR department where then an annual detailed feedback is forwarded to the manager based on the suggestions and complaints sent in by his employees. Discipline from Employees cannot be overlooked. To obey the rules and regulations set by the organisation requires not just submitting subordinates but also good superiors at all tiers. The same disciplinary guidelines are followed at P&G and Unilever, where employees are expected to work with integrity, in all honesty and with the utmost respect for their colleges and customers.

Recently the standards of relationships between people both inside and outside the company have been raised. Malpractice, fraud, bribe, etc. of any level does not receive any sort of entertainment whatsoever. Before joining the company, each and every employee is warned that there are severe punishments that come with such practices. Overall, there isn’t much of a difference between both Unilever and P&G as both of them run almost the same kind of business. They both deal with so many products and hence play huge roles in the global market when it comes to products like theirs. That is why they have so many similarities when it comes to discipline and equity. They also see each other as competition and the rivalry between the two has certainly caused the two to have some differences in management styles like the chain of command and order, remuneration and stability of its employees.

REFERENCES

1) How Procter and Gamble Survived Through Innovation – A Case Study – a knol by Osman Masahudu Gunu. 2011. How Procter and Gamble Survived Through Innovation – A Case Study – a knol by Osman Masahudu Gunu. [ONLINE] Available at:http://knol.google.com/k/how-procter-and-gamble-survived-through-innovation-a-case-study#. [Accessed 12 November 2011]. 2) Unilever global company website. 2011. Unilever global company website. [ONLINE] Available at: http://www.unilever.com/. [Accessed 12 November 2011]. 3) PG.com Home: sustainability, company, brands . 2011. PG.com Home: sustainability, company, brands . [ONLINE] Available at: http://www.pg.com/en_US/index.shtml. [Accessed 12 November 2011]. 4) 14 Principles of Management of Henri Fayol.. 2011. 14 Principles of Management of Henri Fayol.. [ONLINE] Available at: http://www.citehr.com/137134-14-principles-management-henri-fayol.html. [Accessed 12 November 2011]. 5) National Council Of Educational Research And Training :: Home . 2011. National Council Of Educational Research And Training :: Home . [ONLINE] Available at:http://ncert.nic.in/NCERTS/textbook/textbook.htm?lebs1=2-8. [Accessed 12 November 2011]