Avalon

Avalon Avalon

Team

ES

Анализ

Дистрибьюция

Мотивация и KPI

Результаты

Team «Avalon» •

Shishonkova Veronika

•

Ermiyaev Yacov

• Sledina Alesya • Mushkudiani Natalia

Case study Unilever «Towards a new organization» * All materials were made for «Cup Russia 2014» challenge and are property of the Avalon team

Avalon Avalon

Team ES

Shishonkova

Veronika

ES

Ermiyaev

Yacov

Corporative culture

Structure

Talent Management

Risks and Results

Mushkudiani

Natalia

Sledina

Alesya

+7-916-355-76-52 nika.shishonkova@gmail.com

+7-915-037-1305 yacov93@yandex.ru

+7-915-054-1305 a.sledina@gmail.com

+7-916-331-6620 916331@gmail.com

Lomonosov MSU 5th course Faculty of CMC

Lomonosov MSU 3th course Soil science faculty

Lomonosov MSU Master of economics Economic faculty

Lomonosov MSU Master of economics Economic faculty

Winner of Accenture Cup 2013

Winner of KPMG and BT

Finalist of Cup SPB 2014

Finalist of Cup SPB 2014

Works in IT field and business process automation

Works in educational field

Works in franchising consulting

Works in lighting projects field

Interested in Fire Show

Interested in handball

Interested in tourism

Interested in shooting

AVALON

Avalon Avalon

Команда

ES ES

Анализ

Дистрибьюция

Мотивация и KPI

Результаты

Through the integration we achieve the maximum synergetic effect by lay-­‐offs of personnel and modernization of business processes.

1 2

Targets

3

Suggest new organizational model Make stuff optimization proposal Develop change management plan

Effective integration of organizational structures of 2 companies will lead to positive effects that will be related not only to improvement of business performance and personnel costs decrease but to decrease in other costs as well.

6000 4500 3000 1500 0

- 41%

FTE

250 110 187,5 82,5 x 2,5 125 55 62,5 27,5 0 0 FTE productivity

40%

Revenue

127000 126000 125000 124000 123000

3 mln EUR

NET cost

AddiFonal synergy effects in: Materials costs – 15% discount Transporta:on costs – 20% cost decrease Adver:sing costs – 20% cost decrease Expected decrease in personnel costs aAer integra:on = 5,6 mln or 13% Источники: анализ команды

2

Avalon Avalon

Team

ES

Structure Structure

Corporative culture

Talant Managment

Risks and Results

The best model of integration is a combined model, it compares advantages both of authoritarian and autonomous model with the creation of several new synergetic effects Combined integration model will save all the uniqueness of Inmarko's business along with implementationof Unilever's experience and will help to make the integration process as smooth as possible

Authoritarian model

Autonomous model

Combined model

Strong Inmarko brands Save of Inmarko brands

Strong top-management team in Inmarko

Inmarko top-management on their places

Establish business process in Inmarko

Optimal combined business process

Similar organizational structure

Optimal organizational structure Entire corporate culture

Disuse Unilever technology advantage in Inmarko

Technologies synergy

Similar corporate culture

Both companies have similar functional organiztional structures and so target structure is rather close to the Unilevers structure, but with the remark of production type, some advantages and strong points of Inmarko Current Unilever structure contains 3 main departments (more than 85% of employees) and other departments…

199

…however, the target structure is optimized by integration and is based on a positive aspects of Inmarko, such as deliver or producing department.

473

143

415

197 732

551

2 770

1 595

Customer Development

Источники: анализ команды

1 034

Make

Deliver

Supply Chain

Other (Finance, IT, HR eg.)

2

Avalon Avalon

Team

Corporative culture

Structure Structure

ES

Talant Managment

Risks and Results

We suggest the way of integration which is based on two main aspects: integration of some functions with Unilevers’ departments, and modernization and optimisation of Inmarkos’ departments.

Management percent after reduction from current state 100% +2 Unilevers

Production 75%

To integrate all personnel and structure we need first to make an assumption of all personnel

Source: team analysis, case materials

90% + 7

40%

Logistics 70% + 2

All personnel will be decided into three main categories: 1 - we need to save 2 - we need to save only during integration 3 - we do not need

50% + 6

50%

Economic Security

40%

Start of the retirement process, and process of business process integration

Moscow

HR

60% + 1

Legal dept.

Key Accounts

50% + 1

Financial

Central

Marketing

Eastern

Automation and QA/QC system

Commercial Sector

Start of the active corporative culture integration

3

Avalon Avalon

Team

Structure Structure

ES

Corporative culture

Talant Managment

Risks and Results

All decisions about retirement should be done after unbiased assessment and we should choose the most suitable way of lay-­‐off for each employee.

Assesment

Key Employees

Retention and development

Integration Employees

Retention till the end of integration

Lay-off Employees

Lay-off or outsource

There are several ways of personnel reduction, in our model we suggest the way to measure all the payments which should be done throughout the Integration We should choose the most suitable way of personnel reduction in order to save the social rating of the company and make the retirement less harmful for employees.

Typical Retirement

Replacement

Retirement after integration

Employees laid-off = 2 293 Restructuring costs = 10,8 mln euro Source: team analysis, case materials

Invitation to Unilever

Staying in Inmarko

Decrease in personnel costs 2009 = 0,5 mln or 1% Expected decrease in personnel costs 2010 = 5,6 mln or 13% 4

Avalon Avalon

Team

ES

Corporative Corporative culture culture

Structure

Talant Managment

Risks and Results

There are several barriers which prevent effective integration of corporative cultures of Unilever and Inmarko.

The majority of the given barriers is critical and needs to be prevented by a given solution.

Main barriers of corporative culture integration:

Language Barrier Personnel mentality Rejection to foreign company

Preventive measures are mainly based on elimination of the cause of the barrier

Language Courses Gradual change of working language International Leadership Programm Source: team analysis

Supply Full information about Unilever corporate culture and it’s similarity.

Careful organization of KPI system

Career development system

5

Avalon Avalon

Team

ES

Structure

Corporative culture

Talent Talant Managment Management

Risks and Results

The ability of the company to select, engage, retain and deploy talent at all levels is one of the competitive advantages a company possesses

Plan Attract Develop Retain

• Strategic planning to understand critical talent needs • Project positive corporate image • Mentoring and coaching • Manage performance for growth and development • Provide compensation/benefits • Create corporate culture that rewards people emotionally and meets their professional expectations

… The most important components of talent management are corporate values, opportunities for career

development and work-life balance Corporate Values & Reputation Create a brand that reflects strong corporate culture and values Attracts potential talent who ascribe to equal corporate values therefore enlarging the available talent pool

Source: team analysis, case materials

Opportunities for Career Development Talent joins and stays with organization if they believe career prospects are designed for long term with variable career options Employees expect to receive continuous feedback within an organizational culture that is structured for continuous learning

Work Life Balance Increasing trend to offer employees flexible work arrangements Introduce flextime, job sharing, telecommunications, fly-backs for executives working away from home

6

Avalon Avalon

Team

ES

Structure

Corporative culture

Talant Managment

Risks and Results

Careful integration needs to be done step-­‐by-­‐step in order to maximize synergetic effects and to decrease negative effects from reduction of personnel.

0-3 month

Unilever

Settle key integration plan Prepare departments to accept some Inmarko's functions

3-6 month Settle Unilever employees in Inmarko’s Department Integration Inmarko’s task into Unilever departments functionality

6-12 month

12+ month

Invite Inmarko’s best employee in Unilever Optimization of processes

Leadership development program for Inmarko $84 млн Team Building activities for Inmarko English Language courses for Inmarko

Personnel Assesment

Personnel ABC-stratification

Inmarko

Integration of new KPI-system

Integration of Motivation system

Personnel reduction Integration of corporative culture

Construction of communication, notification and analytics data exchange between companies

Source: team analysis

7

Avalon Avalon

Team

ES

Structure

Corporative culture

Talant Managment

Risks and Results

To release the given model of the administrative integration we should consider several risks. Most of them are related to employees opinion about integration and Unilever as a company.

Current Risks High

Critical risks

1

Loss of key personnel

2

Business processes dead-time

Serious risks

Medium

Importance

2

1

4

3

Resistance to changes

4

Incorrect assessment of personnel

5

Medium risks

Low

6

3

Low

Medium

5

Weak information support of restructuring process

6

Rejection of Unilevers’ corporate culture

High

Probability

During the Integra:on process we should save qualita:ve and quan:tate KPI’s of Inmarko’s business. On the other hand we should maximally support the process and release the possible integra:on ac:ons.

Source: team analysis, case materials

8

Avalon Avalon

Team

ES

Structure

Corporative culture

Talant Managment

Risks and Results

Risks are mainly prevented by constant monitoring of current business processes KPIs and organization of reliable assessment system including Unilever’s HR, Inmarko’s HR and the employee.

Importance

Source: team analysis

Risks

Preventive action

Loss of key personnel

Careful assessment and right motivation

Break of business processes

Constant monitoring of current business KPIs and control of employees’ performance.

Resistance to changes

Careful organization of system and sufficient information disclosure during integration

Incorrect assessment of personnel

Three sides assessment Unilever + Inmarko + Employee

Weak information support of restructuring process

Monitoring of current social opinion, analysis of previous experience

Reflection of Unilever corporate culture

Full information about Unilever corporate culture and it’s similarity to Inmarko’s culture.

9

Avalon Avalon

Team

ES

Corporative culture

Structure

Talant Managment

Risks and Results

Effective integration of organizational structures of 2 companies will lead to positive effects that will be related not only to improvement of business performance and personnel costs decrease but to decrease in other costs as well.

250

6000 4500

40%

187,5

- 41%

125

110

3000 1500

82,5

0

126000

62,5 x 2,5

55

FTE

127000

125000

0

3 mln EUR

Revenue 124000

27,5

123000

0 FTE productivity

NET cost

AddiFonal synergy effects in: Materials costs – 15% discount Transporta:on costs – 20% cost decrease Adver:sing costs – 20% cost decrease Expected decrease in personnel costs aAer integra:on = 5,6 mln or 13% Source: team analysis, case materials

10

Avalon

Team

ES

Анализ

Дистрибьюция

Мотивация и KPI

Appendix

AVALON

Результаты

Avalon Avalon

Team

ES

Corporative culture

Structure

Talant Managment

Risks and Results

Finally after integration we will achieve all the settled goals, release the main synergetic effects and make the most suitable way for the company to function.

2008 Position Inmarko Total

2009

FTE

Personnel cost % of initial

FTE new

Personnel cost

Decrease in FTE

Decrease in Personnel costs

5639

3554202

59 %

3346

2037106

-­‐41 %

-­‐43 %

5

11900

100 %

5

11900

0 %

0 %

62

79220

50 %

31

39610

-­‐50 %

-­‐50 %

272

212356

40 %

109

84942,4

-­‐60 %

-­‐60 %

Legal

22

17301

50 %

11

8650,5

-­‐50 %

-­‐50 %

Marketing

18

27003

60 %

11

16201,8

-­‐40 %

-­‐40 %

2696

1824846

46 %

1246

843179,029

-­‐54 %

-­‐54 %

58

61380

75 %

44

46035

-­‐25 %

-­‐25 %

Production Sector

1772

891540

80 %

1418

713232

-­‐20 %

-­‐20 %

Economic Security

17

21088

40 %

7

8435,2

-­‐60 %

-­‐60 %

717

407570

65 %

466

264920,5

-­‐35 %

-­‐35 %

Management Automation and QA/QC Financial sector

Commercial HR Sector

Logistics

Employees laid-­‐off = 2 293 Restructuring costs = 10,8 mln euro Decrease in personnel costs 2009 = 0,5 mln or 1% Expected decrease in personnel costs 2010 = 5,6 mln or 13% Source: team analysis, case materials

10

Avalon Appendix

Team

ES

Structure

Corporative culture

Talant Managment

Risks and Results

Unilever’s aims related to FTE productivity and Net costs decrease can be achieved Due to synergy effects not only in personnel but in other net costs components as well Parameter

Thous. euro 2008

after

synergy effect

Revenue

177981,9512

249174,7317

Net cost

126604

123073,98

-­‐ 3,53 mln

53916,59

64160,74

15% discount

Sales technical support

1557,07

1557,07

Transportation

5991,22

4193,85

Storage costs

6326,34

6642,66

Advertising

8634,15

6907,32

20% decrease

42651,22

31351,22

23,6% decrease

Overhead operating costs

3670,24

4404,29

Depreciation in net costs

3856,83

3856,83

5639

3346

Feedstock and materials

Salaries and taxes

FTE

Net costs before = 126,6 Net costs aAer = 123,1 Effect: Net costs down by 3,53 mln. Источники: анализ команды, данные кейса, лучшие практики

growth 40%

30% cost decrease

FTE produc:vity before = 43,14 FTE produc:vity aAer= 107,8 Effect: FTE producFvity 2,5 Fmes higher 6

Avalon Appendix

Team

ES

Corporative culture

Structure

Talant Managment

Risks and Results

Stage-­‐by-­‐stage lay-­‐offs in different proportion for different departments lead to significant personnel costs and FTE reduction. First period lay-­‐offs are for inefficient personnel. 2nd period lay-­‐offs are for “integration” employees. Total effects are significant: FTE is down by 41% and personnel costs are down by 43%.

1 -­‐ 3 month Position

Cost per person

FTE

3-­‐ 6 month Personnel cost

% of initial in 3 months

6 -­‐ 12 month

FTE new

Personnel cost

% of initial in 6 months

FTE new

Personnel cost

Inmarko Total

5639

630

3554202

81 %

4541

2821993

59 %

3346

2037106

Management

5

2380

11900

100 %

5

11900

100 %

5

11900

62

1278

79220

70 %

43

55454

50 %

31

39610

272

781

212356

65 %

177

138031

40 %

109

84942,4

Legal

22

786

17301

70 %

15

12111

50 %

11

8650,5

Marketing

18

1500

27003

80 %

14

21602

60 %

11

16201,8

2696

677

1824846

75 %

2022

1368635

46 %

1246

843179,029

Eastern

1917

470

900855

75 %

1438

675641

50 %

959

450427,5

Central

297

1041

309188

75 %

223

231891

50 %

149

154594

Key Accounts

88

1183

104117

50 %

44

52059

25 %

22

26029,25

Moscow

389

1143

444655

50 %

195

222328

30 %

117

133396,5

58

1058

61380

86 %

50

52787

75 %

44

46035

Production Sector

1772

503

891540

90 %

1595

802386

80 %

1418

713232

Economic Security

17

1240

21088

60 %

10

12653

40 %

7

8435,2

717

568

407570

85 %

609

346435

65 %

466

264920,5

Automation and QA/QC Financial sector

Commercial

HR Sector

Logistics

Personnel cost= Cost per person*FTE Источники: анализ команды, данные кейса, лучшие практики

FTE down by 41%

Personnel costs down by 43% 6

Avalon Appendix

Team

ES

Structure

Corporative culture

Talant Managment

Risks and Results

When planning lay-­‐offs it is necessary to consider lay-­‐off for different employee types costs as-­‐well.

Harmonization costs also should be taken into account to figure out the overall effect.

Lay-­‐off costs 4-­‐6 month = number of people layed-­‐off* month salary per person * 2

!

Lay-­‐off costs 7-­‐12 month = number of people layed-­‐ off*month salary per person*4

Total restructuring costs = Lay-­‐off costs + HarmonizaFon costs

Lay-­‐off costs

Harmonization costs

Total restructuring costs

4-­‐6 month

1464421,80 €

1987351,04 €

3451772,84 €

7-­‐12 month

3139546,68 €

4223120,96 €

7362667,64 €

total

4603968,48 €

6210472,00 €

10814440,48 €

43

41,25

39,5

37,75

36 Before Integration Источники: анализ команды, данные кейса, лучшие практики

During integration

After integration 6

Avalon Приложения

Команда

ES

Анализ

Дистрибьюция

Мотивация и KPI

SWOT analysis of Inmarko company • Strong distribution net • Wide assortment

• Non strong marketing

• Storage facilities

• Seasonality demand

• Strong logistic net

• Tight assortment

• Popular brands

• Net loss in last years

• Great demand from distributors

• Low hard to specialise

S

W

• Quality of equipment • Great experience

• Development of technologies

O

• Geographic expansion • Growth potential in premium segment • Family ice cream consumption growth • Growth of demand in restaurant segment

T

• Decrease of solvency • Substitutes

• Exchange rates growth • Increase of competition

Результаты