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Human Resource Management & Organizational Behaviour

Case Study Analysis: 'HR Restructuring The Coca-Cola and Dabur Ways'

Anisha Kirpalani CPGFR-1001

IntroductionThis case looks at the human resource reformation activities that were taken up Coca-Cola and Dabur in the 1990s. It primarily throws light on the various circumstances that led to the restructuring and the consequences of the HR exercise. It also talks about how different situations necessitated HR restructuring at the two businesses, the different approaches used by them and how productive the activities proved to be.

Q1. Critically analyse and comment on the Coca-Cola and Dabur Ways.Restructuring has been used as a means to alter HR Strategies and Activities at both CocaCola and Dabur, at approximately the same time (Late 1990s). Although different situations demanded the restructuring exercise, the results proved beneficial to both companies. The outcomes of any decision/ action/ circumstance of an organization are either favourable or unfavourable for it. The analysis of the Coca Cola and Dabur Ways begins with the situations, prior to the restructuring activity, which were beneficial to both these companies; and which were not. Coca-Cola Favourable Internal realization that something was going wrong in the Indian market. Considering HR to be one of the prime factors that needed change. VRS Scheme would sound attractive to all employees New line of control supported entry and middle-level jobs Unfavourable

Over-estimation of volumes At every step, HR was the one major issue Merger in 1999 increased the number of employees to double (10,000)

Increasing the number of regions to six Previous pay packages, in lines with International standards VRS Scheme used by too many employees Senior personnel left the company due to the new line of control designed Resignations and sacking of employees Reports of unfair credit and trade policies

The decision of Coca-Cola to increase from three to six profit centres should not have been done, as the regionalization caused dilution of several central jobs. Availability of a Voluntary Retirement Scheme at all bottling plants was taken advantage of; Coca-Cola may not have expected 1100 employees to use the scheme. Even though a clear career planning system was designed, employees at the plants in North India violated trade and credit policies; this could mean that their personal objectives did not match the organizations objectives. However, the actual situation should have been found out first before the company decided to conduct a performance appraisal for the 560 managers related with the violation. The frustrated employees voiced their dissatisfaction in a violent way. The damage was bound to happen. However, the effort taken by Alexander to

constantly monitor the practices of the company and regularly meet the Finance heads is commendable. After the HR Restructuring, employees too understood and accepted the need to cut down on unnecessary costs like expensive accommodation; this could only happen when they really wanted to see the company grow. This proves the success of the restructuring exercise. Integration of IT was the best initiative they could possibly take at this point. Dabur Favourable Identifying a clear vision to make Dabur India's best FMCG company by 2004 Benchmarking itself against the major players in FMCG at the time. Handing over day to day management to professionals, while concentrating on strategic decisions Unfavourable Lesser P/E Ratio, profit margins compared to its counterparts Higher net working capital Hiring McKinsey & Co. may have been a costly investment by Dabur, adding to the already less profit margins, high costs and Working Capital; but it proved to be beneficial and was probably the best decision they could take in order that they could achieve their goal at the earliest. Making performance appraisals more objective and performance oriented would also increase motivation levels of employees, who contributed the most to the success of the company. The decision to revamp the whole organization structure was bold and necessary; and the company took the chance. To appoint experienced personnel from all the leading FMCG companies and rework on the performance evaluation system was a sensible decision that was directly aligned to the corporate goal. The two-way communication channel helped and so did the ESOP scheme. The HR restructuring exercise proved beneficial not only to the employees and the retention, but also to the performance of the companies. Q2. Have the Ways sustained and achieved all future goals till today? Coca Colas goal is to be the worlds leader in beverage manufacture. In order to achieve this, the company invests a lot in its HR to acquire and retain employees who can grow alongwith and in the same direction of the company. In the company, from management to entry-level, everyone shares the same passion and has a clear understanding of what needs to be done. Coca Cola provides a variety of market-competitive benefits programs to address employees' benefits needs and as in the past, this will pay off and help achieve all its goals. Daburs goal was to become Indias best FMCG Company by 2004. In 2010, it still is Indias fourth largest FMCG company, so it has not reached its ultimate goal yet. The company believes that good HR policies, by themselves, dont create a great workplace. They need to be accompanied by ambition and a sense of daring. The Ways have been consistent and kept sustained although Ninu Khanna left the company. At Dabur, If 90 per cent of the corporate target is not met, no one earns variable pay. This shows the trust and belief the company has in its employees and vice versa. Profit numbers are not as important as employee satisfaction, and the latter will ultimately contribute to the former.