Content

1. Introduction (review at end) Hindustan Unilever Limited (HUL), a first subsidiary of Unilever in India, has several issues in hand from the decline of the companys market share, inter-union rivalries, and cultural problems. These issues need to be solved before it turns into a major problem for Hindustan Unilever Limited. The purpose of this report is to give recommendations to the CEO and Managing Director, management board, and unions of HUL, based on the evaluation from present theories and literature. From Delong and Sinhas 2011 case study, the author found key problems, which are cultural integration, union conflicts, and Long-term settlement (LTS) agreement of three different departments. This report will include cultural integration, diversity management, changing Personnel Management into Human Resource Management, and Performance Management.

2. Main Body

2.1 Cultural Integration (Organisational Culture)

HUL is implementing a one factory strategy to reduce cost and decrease response time to changes in market demand. A huge problem created by the regionalization of 2 departments, the Tea Innovation Unit and Ice Cream Unit into the Tea factory is cultural integration as workers in different departments have different cultures.

Recent literatures suggested that organizational culture is a significant part of an organisation and cultural integration can be improved by forming an organisational culture in the workplace. Robbinss (1996 cited in Martins and Terblanche, 2003) article defined that organizational culture form an inherent part of an organizations functions that put all the employees in the same track. However, after implementing the one factory way, there are now three subcultures in the Tea Factory. Witte and Muijen (1999) noted that, Complex subcultures in an organisation could bring a bad impact on organizational performance. From the case study of Delong and Sinha (2011), although the Innovation Unit moved into the Tea Factory three years ago, they still maintain a distinct culture such as setting up a soup vending machine in their office and hosting their annual day in a five star hotel. This caused inequality and made the union and workers demanding to know why only the Innovation Unit gets those privileges since they are located in the same company and factory. According to Adams equity theory, inequality could affect an organizations development because it reduces employees morale, which would affect productivity in the factory. Therefore, these subcultures could bring more conflicts into the factory if it is not solved quickly.

As summarized by Furham and Gunter (1993 cited in Martins and Terblanche, 2003), organisational culture is used to coordinate and integrate internal functions. Internal integration is used to create the organisation boundary, feeling of identification among employees, and commitment to the organisation. The coordination function is used to create a competitive boundary, using acceptable behaviour according to the environment and stability in the social system, which is the social ingredient to bring the organisation together. Rashid et al, (2003) researched that, forming an organisational culture could motivate employees using different appropriate models for different organisations type, can communicate better as well as understanding each other more. This will bring the three different cultures in the factory together and minimise inter-union conflicts of the different departments. Their paper also stated that worker performance would increase when there is an organisational culture because employees would be able to coordinate with each other and finish tasks without disagreements when cultures are brought together. However, Martins and Terblanche (2003) stated that the only disadvantage of creating an organisational culture is if the basis of communication and mutual affection organisational were not fulfilled while creating an organisational culture, it would greatly lower the efficiency of the organisation.

2.2 Diversity management

In the tea factory, after the regionalization process by HUL to bring other departments into the Tea Factory, there is a diverse population of employees with their own distinct cultures. The diversity includes cultural factors such as age, gender, personality, work style and race. Rodgers and Hunter (1993) noted that most managers utilize one

management style for every worker in the company, which will cause disagreement and conflicts among some employees. Thus, a good method to solve that problem is to implement diversity management into the company. As defined by Groschl (1999), the basic concept of diversity management is to accept that the workforce consists of several types of people with different cultures and by using them properly on the workplace, it can create an environment that everyone feel valued and identified, and will form a productive environment. According to Fleury (1999), it was proved that diversity management is used to attract and retain talents, increase creativity and innovation, improve organisational flexibility, and enable problem solving. Thus, diversity management can be used to in the Tea Factory to increase motivation of workers, prepare a better environment for new employees from different cultures, and most importantly improve work performance.

Women percentage

Better innovation and ideas= more benefit/performance

Easier to recruit, since gender/race is not an issue

Moreover, in a company where employees feel they are treated fairly when managers practise diversity management, employees are more loyal and their performance will increase. For example, a Heskett research found that companies with strong inclusive and diverse culture show average increase in revenues of 682 percent compared to 116 percent for companies that don't have a strong culture.

There are nine best practices to improve diversity management in an organisation. The nine best practices are top leadership commitment by top-level executives where, making diversity as a part of strategy plan, link diversity to performance, measurement of impact of diversity program, accountability of leadership by leaders, succession planning of process to develop talents, and diversity training.

Stated by Byrne (1971, cited in Rodges and Hunters, 1993), a diversity management theory created by Haas, the SimilarityAttraction theory allow workers to distinguish themselves among themselves in the firm, which improves interaction, increases trust and cooperation between them. This theory is effective in most employees but some employees who found out that they do not suit their unit or company will be deeply demotivated, which is a disadvantage of that theory. From the research of Inge et al (2010), they argued that the utilization of diversity management does not always fit the explanation of equality or equity to the people in certain countries. They also noted that western principles in diversity management, where special treatment should be used on diverse groups might be seen as unfair to locals in countries with their own local tradition especially with countries in Asia.

Fleury (1999) stated that diversity management could be applied in the company by using training policies; managers can be sent to the head office for training to improve their cultural understanding and increase awareness of cultural difference in the company. Another

method that can be used is by investing in internal communication projects to improve the understanding between employees from different cultures. These methods could work efficiently and is easy to understand but as argued by Rogers and Hunter (1993), the cost needed for training and communication projects high and it takes a long time to complete. He also states that there is also a risk where employees might leave the company in various circumstances and the management team will have to re-train new workers, which will be time-consuming and increases costs, but in the long term, the benefits outweighs the disadvantages in the short term provided that the employees stay and work for the company for a long time.

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2.3 Change Personnel Management (PM) to Human Resource Management (HRM)

There are many literatures written by professionals that recommend companies should change their management style from Personnel Management to Human Resource Management. In HUL, Personnel Management (PM) style is used by the managers to manage the workers. Armstrong (1977 cited in Lundy, 1994) stated that personnel management is an old management style that concerns about obtaining, organising and motivating employees in the company. A personnel manager is help individuals to work toward their personal goals in the company unlike Human Resource Management, which target many employees to work together as a team towards the companys goal. Lundy (1994) noted that Human

Resource Management (HRM) evolved from the PM style and has implemented a more human feeling into its management style compared to the PM style. She argued that PM style is traditional and focuses into administrative roles only, overlooked emotional welfare and consider employees as a cost to the firm, while HRM has a broader approach and is more holistic instead of administrative. Lundy (1994) defines HRM as a function that concentrate on the recruitment, management and guiding of workers in the organisation. The HRM policy is able to create a long-term effect of employee commitment, competence, and cost-effectiveness. As the environment in the firm is changed to suit employees needs, which maintains a harmonious working condition, innovation and performance of workers in the firm will gradually increase from higher motivation. For example, workers in the past voluntarily attend work for training on Sundays but in the current days, workers need to be persuaded and paid overtime to work on Sundays. This shows the employee behaviours have changed and HRM is a good method to re-motivate employees (Wilkinson, 1993).

HRMs function is significant for implementing training programs to develop employees in relation to diversity management and to create an organisation culture. It most important feature is to resolve disputes among employees, managers and unions to create harmonious working relations in the company. Its disadvantages are the cost required to hire and train HRM employees and managers. It is also very time consuming and take a long time to train managers to learn the HRM function. Therefore, HRM is only useful in the long term and not too effective on the short term if the organisation wants to reduce costs.

From the literatures and theories, the author believe that Human Resource Management can create a more harmonious environment for employees in HULs factory to work on instead of maintaining their Personnel Management function. Since HRM look at employees as an important resource instead of a cost to the company, it not only can create a harmonious environment in the tea factory but also bring the three different departments together. HRM can also be used to solve the Tea Factorys inter-union rivalry and to settle the Long Term Settlement Agreement as soon as possible because the HRM department have a special knowledge to solve these problems (Wilkinson, 1993).

The author believes that as long as the Long Term Settlement (LTS) agreement is not resolved, worker will lose money and other benefits everyday. This will demotivate workers and unhappiness in the Tea Factory. Changing PM style to HRM will help resolve the LTS problem quickly. Other than that, the HRM team can apply diversity management and form an organisational culture, which is significant to create motivated and high-performing employees in the Tea Factory and boost company production.

2.4 Performance Management

Performance management is important for companies especially if they are team-based. Performance of individual employees needs to be managed to ensure they keep a consistent and high performance. Performance Management is used to keep employees working at their best of their ability (Brumback, 2003).

From the research of Brumback (2003), performance management can be managed by developing clear job descriptions, coaching workers, providing feedback so that workers have a clear goals and targets to develop themselves. Performance reviewing between managers and workers are significant as it allow workers to change their mistakes so the employees can work in their best ability and increase the overall company performance.

Moreover, in some companies, employees especially new workers do not know what to do or how to do their work. This is where Performance Management becomes the most suitable to use to help or guide them to enable them to develop their skills quickly. In performance management, human resource managers are also required to meet employees on a yearly basis to form a development plan that includes job-performance and expectations. However, there is a drawback to performance management as old employees will be more reluctant to change as they have their own believes and methods in doing their job (McAfee and Champagne, 1993). They also argued that senior workers would not be able to accept the decision for training nor develop themselves more since they have been using the same method for a long time without problems. Another problem will be accepting young Human Resource managers decision as the older workers think they are more experienced in their working field (Brumback, 2003).

Furthermore, Performance Management consists from a range of difficult theories and methodologies as well as requiring managers to complete high amount of work for it to be successful. Waal and

Counet (2009) stated from their research that, the failure rate of Performance management in companies around the world is disturbingly high. They also noted that problems from Performance management could be caused managers that are unable to understand the complex system of performance management, low priority and commitment on implementation due to time limitations and job pressures, and lack of knowledge toward performance management that could easily cause managers to use the wrong methods while implementing Performance Management into the company. Therefore, if the Performance Management system is not implemented correctly, it could be repetitive and waste large amount of time (Brumback, 2003). Although the risk is high, Performance Management can help organisations to improve their level of motivation and performance rate, which is a significant reason for many large corporations to invest into it.

The author believed that, in HUL tea factory, since many old experienced workers retired and are replaced by new employees Delong and Sinha (2011), performance management would be useful to advice and guide new workers to maximise their ability and generate higher production for the factory.

3. Conclusion

In conclusion, the theories researched have both advantages and disadvantages respectively. Forming an organisational culture has a risk of lowering the efficiency and performance of the organisation more if managers fail to implement the organisational culture properly. However, the risk of failure is low and the benefits are high.

Organisational culture enables employees to be able to communicate better, which improves motivation and show higher performance during work. It can also reduce conflicts between employees, managers and unions.

Diversity management could increase fairness and form a harmonious environment in the organisation. It can make recruitment easier for managers and workers can form better idea and innovation, which will benefit the organisation. Although diversity management have many advantages, there are also disadvantages. Diversity management might not be suitable for certain cultures especially in Asian countries. Even though this method is easy to understand and implement, its costs is high and require a high amount of time to implement, which will only be useful in the long run.

Changing Personnel Management into Human Resource Management is a good strategy that could improve teamwork, solve disputes in the organisation, and sustain a harmonious working environment in the organisation. The only problem with HRM is its cost to hire HRM managers and train HRM employees.

Performance Management is useful to most large corporations. It is used to guide employees and maintain their top performing ability. Unfortunately, there are a few drawbacks in this strategy. It was proven that Performance Management have a high failure rate and could cost corporations high amount of money while achieving nothing.

Lastly, all the strategies are related to each other and could help improve conditions the Tea Factory but there are also risks, which require a high amount of consideration and research to determine what strategy to implement into the Tea Factory. The risks are high in some strategies but the benefits will definitely outweigh its risks to form a workplace with a harmonious environment and a highperforming workers.

4. Recommendation

The findings and conclusion from the report supports these recommendations:

Train employees to