Article: Institutionalizing leadership - The HUL story


Institutionalizing leadership - The HUL story

An organisation that is serious about leadership development makes it a way of life

The critical role of a “leader” in HUL is to create talent and capability for the future


Leadership development is ingrained in our company culture and is aligned to the vision of being a high performance workplace


An organization that is serious about leadership development makes it a way of life. Hindustan Unilever has been consistently producing CEOs and corporate leaders for India INC for more than 25 years now; the leadership development process at Levers is more of a tradition, institutionalized over the last many decades. With more than 1000 alumni sitting on boards globally, HUL is a source of inspiration for many companies.

The key tenets of this solid tradition have been -- commitment from top leadership, a robust and consistent process, strong linkage between individual development and level of exposure offered, mentoring, training – all fostered in a culture of transparency and equal opportunity. The company uses what it calls a “70-20-10” model for developing its workforce: 70% of learning happens on the job, 20% through mentoring, and 10% through training and coursework.

Leadership development is one of the core tasks of the Management Committee at Hindustan Unilever. “Senior management devotes enormous time in the leadership development process,” says Leena Nair, Executive Director HR. In every fortnightly management review meeting, talent review session is an integral part of the overall agenda. Top management at Hindustan Unilever invests anywhere between 30 to 40% of their time in grooming and mentoring leaders for the future. They get involved at various stages -- from redefining the talent identification process, to identifying talent, to grooming and coaching, to creating opportunities for growth and exposure.

The critical role of a “leader” at HUL is to create talent and capability for the future. Each identified leader is expected to create leaders within and draft their succession plan. “As Head of Human Resources, I need to ensure that I have identified and am grooming a couple of people who can take over my role today, another couple who could take over my role in 2 to 3 years and in 5 to 7 years -- that is my responsibility as a leader,” says Leena Nair.

In the process of identifying leadership talent, Performance and Behavior are considered equally important. “You need to be delivering great performance, but just that is not sufficient. The demonstrated behaviors or ‘Standards of Leadership’ as we call them at Unilever, will also determine your potential for future growth and success,” says Leena. Unilever uses the Leadership Differentiation Tool (LDT), a 3x3 grid of performance vs potential to differentiate amongst its talent pool. These principles are applied to around 5,000 people as part of talent assessment across the company.

Information on performance is taken from the appraisal review process & KRAs on the job, while information on behaviors and potential is taken from multiple sources: a 360 degree profiling (done once every two years), behaviors demonstrated on the job & GPS (Global People Survey) results. GPS is an employee survey that captures insights into employee engagement levels across various teams, thus giving information and feedback at the organizational level.

LDT & the assessment of future potential of employees leads to identifying High Potential (HP) and Sustained High Performers (SHP) talent pool. “We identify 15% of our talent pool as HP & another 10% as SHP,” says Leena. From this point onwards, this select pool receives differentiated inputs when it comes to training and development, career opportunities, coaching, compensation etc.

The leadership development has a very strong component of learning, as emphasized in the 10% of the 70-20-10 principle. The e-learning options for employees are exhaustive. Senior leaders, identified as High Potential also have access to training at Unilever’s exclusive training center in London, Four Acres and programs at top business schools across the world.

The process also incorporates job rotation- the 70% part of the learning principle. “People learn by exposure to a variety of jobs, there are career paths defined based on the potential future role identified for the individual,” says Leena Nair. Employees identified in the talent pool will go through planned moves to ensure that they get the right skills and exposure required for the next level of responsibility. “We believe in building individual capability by providing opportunities to deliver in a wide range of roles which get broader in scope and responsibility. These are roles with huge responsibilities and bring with them opportunities for personal growth,” says Leena.

There is also this interesting concept at HUL called “Hot Jobs for Hot People”. Every year the management committee identifies around 50 jobs that could be the most impactful jobs for the year, either because it is an area of growth or a strategic pursuit for the group. “We identify the hot jobs & hot people on an annual basis, roughly 7-10% of jobs based on their complexity & impact to the business” says Leena Nair. “Hot Jobs are opportunities with very high visibility in the company and provide a chance to the employees in HP/SHP pool to create an impact at the organizational level. The HP/SHP pool is a dynamic pool since about 20% of managers in this would move into new roles every year.
Finally, the last 20% is the coaching and mentoring program. This is accomplished through access to coaches; both external and internal coaches are available depending on the requirement. This also includes the role that Line Managers are expected to play as coaches to their team members.

In terms of compensation, “employees on the top right box of the LDT could be receive between 175% to 200% more shares that the rest of employees at the same level”, says Leena Nair. This compensation differential is also reflected in salary revisions, where employees listed could receive double or more than the rest in their base pay revision; similarly, for variable pay the difference can also be 100% or more for talent pool employees.

Transparency is paramount for the success of the process. Managers in the organization are given a capability card after the annual review cycle. This capability card details all the output of the review cycle and highlights the path for development for the coming year.

Leadership development is ingrained in the Hindustan Unilever culture and is aligned to the vision of being a high performance workplace. “The differentiation created around people identified as leaders creates a culture where people are competitive, they want to outperform,” says Leena Nair.

The success of HUL leadership program has been proven over decades. The leadership team now tracks metrics like succession plan compliance, listing cover, number of positions with ‘ready now’ candidates, number of successors for each position, percentage of roles with female successors as potential options etc. The success of the organization’s efforts in leadership development is evident in its 80%+ succession plan compliance for key roles. “90% of our senior leaders are groomed internally.” Says Leena Nair.

Indeed, Hindustan Unilever is a model example of how taking talent and its management seriously across the organization can create a culture of performance, excellence and leadership.

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Topics: Leadership, Culture, Learning & Development, #BestPractices

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