HR Restructuring - The Coca Cola & Dabur Way

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The Dabur Way

Dabur's restructuring efforts began in April 1997, when the company hired consultants McKinsey & Co. at a cost of Rs 80 million. McKinsey's three-fold recommendations were: to concentrate on a few businesses; to improve the supply chain and procurement processes and to reorganize the appraisal and compensation systems. Following these recommendations, many radical changes were introduced. The most important was the Burmans' decision to take a back seat. The day to day management was handed over to a group of professional managers for the first time in Dabur's history, while the promoters confined themselves to strategic decision making. Dabut decided to revamp the organizational structure and appoint a CEO to head the management. All business unit heads and functional heads were to report directly to the CEO.

In November 1998, Dabur appointed Ninu Khanna as the CEO. The appointment was the first incident of an outside professional being appointed after the restructuring was put in place. Ninu Khanna, who had previously worked with Procter & Gamble and Colgate-Palmolive was roped in to give Dabur the much-needed FMCG focus. Dabut had also appointed Cadbury India's Deepak Sethi as Vice President - Sales and Marketing - Health Care Products division; Godrej Pilsbury's Ravi Sivaraman as Vice President - Finance and ABB's Yogi Sriram as Vice President - HRD.

Dabur made performance appraisals more objective by including many more measureable criteria. Concepts such as customer satisfaction, increased sales and reduced costs, cycle-time efficiency, return on investment and shareholder value were all introduced as yardsticks for performance appraisals. Harish Tandon, general manager, HR, Dabur remarked, "Now Dabur is working towards making compensation more performance-oriented, and the performance evaluation system is being worked on. Today, performance in terms of target achievement is the main factor followed by other criteria such as sincerity and longevity of service." The focus of appraisals thus shifted to what a person had achieved, as much as on what he was capable of.

Dabur's employee friendly initiatives included annual sales conferences at places like Mauritius and Kathmandu. These conferences, attended by over a hundred sales executives of the company, combined both 'work-and-play' aspects for better employee morale and performance. Dabur also gave cash incentives to junior level sales officers and representatives upon successful achievement of targets. Employees were also allowed to club their leaves and enjoy a vacation.

To increase employee satisfaction levels, Dabur identified certain key performance areas (KPAs) for each employee. Performance appraisal and compensation planning were now based on KPAs. Employee training was also given a renewed focus. To help employees communicate effectively with each other and for better dissemination of news and information, Dabur brought out a quarterly newsletter 'Contact.' The interactive newsletter worked as a two-way communication channel between the employees. Dabur also commissioned consultants Noble & Hewitt to formulate an Employee Stock Option Plan (ESOP). The scheme, effective from the fiscal 2000 was initially reserved for very senior personnel. Dabur planned to extend the scheme throughout the organization in the future.

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