W13532

HINDUSTAN UNILEVER LTD.: MEETING EMPLOYEE EXPECTATIONS

Professors Shashank Shah, Ajith Sankar and David Sharp wrote this case solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.

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Copyright © 2013, Richard Ivey School of Business Foundation Version: 2013-12-18

It was 8.45 p.m. on a Friday evening in April 2012. After a long meeting with her core team, Leena Nair,
executive director Human Resources (HR), at Hindustan Unilever Limited (HUL), was returning home
from the company’s new premises at Andheri (East) in suburban Mumbai. A number of issues were
discussed at the meeting, in particular, the success of the many people initiatives rolled out in the previous
few years. Recently, Hewitt Associates had ranked HUL among the top four companies globally in the list
of Global Top Companies for Leaders. The company had been ranked number one in the Asia-Pacific
region and in India. In a 2009 Nielsen Campus Track–Business School survey, HUL was named the
“dream company” to work for by almost 64 per cent of management students graduating in 2010. In 2011,
too, Nielsen’s survey rated HUL as one of the top five employers. Exhibit 1 shows Aon Hewitt’s listing
of the top 25 employers in 2011. Factors driving students’ decision were good job prospects, a high
degree of independence, good market standing and a decent salary. Besides offering these, HUL also
provided year-round leadership training programs, global job opportunities, a mapping of employees’
potential and a three-year career projection should they choose to stay on in the company. Ever since
naming the company’s first Indian chairman, Prakash Tandon (a founding member of the Indian Institute
of Management, Ahmedabad, which had been ranked as the top business school in India for decades) in
1961, HUL had cultivated its leadership factory with care and turned out leaders within both HUL and the
parent Unilever.

However, Nair’s concern was the shifting demographic profile of employees and the changing
expectations that every passing batch of students from top business schools had from a “dream employer”
like HUL. While the company had changed its traditional employment value proposition, in a highly
competitive and talent-scarce job market, would it continue to be relevant to its 1,500 strong managerial
base of the best talent in the country? The typical Mumbai traffic ensured that her journey home would
take quite some time. The search for the right way ahead was uppermost in her mind.

THE CHANGING INDIAN ECONOMY

As a consequence of the adoption of the New Economic Policy (NEP) of 1991, the growth rate of the
Indian economy, which had been the “Hindu Rate of Growth” of 3.5 per cent per annum from 1951 to

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1979 and 5.0 per cent per annum from 1980 to 1991, accelerated to 6.1 per cent per annum from 1992 to
2000, and to 9 per cent at the end of the first decade of the twenty-first century, one of the fastest growing
economies of the world. While the share of the agricultural sector in real gross domestic product (GDP) at
1993–94 prices declined from 55.5 per cent in the 1950s to 28.7 per cent in the 1990s, the share of the
manufacturing and services had increased from 16 per cent to 27 per cent and from 28 per cent to 44 per
cent, respectively. 1

The Industrial Sector

According to a McKinsey Report, 2 if India’s manufacturing sector realized its full potential, it could
generate up to 30 per cent of GDP by 2025, thus propelling the country into the manufacturing big
leagues, along with China, Germany, Japan and the United States. Along the way, it was estimated that
India could create 60 to 90 million new manufacturing jobs and become an attractive investment
destination for its own entrepreneurs and multinational companies. Indian manufacturers lagged behind
their global peers in production planning, supply chain management, quality and maintenance — areas
that contributed to their lower productivity. Consequently, on average, workers in India’s manufacturing
sector were about one-quarter to one-fifth as productive as their counterparts in Thailand and China,
respectively. Productivity of the manufacturing industry in India was only one-fifth of the United States
and half of South Korea and Taiwan. India’s manufacturers could learn a lot from the information
technology (IT) sector’s experience in promoting the large-scale development of skills.

India’s IT services and business process outsourcing sectors together hired nearly one million new
recruits a year and brought them up to speed in months. A key factor in this success was the early
recognition among Indian IT companies that the number of engineering graduates in computer sciences
wouldn’t meet the needs of the country’s burgeoning IT sector. In response, Infosys, Wipro and other
companies began hiring graduates from all engineering disciplines. They used in-house curricula and
faculties to build skills among new hires. That approach ultimately led to the formation of a successful
network of independent, privately owned computer-training institutes such as Aptech and NIIT. India’s
manufacturers could follow a similar path by establishing in-house training centres to promote vital
manufacturing roles. 3 Driven by growth in IT and IT enabled services (ITES), India’s services sector had
been growing. Services sector contributed almost 57 per cent of India’s GDP. It also charted a compound
annual growth rate (CAGR) of 9.4 per cent for the period of 2001 to 2010. This growth was one of the
strongest in the world. Revenues from the IT and ITES sector, as a proportion of national GDP, increased
to 7.5 per cent in 2011–12 from 1.2 per cent in 1997–98. An increase in disposable income was expected
to benefit fast moving consumer goods (FMCG) companies.

The Indian FMCG Industry

According to the Associated Chambers of Commerce and Industry of India, the FMCG industry in India
was the fourth largest sector with a total (organized) market size of more than US$15 billion in 2007. It
was classified into the premium segment (~25 per cent), which catered mostly to higher/upper middle
income consumers, and the popular price sensitive or mass segment (~75 per cent), which consisted of
consumers belonging mainly to semi-urban or rural areas who were not, and could not afford to be, brand
conscious. The market growth over the previous years had been phenomenal, primarily due to consumers’
growing disposable income. The large young population in the rural and semi-urban regions was driving
the growth with the continuous rise in their disposable income, life style and food habits. It was predicted
that the FMCG market would reach US$33.4 billion in 2015 from US$ billion 11.6 in 2003. 4 On the

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supply side, the wide availability of raw materials, vast agricultural produce, low cost of labour and
increasingly organized retail industry helped the competitiveness of players.

According to a study conducted by AC Nielsen, 62 of the top 100 brands in the Indian FMCG sector were
owned by multinational corporations (MNCs), and the balance by Indian companies. Fifteen companies
owned these 62 brands, and 27 of these 62 were owned by HUL. Personal care, cigarettes and soft drinks
were the three biggest categories in the FMCG sector. Between them, they accounted for 35 of the top
100 brands. Exhibit 2 shows the leading companies. The personal care category had the largest number of
brands — 21, including Lux, Lifebuoy, Fair and Lovely, Vicks and Ponds. HUL accounted for 11 of the
21 brands, accounting for 54 per cent of the personal care category. The foods category in FMCG gained
popularity with a swing of launches by HUL, ITC, Godrej and others. This category had 18 major brands.
The food category, which had seen innovations such as softies in ice creams, chapattis and ready-to-eat
rice by HUL and pizzas by both GCMMF and Godrej Pillsbury, had grown faster than other sub-
categories. 5

At a time when the economy and other large industrial sectors such as automobiles, aviation and financial
services were reeling from the global slowdown, the consumer goods sector in India defied the trend.
India’s FMCG industry had been resilient to the slowdown in the economy and a dip in consumer
sentiment, with most companies posting double digit growth in net profits in the first half of fiscal 2009,
backed by healthy sales. 6

HINDUSTAN UNILEVER LIMITED (HUL) 7

Hindustan Unilever Ltd. (HUL) was a subsidiary of Unilever Inc. “On any given day, two billion people
use Unilever products to look good, feel good and get more out of life” 8 — this is how Unilever Inc., one
of the world’s leading FMCG suppliers, introduced itself on its website. With strong local roots in more
than 100 countries across the globe, Unilever had annual sales of about €46.5 billion in 2011. Of the more
than 400 brands of the Unilever Group, 12 generated sales in excess of €1 billion a year. These 400
brands spanned 14 categories of home, personal care and food products. As of May 2011, Unilever
employed more than 167,000 people worldwide.

HUL was a packaged mass consumption FMCG company based in India. Although the company was
incorporated in 1933, its products had been sold in India since 1888. Through 35 brands spanning over 20
distinct categories in home and personal care products, foods and beverages (Exhibits 3 and 4), HUL
touched the lives of two out of three Indians. Its brands were household names across the country. It
operated through seven business segments: soaps and detergents, personal products, beverages, exports,
foods, ice creams and other operations. HUL met everyday needs for nutrition, hygiene and personal care
with brands that it claimed help people “feel good, look good and get more out of life.” 9 Headquartered in
Mumbai, HUL had a national sales network with offices in four metropolitan cities — New Delhi,
Mumbai, Kolkata and Chennai. With over 2,000 distributors, over 2,000 suppliers and associates, about
2,900 stockists, a direct coverage of over 1.5 million outlets and a total coverage of 6.4 million outlets,
HUL could boast of having one of the largest and well-penetrated distribution networks in India. It
covered over 700 million consumers across the country including 250 million rural consumers. Without
doubt, it had been an established market leader in the Indian FMCG industry for over half a century.

To support this distribution network, the company had an extensive manufacturing base, which included
more than 35 locations across India, with major hubs in Assam in the east, Uttaranchal and Himachal
Pradesh in the north, Pondicherry in the south and Dadra and Nagar Haveli in the west. To find suitable

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alternatives to edible oils and fats that were being used as raw materials for soaps, the Hindustan Unilever
Research Centre (HURC) was set up in 1967 at Mumbai (then known as Bombay). Later, import
substitution and export obligations directed the research focus towards non-edible oil seeds, infant foods,
perfume chemicals, fine chemicals, polymers and nickel catalysts. With innovations in varied segments to
meet the company’s growing product base, and to contribute to improvements in manufacturing
processes, HURC grew from strength to strength and gained eminence within Unilever Global research
and development (R&D). With the creation of Unilever Research India in Bangalore in 1997, it became
recognized as one of Unilever’s six global R&D centres. Towards the end of 2006, all research programs
in India were integrated into a single research establishment of Unilever Research Bangalore, with the
construction of additional world class laboratories. As of 2011–12, HUL had more than 670 live patents.

HUL was the first foreign subsidiary in India to offer equity to the Indian public, which it did in
November 1956. The company recorded revenues of ₹196,910.2 million (US$4,292.6 million) during the
financial year ended March 2011 (FY2011), an increase of 10.8 per cent over FY2010. The operating
profit of the company was ₹27,360.9 million (US$596.5 million) in FY2011, an increase of 0.6 per cent
over FY2010. The net profit was ₹22,960.5 million (US$500.5 million) in FY2011, an increase of 6.5 per
cent over FY2010. Exhibit 5 shows its eight-year track record.

The Eight-Decade Odyssey

HUL had developed through three distinct phases during the previous century.

The Pre-Independence Colonial Era: 1888–1947

Though the first consignment of Sunlight soaps landed on Kolkata harbour in East India in 1888, Unilever
established its three subsidiary companies in India between 1931 and 1937 — Hindustan Vanaspati
Manufacturing Company (1931), Lever Brothers India Limited (1933) and United Traders Limited
(1935). By then, the Indian population, then in the thick of the freedom struggle from colonial British
rule, was familiar with brands such as Lifebuoy, Pears, Lux and Vim, which had been imported since
1895.

The Post-Independence Era: 1948–1991

The Unilever subsidiaries formed between 1931 and 1937 were merged to form Hindustan Lever Ltd.
(HLL, later renamed Hindustan Unilever Ltd., HUL) in November 1956; it offered 10 per cent of its
equity to the Indian public. In 2012, Unilever held about 52.10 per cent equity in the company. The rest of
the shares were distributed among 360,675 individual shareholders and financial institutions.10 In 1972,
Unilever acquired Lipton, the world-renowned tea brand that had belonged to Brooke Bond 11 whose
presence in India dated back to 1900. In 1984, Unilever acquired Brooke Bond, with its ownership of the
well-known Red Label brand. Pond’s (India) Limited, 12 which had been present in India since 1947,
joined HUL in 1986 when Unilever acquired Cheseborough Pond USA.

The Post-Liberalization Era: 1991 onwards

The landmark year 1991–92 saw the end of the Licence Raj 13 period in Indian industry. The then finance
minister, Manmohan Singh, 14 initiated liberalization, privatization and globalization (LPG) of the Indian

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economy and paved the way for greater international investments in multiple sectors and hence greater
competition within industry categories. After 45 long years, Indian industry had opened up to
international players. With multiple players in the FMCG industry, this period saw greater consolidation,
mergers and acquisitions between companies in the Indian market.

In 1993, the Tata Oil Mills Company, a leader in the Indian FMCG industry and belonging to the Tata
Group, 15 merged with HUL. HUL acquired the Kissan 16 business from the UB Group 17 and the Dollops
ice cream 18 business from Cadbury India, 19 expanding its base in the food category. In 1995, HUL and yet
another Tata company, Lakme Ltd., 20 formed a 50:50 joint venture, Lakme Unilever Ltd., to distribute
Lakme’s market-leading cosmetics and other products of both companies. In 1998, Lakme Ltd. sold its
brands to HUL and divested its 50 per cent stake in the joint venture. In 2000, the Government of India
sold 74 per cent of the equity in Modern Foods to HUL for ₹10.5 million. The company’s entry into bread
was a strategic extension of its wheat business. In 2002, HUL acquired the government’s remaining stake
in Modern Foods for ₹4.4 million.

In 2001, HUL started Project Shakti (literally meaning feminine energy), a rural initiative that targeted the
bottom of the pyramid customers from small villages (less than 5,000 individuals). This award-winning
initiative focused on rural affluence and women’s empowerment with business benefits. 21 As of 2012,
there were more than 45,000 Shakti entrepreneurs covering more than 100,000 villages across 15 Indian
states and reaching more than three million homes. In 2002, HUL ventured in to the Ayurvedic beauty
products category. To beat competition from a number of network marketing FMCG companies such as
Amway India and Modicare, HUL started its own direct-to-home distribution network called the
Hindustan Unilever Network (HULN) in 2003. In 2012, HULN had active partners across 500 towns and
cities and was backed by 30 offices across the country. 22 In 2004, the company forayed into water
purifiers through its Pureit range, which provided clean drinking water at the affordable price of US$22.

In 2007, the name of the company was changed from Hindustan Lever Ltd. (HLL) to Hindustan Unilever
Ltd. (HUL). It also launched a new logo, which comprised 25 different icons representing the
organisation and its brands.

By October 17, 2008, when HUL celebrated its platinum jubilee of corporate existence in India, it had
established itself as the market leader in most of the segments in which it operated in the so-called “soap
and soup” domain. As of 2012, it was the number one brand in laundry, soaps, hair care, skin care, home
care and deodorants and the number two brand for the oral care and tea segments.

THE EMPLOYEE STORY AT HUL

People are at the heart of our business. Our deep commitment to people and our ability to offer
them exciting opportunities enables us to attract the best talent that gives us the competitive edge.
Throughout 2010–11, we strengthened our Employer Brand and continued to retain our number
one position with the top business schools we visit. We can hire and retain the best talent because
of the value systems we uphold; it is the foundation on which we have built this business. 23
Harish Manwani, Chairman, Hindustan Unilever Ltd.

In 2011–12, HUL had more than 16,000 employees including 1,500 managers, over and above the more
than 50,000 indirect employees that HUL and its many businesses generated employment for. This was
among the largest number of employees in the FMCG sector. As of 2010, Marico Industries, a close
competitor of HUL, had only 1,000 employees. HUL also had a talent pool of more than 250 highly

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skilled people, out of which more than 80 were scientists with PhDs and post-doctoral experience from
renowned universities around the world. Many of them had earned high repute outside the organization
and represented Unilever in technical committees, government consortia and other international agencies.
The scholarly work of these scientists regularly featured in respected national and international journals,
books, conferences and workshops. Patent applications and grants were credited to them on a regular
basis. 24 According to Nair:

The biggest strength of HUL is that we have been known as a “leadership machine” — 440 CEOs
in different companies of India today or those who sit on global boards are from HUL. HUL has
been recognized for always creating leaders. Its HR practices are known for doing fantastic
succession planning and fantastic talent tracking. I think that’s our biggest strength. People don’t
see us as just an FMCG company but as a company that creates leaders for the country. Most
companies that you see today have as their CEO [chief executive officer] individuals who have
had experience at HUL for 15 to 20 years. This applies to any sector in industry in the country.
This could be attributed to the training, culture, meritocracy, professionalism, etc. in the
organization. 25

Known as a leadership machine and the CEO factory of India, HUL had many legends associated with it
in the employee domain in as diverse areas as employee health and safety, employee family welfare and
ethical dealings. Exhibit 6 shows its Code of Business Principles and Exhibit 7 lists some of the HR
awards the company had won.

Health and Safety

There was a saying within HUL: “Normally you need not work for Hindustan Unilever as a company, but
if there is a medical emergency, you should be working for Hindustan Unilever.” Workers’ health welfare
was ensured by the company as all medical expenses were covered through an insurance scheme in case a
worker fell sick. An incident that occurred during the earthquake at Bhuj in Gujarat in 2001 was notable.
One HUL employee was missing in spite of all attempts made at tracing him. Company personnel
helicoptered down to Bhuj to find him. Finally, he was found, alive. Dhaval Buch, executive director
(Supply Chain) recollected: “We sent an entire team to find the one missing employee because we wanted
to let him and his family know what is happening. In crisis, the company comes together and can go to
any extreme.” 26

Family Welfare

While the company provided welfare and benefit packages to its workers, it also took care of the welfare
of the employees’ family after death. Nair fondly recollected:

For employees that we have lost in service, we ensure that their children’s education is fully taken
care of. I get a lot of thank you notes from widows of managers who have passed away in service
and whose children’s education has been fully supported by the organization for a period of 20 to
25 years. The children may have been just one or two years old when their father passed away,
but the subsequent period of their education has been taken care of by the organization. They
express their gratitude and appreciation for what HUL is doing. They say that this care and
concern of HUL for their employees who are not even on their rolls and especially for the
families is something really commendable. And the deaths of these employees are not even on

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service, it could have been in any personal accident, due to a heart attack or any other ailment of
that kind. This is something that strikes me always. 27

Ethical Dealings

In the late 1980s, an event happened at one of the company’s factories in the eastern part of India that
highlighted the company’s commitment to its core values. This had almost become a part of the folklore
at HUL. Nair told the story:

In the late 1980s, when we were being threatened in Assam by some anti-social elements to give
in to their demands and give a huge ransom, overnight we shut the factory. In planeloads we
shifted our employees, managers, workers and their families overnight from that place. That’s the
commitment of the organization to its people. We will never put people at risk; especially if you
find that the people are being made to compromise on their values, we will stand by them fully.
We will take the hits wherever necessary in terms of business or profits, but we will protect our
people. Later, we did restart the Assam factory when the government stepped in. It was a big
thing as everybody stepped in and they reassured us. And that scared the anti-social elements too
because the industry closing down is not good news for them either. They just wanted to bully us
into submission. That just didn’t happen. Even today people remember that this company will
care for me no matter what. 28

The Downturn

Between 2001 and 2004, HUL faced increasingly intense competition and price wars, resulting in low
single digit revenue growth. The organization was considered to be arrogant and conservative. Morale
was at its lowest, and HUL’s reputation as talent’s dream destination was starting to unravel. It was also
the period when some of the company’s star performers left for other MNCs. These included D.
Shivakumar for Nokia, Uday Khanna for Lafarge, Anand Kripalu for Cadbury and V.S. Sitaram for
Dabur. It was felt that HUL’s leadership culture needed to be re-energized, fast. 29

In 2007, HUL fell to fourteenth in the dream employer list among graduating business school students,
after being the leader for almost two decades. Factors such as job prospects and content, degree of
independence, market standing of the company and salary package influenced the students’ choice: “. . .
they didn’t see us as a global player and assumed that one got global assignments only after reaching the
CEO level,” said Nair. 30

While there was some soul-searching to be done by HUL, the problem was not unique to the company. It
was a problem of competing with fast-growing service sector employment opportunities, which changed
the entire employment value proposition, especially for businesses that were traditionally operated in the
Indian manufacturing sector. For example, employees did not want to get posted to far-off places. Nobody
wanted to work in a factory, for example at Haldia, 31 for five years, with their family living in on-site
accommodation. Employees wanted a better lifestyle, which meant urbanization. Service sector
opportunities in IT companies and financial institutions were mainly located in fashionable metropolitan
cities with the latest amenities and state-of the art infrastructure. People wanted their children to have the
best education in the cities and wanted their families to have great medical care. This was not possible in
a rural posting. The concept of what employees needed was becoming so different from the traditional
employment model that matching the two was a challenge. The traditional formula in the manufacturing
industry category, especially the FMCG sector, was that employees were first posted in a factory in a

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small town in the hinterland. This was typically followed by a sales assignment in a bigger town or city.
Head office postings at Mumbai were always at a later stage as one rose up the career ladder. However,
the work-life balance which new employees expected challenged this traditional employment and job
model. The younger generation of premier business school graduates was not willing to wait that long.
They wanted to work for five years and make it big.

The company put some of its 70 top leaders to work do some serious intra-organizational introspection.

Identification of Employee Expectations

In June 2007, Nair had just taken over as executive director of HR at HUL after nearly two decades of
experience in the company. She analyzed and identified the changing expectations of the new generation
that had altered the employment equation in the FMCG sector in India, with direct competition in terms of
attractive job prospects from service sector companies in the IT, banking and finance sectors. Unlike
earlier generations, new recruits were questioning established fundamentals and the existing social
structure. Sameer Nagarajan, head of Employee Relations, observed that there were clashes with the
established norms about age and hierarchy, even at the workers’ level. 32

Nair and her team identified some of the core needs of the newer generation of employees on which the
company had to focus. The new recruits from top business schools were looking for many unique
employment propositions.

First, they were looking for an exciting job that was meaningful. They were interested to know how their
work would make a big difference to the ultimate stakeholder. Some of them even expected the
organization to provide opportunities through which they could contribute to society and the environment.

Second, they wanted to have a career path and had the desire to grow personally and professionally within
the organization. They were also concerned about the future of the company to which they were
contributing their time, talent and effort.

Third, they wanted the organization to have a responsible and caring work culture that would be sensitive
to their needs and welfare.

Fourth, the employees expected rewards and recognition for exceptional performance and special
achievements. These played an important role in boosting their morale and encouraging them to give their
best.

The competitive working environment and increasing pressures of the daily work life made work-life
balance another important factor for employees. Highlighting the changing expectations of employees,
Nair observed:

This was not as important five years ago. But today it is very important. People want a break,
they want to work six months a year, etc. The entire concept of employment is changing at a rate
faster than what the HR heads can cope with. 33

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THE TURNAROUND

The next five years saw a total turnaround in the employment proposition at HUL. The initiatives started
by her predecessor were further developed and continued by Nair and her team.

Career Path

One problem facing the company was the slow rate of career advancement. Hence, flattening the
organization structure was a priority for HUL. In 2001, it took 16 to 18 years of experience before
employees could achieve a senior management position. By 2011, this had been cut to 14 years.

HUL also started pushing expatriate opportunities in a big way because people wanted global experience
early on in their career out of a desire for exposure. It was observed that if the company didn’t offer an
early international position, it was more likely to lose the employee. So, HUL changed many career paths
and sent people abroad as early as during the initial training period. Senior managers were seconded to
Unilever PLC. In 2011, over 200 managers of HUL, about 13 per cent of its managerial strength, served
Unilever globally. The number of managers expatriated steadily increased over the years. 34

Compensation

Nair observed that compensation was a lower priority for employees. HUL was at about 75 per cent of the
market when it came to salaries. There was a good balance of variable, fixed and stock. 35 HUL
benchmarked its compensation with select companies in the FMCG, telecom and banking sectors and
made annual revision to ensure fair salaries reflecting market trends. Differentiation in salary was made
on the basis of performance. Between 2008 and 2009, HUL had increased the variable component of the
salary by more than 100 per cent, thus putting a great emphasis on performance and performance-based
rewards. This was a marked improvement compared to its previous and predominantly fixed salary
structure. Rewards were based on the overall performance of the company, performance of the team with
which the employee was associated and the individual employee performance.

Nagarajan observed that even for its shop floor workers, the compensation was better than the competitors
in the industry (a list of the top players and the main competitors for HUL is given in Exhibit 2) and
beyond the amount stipulated by law for the workers. Fifteen to 20 per cent of this was based on the
actual performance of the employees. The company also provided subsidized canteen facilities. 36

However, in the view of the top management, there were other aspects of the value proposition at HUL
that attracted young talent. As a management trainee of 15 months, fresh recruits were given
responsibility for a market of a few million rupees. The size and scale of this responsibility at an early age
created an attractive proposition. The other part was leadership training, which was the unique selling
proposition of HUL’s HR brand.

Training and Development

Leadership development was said to be a part of the HUL culture and in alignment with its vision of
being a high performance workplace. Highlighting the difference that such leadership training made to the
employees, Nair observed, “The differentiation created around people identified as leaders creates a
culture where people are competitive, they want to outperform. 90 per cent of our senior leaders are

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groomed internally.” 37 The success of the organization’s efforts in leadership development was evident in
its succession plan compliance for key roles of more than 80 per cent.

Twice a year, the management committee would go for a day-long outdoor interaction to discuss training
and development with the top 100 people within the organization. Each subsequent level would discuss
this, so that the whole cascading system right up to 5,500 people at HUL, including the last executive or
supervisor on the front line managing one of the company’s 40 factories, was included in this process. For
the workers, HUL had a separate package of capability and leadership development initiatives.

HUL followed the “70–20–10” model to develop its people. In this, on-the-job learning contributed to 70
per cent, mentoring contributed to 20 per cent and the remaining 10 per cent was contributed through
training and coursework.

On-the-Job Learning — The Levers Business Leadership Training (BLT) Program

The BLT Program was held for graduates selected from some of the leading business schools and
engineering colleges of India. This 15- to 18-month structured program had functional periods of training
(sales and marketing, HR, technical, commercial and IT) and also exposed the trainee to the rural markets
of India through a four-week rural stay. As of 2011, HUL catered to over 250 million rural consumers —
and this number was growing. In order to understand the buying behaviour and have first-hand
understanding of the rural scenario, this training formed a critical part of the on-the-job training process.
“The key challenge for FMCG companies is to ensure that their products are available to consumers in the
most remote and small villages” said Nitin Paranjpe, CEO of HUL, in an interview to India
Knowledge@Wharton. 38 On the other hand, the company also sent the employees on international
assignments to get exposure to working in different cultures and geographies. Thus, BLT was a holistic
program designed to give trainees exposure across the business. Its impact was long-lasting for many of
the new recruits, so much so that over two decades later, Nair recollected her own experience in the BLT
program:

I still remember the best moments in this company when I was a management trainee, living in a
village, understanding what it takes to influence and change, even if it is some 500 people in a
little village in India with no roads to reach there. These are life-transforming experiences as a
leader. 39

“These are people who we believe will be the future leaders of this organization,” 40 said Paranjpe. In
2011, with an employee strength of 16,588 and each year adding another 40 to 50 business school
graduates in their early twenties, the BLT program played a significant role in employee training and
development. 41

Mentoring

When a BLT trainee joined as a management trainee, a senior manager would be allocated to him as a
coach, a member of the Management Committee as a mentor and his immediate manager as a tutor who
would help and guide him on projects. Each of these people — the coach, mentor and tutor — played a
role in the trainee’s learning process. On completion of the training period, trainees would get feedback
on how well they performed, whether they managed to learn, how they delivered on their projects, etc. On
the other hand, the mentors, coaches and tutors were also evaluated on whether they delivered in terms of
building their trainees. If the trainee said that the coach did not do a good job, the consequences appeared

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in the coach’s annual appraisal. Mentors who had not done a good job would not get another trainee until
they agreed to improve their performance.

Nair observed that people left companies if their boss was not a good leader. At HUL, the bosses’
engagement with their respective teams and the level of satisfaction of the teams with their bosses was
measured. Those doing a poor job in this regard were coached, assisted and sometimes even warned.
Seven times a year, bosses had the opportunity to speak to their subordinates. These opportunities were to
be used to build a person, appreciate the individual’s character and contribution to the organization and
even set mutual targets. These interactions between the superior and the subordinate played a crucial role
in discussing performance and potential. “And we really coach all our line managers and bosses to get
those leadership moments really done well, so that people go away feeling secure, knowing where they
stand, feeling insecure if they are not doing well, by the way, but having clarity,” observed Nair. 42

Deepika Bhan, 30, senior regional brand manager/hair, for South Asia at HUL had a mentor from the
senior management team with whom she interacted on a fortnightly or monthly basis. She said, “We
discuss behavioural issues on standards of leadership and how I can inspire the people I work with.”
When she joined HUL in 2005, she was in sales and led a team of people who had been with the
organization for 15 years. “They give you a lot of responsibility at an early stage,” said Bhan. By 2011,
she was heading the company’s hair care brand, Clinic Plus, in a regional role. Her appraisals and
interactions with peers and managers had helped her develop the confidence to take up more
responsibility as she progressed to higher roles in the company. 43

HUL also had a structured mentoring program called “Alchemy.” There were regular “sip-and-share”
sessions where knowledge and learning were shared across varied areas from marketing and HR analytics
to leadership.

Top management at HUL invested anywhere between 30 to 40 per cent of their time in grooming and
mentoring leaders for the future — from redefining the talent identification process, to identifying talent,
to grooming and coaching, to creating opportunities for growth and exposure. “Senior management
devotes enormous time in the leadership development process,” said Nair. A talent review session was an
integral part of every fortnightly management review meeting. “As head of human resources, I need to
ensure that I have identified and am grooming a couple of people who can take over my role today,
another couple who could take over my role in two to three years and in five to seven years — that is my
responsibility as a leader,” she said. 44

There was yet another interesting opportunity of interaction with the top management — the CEO
himself. Every fortnight, 10 to 15 young managers would be randomly picked to have lunch with
Paranjpe. He would encourage them to share their views and speak their minds and would even have them
tell what they disliked most about HUL. This enabled the senior most leader of the company to know
what was not working in the organization the way it was expected to. 45

Besides this, the directors of the company would go to the four regions of India and make presentations to
the employees about company performance — the positive aspects as well as the areas of improvement.
On such occasions, feedback was taken from employees. These interactions between the managers and
top management in the four regions of the country were converted into a CD format to be shared with
workers in factories across the country to keep them abreast with the latest developments in the
organization. Whenever there were any achievements in the company — for example, brands doing well,
awards received, corporate responsibility initiatives, etc. — they were communicated instantaneously to
all the employees through e-mail to keep the morale of the employees high and make them feel happy that

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news about the company’s success was shared with them and they were being involved in the company’s
day-to-day functioning. The CEO updated the company’s quarterly performance to all the employees in a
webcast. HUL also had an online portal “Ur Say,” which provided a platform for all employees to give
suggestions to the management committee. The in-house magazine, Hamara, was another avenue for two-
way communication and expression. Thus, top-down and bottom-up communication was balanced to
create a transparent culture in the organization.

Training and Coursework

Addressing the Annual General Meeting of HUL, Harish Manwani, its chairman, stated,

We do capability building across functions and at every level of the organization. For example,
we have “skills maps” against which the workforce in our manufacturing units and our sales force
are benchmarked. Besides on the job training, they undergo up to eight man-days of training
every year. On a conservative basis, this implies a staggering one lakh 46 man-days of training
across the organization every year! We have the same emphasis on skills training even in our
extended sales and distribution network and invest another one lakh man-days of training every
year. 47
HUL had made significant investments for training in the areas of marketing excellence, customer service
and building capabilities for organized retail trade. Large numbers of training programs were delivered
through classrooms, new capability-building courses and external learning sessions. The e-learning
platform introduced in 2007 offered a portfolio of over 3,000 courses via the Internet. This provided
employees access to learning anywhere, anytime. In its second year, with over 25,000 course registrations
by HUL employees, the company had set a benchmark.

The HUL Professional Internship Program gave interns a unique opportunity to integrate classroom
learning with the realities of real business. Interns generally worked as a part of a small cross-functional
team on a live challenging business project. The project provided them with a thorough and holistic
understanding of business and its various functional aspects. Besides this, HUL’s R&D function
developed a three-day sustainability foundation course to train and mould a workforce aware of the wider
impacts of business on society and the environment. The course was open to all managers across the
business. A complementary sustainability awareness e-learning module was developed in 2009. These
courses aimed to show how one could deftly weave sustainability into the business strategy as a means of
achieving a competitive advantage.

Performance Measurement

To me, at the end of the day, people and talent are the heart of the organization. Everything else
revolves around that. . . . Where does leadership come from? It comes from talent, it comes from
people who have really imbibed the value systems of the organization. Therefore, in our
assessment system when we evaluate people, there is a two-grid process that we do. We say what
he or she has delivered and how he or she has delivered. Both the means and ends are important
for us as an organization. The “what” is the business targets and how you have really met the
business targets. The “how” is the six standards of leadership. We assess our people based on
these. We call it GREATB. It stands for Global Mindset, Real Accountability, External
Orientation — towards consumers, society and related issues — Action not Debate, Team
Alignment — this is because we do not want individual excellence people — Building great
talent. We call this the SOL — Standards of Leadership. We assess the people on this basis. If

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you ask me, for the success of the organization, there are lots of hardware. But at the end of the
day, people, processes and talent are very important. 48

D. Sundaram, former vice chairman and chief financial officer, HUL

In 2004, Gurdeep Singh, then management committee member and executive director (HR) at HUL, who
was chief among those who pushed for a shift in the organization culture. “The introspection was hard,
but we knew it was time to formalize a shift in culture,” 49 he recalled. That same year the 360-degree
process of performance appraisal was institutionalized. Paranjpe, who was the youngest CEO HUL had
ever had, observed, “It was a huge cultural transformation. Some were big enough to deal with it, others
struggled enormously.” 50 Thereafter, mid-year reviews were made mandatory. “Your self-image gets
shattered pretty fast with 360-degree reviews,” said Sanjiv Kakkar, now chairman, Unilever Russia,
Ukraine and Belarus (RUB). “You get the message about your performance gaps loud and clear.” 51 By
2010–11, there was greater emphasis on real delivery and performance accountability, and the company
had moved to a far more aggressive performance-based rewards system.

HUL used the Leadership Differentiation Tool (LDT), a 3×3 matrix of performance versus potential to
differentiate its talent pool. This was applied to 5,000 people as part of talent assessment across the
company. 52 The grid measured performance and leadership capability in two or three different ways.
Everyone in the company went through a 360-degree feedback. Information on performance was taken
from the appraisal review process and the key result areas (KRAs) on the job. Information on behaviour
and potential was taken from multiple sources including a 360-degree profiling (done once every two
years), behaviours demonstrated on the job and the GPS (Global People Survey) 53 results. Every
employee got a performance and capability card in early April. This e-card could be downloaded. It
detailed various aspects of the employee performance and also whether the employee was rated as a
“lister” (HUL phrase for fast-track leaders), which box of the matrix the employee was, employee
potential, likely next job, the company opinion on employee potential and much more. Thus, every person
had clarity about performance and potential from a 360-degree perspective. This was shared transparently
by HUL with its employees.

LDT and the assessment of future potential of employees led to the identification of the high potential
(HP) and sustained high performers (SHP) talent pool. Twenty-five per cent of the company’s talent pool
was identified as key performers. Once identified in this category of HP and SHP, this set of performers
received differentiated inputs in training and development, career opportunities, coaching and
compensation. 54 For this special category, HUL introduced an interesting concept called “Hot Jobs for
Hot People.” Every year, the management committee identified about 50 jobs that could be the most
impactful jobs for the year, either because they were in an area of growth or represented a strategic
pursuit. These provided an opportunity to the HP/SHP pool to create an impact at the organizational level
and get high visibility in the company through their contribution in these critical areas.

In 2011, the average attrition rate at HUL was at 5 per cent, much lower than the FMCG average of 18
per cent. Recognition through the LDT and rewards to best performers had acted as good retainers. 55

Work-Life Balance

The employee environment in pre-liberalization India from the 1950s to the late 1980s was very different
to the current situation. Due to the regulated industrial and economic policy, most organizations faced
little competition. Hence, the work pressure on employees was limited. In the post-liberalization era, the

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entry of large MNCs in diverse industry categories including consumer goods and consumer durables,
banking and finance, automobile and IT led to increased work pressure in organizations, tighter deadlines
and longer working hours. This led to a greater focus on ensuring work-life balance by many
organizations.

HUL introduced a number of initiatives in this regard. It developed generous policies on career breaks
and sabbaticals. Employees could take up to five years off for further studying, pursuing music, taking
care of aged parents, looking after children or any reason that was important in the employee’s personal
life. HUL encouraged flexibility in a big way by giving employees the option of working out of home at
least once a week. While this was common in many other sectors, it was a new initiative in the highly
traditional Indian FMCG sector. The company made a policy that at 8.30 p.m. lights would be switched
off in the office and all employees were expected to go home and spend time with their families.

Keeping in mind the sedentary lifestyle to which the employees were exposed, HUL introduced the
vitality index for every employee. This was measured on key parameters such as blood pressure,
cholesterol, diabetes and body mass index (BMI). In 2008, the company had about 8 per cent of
employees with a risky profile on the vitality index. To assist employees to maintain good health, HUL
established an occupational health centre. The food court offered diet food for those who were health-
conscious and wished to lose weight. Physical fitness, stress counselling and yoga workshops were
organized. Marathon runners, gym and yoga experts and guided meditation were provided for the
employees on select days of the week. HUL attempted to put employees at the centre of all their activities.
By 2011, the number of high risk profile employees was down to 4 per cent.
HUL’s new headquarters at Andheri, a suburb of Mumbai, inaugurated in 2010, was also designed
keeping in mind the changing requirements of the new generation of employees. Unlike its original
headquarters — Lever House at Backbay Reclamation in South Mumbai — the senior executive floor was
scarcely different from other floors, and employees literally cut across all levels as they traversed the
facility’s length and breadth. The facility aimed at binding people and spaces, knitting together the
intangible and the tangible. Intangible values such as collaboration, openness, work-life balance and well-
being were actively promoted by tangible architectural elements, employee amenities and technology.
Some of the new facilities included a recreation centre with multiple sports offerings such as squash,
badminton and a gym; an occupational health and safety centre with full-time doctors and nurses; and a
day-care centre run by a day-care specialist. The facility kept pace with changing work patterns, installing
a campus-wide wi-fi network, video conferencing facilities and formal and informal meeting spaces.
“Today work is not a place you go to, work is an activity you can carry out anywhere,” said Mutreja, head
of Projects. “People work in teams and come to work to collaborate, so we have created situations where
people will just happen to meet, in chance encounters, to strengthen bonds.”56 HUL engaged specialist
space planners to devise an open-plan environment that was comfortable, noise-free and adaptable to
changes in team size and configuration. So the workstations used light portable desks, low-height
partitions and storage units, rather than bulky panel systems. The architects observed that there were
hardly any other Indian corporate establishments that had focused on public spaces and interactive
environments as HUL had done in its new premises.

Corporate Social Responsibility (CSR) Initiatives

HUL integrated CSR into its everyday agenda. In November 2010, Unilever announced its “Sustainable
Living Plan” with three goals, to be achieved by 2020. They were:

1. “Help more than one billion people improve their health and well-being.”

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2. “Halve the environmental impact of our products.”

3. “Source 100 per cent of our agricultural raw materials sustainably.” 57

Employees committed to dedicate a certain number of hours to community service with causes in which
they were interested. This was done to make people see their work as part of a bigger picture, as a part of
something whole. The company also had a formal employee volunteering initiative, which clocked more
than 115,000 hours of volunteer work in 2009. Through this program, HUL was able to connect its
employees to the needs of the people. With more than two-thirds of India’s population still in the rural
hinterland, these activities provided a business case for CSR. CSR works were undertaken in every
factory and unit as well as various centralized initiatives. Thus, the employees were made aware of the
larger organizational goals and their role in achieving them.

THE WAY AHEAD FOR HUL

In the previous decade, HUL went from not growing to growing, from criticism of its working style to
being named India’s best employer by Aon Hewitt and from harnessing local leaders to turning out global
leaders. Nair said that the roughly ₹20,000-crore 58 company had learned to listen more and was willing to
change. 59

While the road traversed thus far was no doubt challenging, the road ahead would throw up further
challenges for the company. According to a McKinsey & Company report, India would need to up-skill or
re-skill 500 million people by 2020 to meet its growth requirements. However, at capacities in 2012, India
could train barely 50 million — an astounding gap of 90 per cent! Similarly, the Eleventh Five-Year Plan
of the Government of India pointed out that only 2 per cent of the existing workforce had skills training.
Another report by Boston Consulting Group (BCG) highlighted that out of the 89 million people who
were expected to join the Indian workforce from 2009 to 2013, more than 47 million would be school
dropouts. 60 This portrayed a grim picture in terms of the availability of skilled manpower, which would
become an acute shortage in the decade ahead.

In 2009, HUL witnessed 4.9 per cent voluntary attrition among managers 61 and 9 per cent among
officers. 62 The total rate of employee turnover (total exits due to resignation, retirement, death, early
retirement) was 10 per cent for managers and 14 per cent for officers. 63 However, complacency in this
regard could prove dangerous for the company. Whenever the talent market heated up, the first target was
HUL. The company had always been a huge poaching ground for Indian industry. This could be seen
from the fact that over 400 top executives across corporate organizations in India had once been
employed at HUL for a decade or more. HUL would have to continue to intensify its efforts in the highly
competitive talent market in India. While everyone would want to grab trained and talented manpower,
wherever available, there was a huge quantity of good people sitting in HUL: 1,500 managers — all
trained and polished through coaching and training, ready on their leadership journey for a successful
corporate career. How could HUL retain them? How could the company make employees feel part of its
larger vision and mission? How could it make itself a full-fledged flexible organization? How could it
continue its eight-decade long legacy of being the “CEO Factory” of India? These were the questions
haunting Nair when she reached home.

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EXHIBIT 1: 25 BEST EMPLOYERS BY AON HEWITT FOR 2011

Source: www.aon.com/india/attachments/Aon_Hewitt_Best_Employers_in_India_2011_Press_Release_May_05_
2011.pdf, accessed June 20, 2012

EXHIBIT 2: THE TOP 10 COMPANIES IN THE FMCG SECTOR

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)
3. Nestlé India
4. GCMMF (AMUL)
5. Dabur India
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries
9. Procter & Gamble Hygiene and Health Care
10. Marico Industries

Source: www.chillibreeze.com/articles_various/fmcg-in-india.asp, accessed June 19, 2012.

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EXHIBIT 3: MAJOR PRODUCTS AND SERVICES PROVIDED BY HUL

Soaps and detergents Beverages Ice creams

Soaps Tea Ice creams
Detergent bars Coffee Frozen desserts
Detergent powders Foods Exports
Detergent liquids Oils Marine products
Scourers Fats Leather products
Personal products Wheat flour Castor
Oral care Salt Rice products
Skin care Tomato-based products Others
Hair care Fruit-based products and Chemicals
Deodorants soups Agricultural seeds
Talcum powder Wheat-based products Property development
Colour cosmetics Supplementary nutritional Water business
Ayush services products

Source: Datamonitor Company Report dated November 8, 2011, accessed June 20, 2012

EXHIBIT 4: MAJOR HUL BRANDS

Lux Sunsilk Red Tubs

Breeze Clinic Plus Italian Gelato
Lifebuoy Axe Viennetta
Liril Lakme Ocean Diamond
Dove Brooke Bond Ocean Excellence
Pears Taj Mahal Shogun
Hamam Green Label Hima
Rexona Lipton Gold Seal
Surf Excel Bru Tara
Rin Knorr Prima
Wheel Annapurna Gold Seal Indus Valley
Pepsodent Kissan Rozana
Close-Up Kwality Wall’s Annapurna
Fair & Lovely Cornetto Topsol
Pond’s Feast

Source: Datamonitor Company Report dated November 8, 2011, accessed June 20, 2012

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EXHIBIT 5: HUL EIGHT-YEAR TRACK RECORD

Statement of Profit and Loss

2008–09
2004 2005 2006 2007 15 months 2009–10 2010–11 2011–12
Gross Sales 10,888 11,976 13,035 14,715 21,650 18,220 20,285 22,800
Other
income 319 305 355 432 590 350 627 659
Interest –130 –19 –11 –26 –25 –7 0 –1
Profit before
taxation 1,505 1,604 1,862 2,146 3,025 2,707 2,730 3,350
Profit after taxation 1,199 1,355 1,540 1,743 2,501 2,103 2,153 2,599
Earnings per share 5.44 6.4 8.41 8.73 11.46 10.1 10.58 12.46
Dividend per share 5 5 6 9 7.5 6.5 6.5 7.5

Balance Sheet
2008–09
2004 2005 2006 2007 15 moths 2009–10 2010–11 2011–12
Fixed Assets 1,518 1,484 1,511 1,708 2,079 2,436 2,458 2,363
Investments 2,230 2,014 2,414 1,441 333 1,264 1,261 2,438
Net deferred Tax 226 220 225 212 255 255 210 214
Net Assets (current – –
& non-current) –409 –1,355 1,353 1,834 –183 –1,365 –1,269 –1,502
3,564 2,363 2,796 1,528 2,483 2,584 2,660 3,513
Share Capital 220 220 221 218 218 218 216 216
Reserves and
Surplus 1,873 2,086 2,503 1,221 1,844 2,365 2,444 3,297
Loan Funds 1,471 57 73 89 422 0 0 0
3,564 2,363 2,796 1,528 2,483 2,584 2,660 3,513

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EXHIBIT 5 (CONTINUED)

2008-09
Segment-wise Sales(%) 2004 2005 2006 2007 15 months 2009-10 2010-11 2011-12

Soaps, Detergents 45 45 47 47 49 48 46 48
Personal Products 26 28 29 29 29 30 32 31
Foods 25 22 22 20 20 20 19
Chem, Agri, Fertilizers &
Animal Feeds 1 1 1 1 1 0 0
Others 1 1 1 1 1 2 2 2

2008-09
Key Ratios and EVA 2004 2005 2006 2007 15 months 2009-10 2010-11 2011-12
EBIT as % of Sales 13.4 12.3 13.1 13.1 13.1 14.1 12.1 13.5
Fixed Assets turnover (times) 7.2 8.1 8.6 8.6 8.3* 7.5 8.3 9.6
PAT/sales (%) 11 11.3 11.8 11.8 11.6 11.5 10.6 11.4
Return on Capital Employed (%) 45.9 68.7 67 78 107.5* 103.8 87.5 96.8
Return on Net Worth 57.2 61.1 68.1 80.1 103.6* 88.2 74 77.7
Economic Value Added (RS Crs) 886 1014 1126 1314 2154 1791 1750 2250
*Show on annualized basis

2008-09
Others 2004 2005 2006 2007 15 months 2009-10 2010-11 2011-12
HUL Share Price on BSE 143.5 197.25 216.55 213.9 237.5 238.7 284.6 409.9
(Rs/share)
Market Capitalization (Rs Crs) 31,587 43,419 47,788 46,575 51,770 52,077 61,459 88,600
Contribution to exchequer (Rs 2,674 2,638 2,813 3,133 4,429 3,704 3,953 4,839
Crs)

Note: EBIT – Earnings Before Interest and Taxes; PAT – Profit After Taxes; BSE – Bombay Stock Exchange

Source: www.hul.co.in/Images/Performance-Trends_tcm114-309359.pdf accessed November 13, 2012.

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EXHIBIT 6: CODE OF BUSINESS PRINCIPLES WITH RESPECT TO EMPLOYEES AT HUL

Unilever is committed to diversity in a working environment where there is mutual trust and respect and
where everyone feels responsible for the performance and reputation of our company.
• We will recruit, employ and promote employees on the sole basis of the qualifications and abilities
needed for the work to be performed.
• We are committed to safe and healthy working conditions for all employees. We will not use any
form of forced, compulsory or child labour.
• We are committed to working with employees to develop and enhance each individual’s skills and
capabilities.
• We respect the dignity of the individual and the right of employees to freedom of association.
• We will maintain good communications with employees through company based information and
consultation procedures.
Source: Based on the information provided on the company website,
www.hul.co.in/aboutus/purposeandprinciples/ourprinciples/, accessed June 20, 2012.

EXHIBIT 7: HR AWARDS FOR HUL

• HUL emerged top in the “Best Employer in India 2011” survey conducted by Aon Hewitt.
• HUL was ranked the top “Dream Employer” among the 2011 graduating batch management students
at the leading business schools of India. It was also the ranked as the leader in the “Employer of
Choice” category among the students of the top six Indian Institutes of Management (IIM
Ahmedabad, IIM Bangalore, IIM Indore, IIM Kozhikode, IIM Kolkata and IIM Lucknow). These two
surveys were conducted by AC Nielsen.
• HUL was conferred HR Excellence Award by the CII Western Region for the year 2008–09
• Leena Nair received the “Young Women Achiever Awards — 2009” for outstanding work in the field
of business. She was also named by Business Today as one of the 25 Most Powerful Women in Indian
business.

Source: Company website, www.hul.co.in/investorrelations/UnderstandingHUL/Awards/, accessed June 20, 2012, and

Annual Report 2010–11.

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NOTES
1
Jagadish Raiyani and Nilesh Joshi, “Service Sector in India: Performance, Problems and Prospects,” Advances in
Management 4.5, May 2011.
2
Rajat Dhawan, Gautam Swaroop and Adil Zainulbhai, “Fulfilling the Promise of India’s Manufacturing Sector,” McKinsey &
Company, 2012, www.mckinsey.com/insights/operations/fulfilling_the_promise_of_indias_manufacturing_sector, accessed
June 20, 2012.
3
Ibid.
4
www.chillibreeze.com/articles_various/fmcg-in-india.asp, accessed June 19, 2012.
5
info.shine.com/Industry-Information/FMCG/780.aspx, accessed June 20, 2012.
6
Ibid.
7
Based on the information provided in the HUL Annual Report 2010–11, the Data Monitor Company Report dated
November 2011 accessed on June 20, 2012, information provided on the company website, accessed June 20, 2012, and
the company reports available on the Capitaline Database, accessed June 20, 2012.
8
Ibid.
9
Ibid.
10
www.hul.co.in/aboutus/ourhistory/, accessed June 20, 2012.
11
Brooke Bond was an independent manufacturer of tea established in 1845 in Lancashire, UK by Arthur Brooke.
12
An internationally renowned name in cosmetics, the T.T. Pond Company was formed in the United States in 1846. The
company was merged with the Chesebrough Manufacturing Company in 1955.
13
This refers to the Government of India’s policy requiring elaborate licenses and regulations and the accompanying red
tape to set up and run businesses in India between 1947 and 1990.
14
A renowned economist and prime minister of India since 2004.
15
Tata Group is a century-old Indian multinational conglomerate company with 96 operating companies in seven major
sectors; it is one of the largest conglomerates in India by market capitalization and revenue.
16
A leading brand of jams, ketchups and squashes.
17
An Indian conglomerate company with core businesses that included brewing, distilling, real estate, engineering,
fertilizers, biotechnology, information technology and aviation.
18
A leading Indian ice cream brand.
19
The Indian subsidiary of the confectionary market leader Cadbury, based out of London, and taken over by Kraft Foods in
2010.
20
A market leader in the Indian cosmetics industry.
21
HUL’s Shakti entrepreneur program created livelihood opportunities for underprivileged rural women. It recognized that
while micro-credit played a key role in alleviating poverty, its ability to do so depended on the availability of investment
opportunities. It contributed by creating profitable micro-enterprise opportunities for rural women. Armed with micro-credit,
rural women became Shakti entrepreneurs: direct-to-home distributors in rural markets of a range of mass-market products
especially relevant to rural consumers. HUL invested its resources in training the entrepreneurs, helping them become
confident, business-savvy professionals capable of running their own enterprises. Shakti entrepreneurs typically earned
between ₹600 to ₹800 per month. As most of these women were from below the poverty line (BPL), this earning often
doubled their household income.
22
www.huln.co.in/about_us.aspx, accessed June 2012.
23
HUL Annual Report 2011.
24
Based on the information provided on the company website www.hul.co.in/, accessed June 20, 2012.
25
Nair, personal interview with the case writer.
26
Dhaval Buch personal interview with the case writer.
27
Nair, personal interview with the case writer.
28
Ibid.
29
Arati Menon Carroll, “Hindustan Unilever: The CEO Factory,” Economic Times, September 12, 2008,
articles.economictimes.indiatimes.com/2008-09-12/news/27734862_1_hul-ceo-nitin-paranjpe-hindustan-unilever, accessed
June 20, 2012.
30
Kala Vijayraghavan, “HUL is Dream Employer at Campuses Again,” Economic Times, February 8, 2010,
articles.economictimes.indiatimes.com/2010-02-08/news/27616834_1_hul-nitin-paranjpe-harish-manwani, accessed June
20, 2012.
31
A manufacturing hub of HUL in distant Paschim Banga (West Bengal).
32
Nagarajan, personal interview with the casewriter
33
Nair, personal interview with the casewriter
34
Namrata Singh, ‘People Leave Bosses, Not Organizations,’ The Times of India, July 5, 2011,
timesofindia.indiatimes.com/business/india-business/People-leave-bosses-not-organizations/articleshow/9106603.cms,
accessed June 20, 2012.
35
With effect from 2001, HUL had a unique stock grant scheme that was linked to the share performance of both HUL and
the parent company, Unilever PLC. This scheme covered all current HUL directors, managers and management trainees.
Fresh recruits in the management cadre too were entitled to it from their very first year with the company. As of March 31,
2009, the employee stock ownership plan shares were valued at ₹40.538 million.
36
Nagarajan, personal interview with the casewriter

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37
“Institutionalizing Leadership — The HUL Story,” People Matters, January 12, 2010; www.peoplematters.in/articles/cover-
story/institutionalizing-leadership-the-hul-story, accessed May 19, 2011.
38
knowledge.wharton.upenn.edu/india/article.cfm?articleid=4536, accessed June 20, 2012.
39
Vinay Kamath and Aarati Krishnan, “HUL’s School for Leadership,” The Hindu Business Line,
www.thehindubusinessline.com/features/newmanager/article2465229.ece?homepage=true, accessed June 20, 2012.
40
articles.economictimes.indiatimes.com/2011-06-14/news/29657071_1_ceo-nitin-paranjpe-hul-management, accessed
June 20, 2012.
41
articles.economictimes.indiatimes.com/2011-06-14/news/29657071_1_ceo-nitin-paranjpe-hul-management/2, accessed
June 20, 2012.
42
Vinay Kamath and Aarati Krishnan, “We’re Not Just ‘Happy-clappy,’ Productivity Counts Too,” The Hindu Business Line,
www.thehindubusinessline.com/features/newmanager/article2484776.ece, accessed June 20, 2012.
43
Ahona Ghosh, “At Hindustan Unilever, Leadership Training Is an Organizational Goal,” The Economic Times, June 14,
2011, articles.economictimes.indiatimes.com/2011-06-14/news/29657071_1_ceo-nitin-paranjpe-hul-management/2,
accessed June 20, 2012.
44
“Institutionalizing Leadership.”
45
Kamath and Krishnan, “We’re Not Just ‘Happy-clappy.’”
46
A lakh is 100,000 rupees.
47
Excerpts from the Address of the Chairman at the HUL’s Annual General Meeting 2010.
48
Personal Interview with the case writer.
49
Carroll, “Hindustan Unilever: The CEO Factory.”
50
Ibid.
51
Ibid.
52
Normally, an employee was plotted after about three years within HUL. This was because Year 1 focused on learning the
job, Year 2 on contributing in the profile and Year 3 on the impact of the employee’s contribution.
53
GPS was an employee survey that captured insights into employee engagement levels across various teams, thus giving
information and feedback at the organizational level.
54
“Institutionalizing Leadership.”
55
articles.economictimes.indiatimes.com/2011-06-14/news/29657071_1_ceo-nitin-paranjpe-hul-management/2, accessed
June 20, 2012.
56
Aparna Piramal Raje, “Designed for Leverage,” Business of Life, February 3, 2010;
www.livemint.com/2010/02/03213020/Designed-for-leverage.html, accessed June 20, 2012.
57
www.sustainable-living.unilever.com/the-plan/, accessed June 20, 2012.
58
A crore is 10 million rupees.
59
Singh, “People Leave Bosses, Not Organizations.”
60
Excerpts from the Address of the Chairman at HUL’s Annual General Meeting 2010.
61
At HUL, employees on work levels as per Hay Level 13 and above or Mercer PC 49 and above are managers.
62
At HUL, employees on work levels below Hay Level 13 and below Mercer PC 49 are officers.
63
Hindustan Unilever Ltd. Sustainable Development Report, 2009,
www.hul.co.in/Images/HUL%20Sustainable%20Development%20Report%202009_tcm114-226531.pdf, accesses June 20,
2012.

This document is authorized for use only in Prof. M. Srimannarayana's HRM, PGCBM-40 (VIL Program) at Xavier Labour Relations Institute (XLRI) from Apr 2022 to Oct 2022.