HR Restructuring - The Coca Cola & Dabur Way

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Case Details:

Case Code : HROB003
Case Length : 08 Pages
Period : 1995-2001
Organization : Coca Cola India Limited, Dabur
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Food, Beverages & Tobacco

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Restructuring the Mess

The Coca-Cola Way

In 1999, following the merger of Coca-Cola's four bottling operations (Hindustan Coca-Cola Bottling North West, Hindustan Bottling Coca-Cola Bottling South West, Bharat Coca-Cola North East, and Bharat Coca-Cola South East), human resources issues gained significance at the company. Two new companies, Coca-Cola India, the corporate and marketing office, and Coca-Cola Beverages were the result of the merger. The merger brought with it over 10,000 employees to Coca-Cola, doubling the number of employees it had in 1998.

Coca-Cola had to go in for a massive restructuring exercise focusing on the company's human resources to ensure a smooth acceptance of the merger. The first task was to put in place a new organizational structure that vested profit and loss accounting at the area level, by renaming each plant-in-charge as a profit center head.

The country was divided into six regions as against the initial three, based on consumer preferences. Each region had a separate head (Regional General Manager), who had the regional functional managers reporting to him. All the Regional General Managers reported to VP (Operations), Sanjiv Gupta, who reported directly to CEO Alexander Von Bohr (Bohr)...

The after Effects

Both Coca-Cola and Dabur had to accept the fact that a major change on the human resources front was inevitable, although the changes in the two were necessitated by radically different circumstances. More importantly, the restructuring seemed to have been extremely beneficial for them. Besides improved morale and reduced employee turnover figures, the strategic, structural and operational changes on the HR front led to an overall 'feel-good' sentiment in the companies.

In 1999, Coca-Cola reported an increase in case-volume by 9% after restructuring. Volumes increased by 14% and marketshare increased by 1% after the regionalization drive. The company's improving prospects were further reflected with the 18% rise in sales in the second quarter of 2000. However, in spite of all the moves, Coca-Cola's workforce was still large. Given the scale of its investments, the future was far from 'smooth sailing' for the company. With the new found focus and a streamlined human resources front, Coca-Cola hoped to break even by the end of fiscal 2001...