Human Resource Management

& Organizational Behaviour

Case Study Analysis:

'HR Restructuring –
The Coca-Cola and Dabur Ways'

Anisha Kirpalani
CPGFR-1001
Introduction
This 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 Coca-
Cola 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 Cola’s 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 India’s best FMCG Company by 2004. In 2010, it still is India’s
fourth largest FMCG company, so it has not reached its’ ultimate goal yet. The company
believes that good HR policies, by themselves, don’t 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.