Project Description

An overall approach from all functions helped this business survive the shock of closing. Small measures fail to impact the P&L. Tough decisions and concerted efforts are hallmark of the building a business into a sustainable entity.

One of the business unit of a Multinational company in North Africa (BU). The BU reported to Regional office in Middle East. There a exist a matrix reporting structure between the BU and the Regional office managers. In 2002, this BU was making loss year after year for preceding 20 years. The BU needed to exist as there were some service delivery from other countries to be fulfilled. The revenue generation was not in line with the kind of cost structure and productivity that the BU was producing. It came to a point to decide whether to keep the entity or improve the existing business thru restructuring.

The remarkable turnaround that made history…

What was happening?

  • The BU was looking at the traditional product offering that was a part of the multinational’s product portfolio.
  • Revenue out of these portfolios was stagnating, while the costs were increasing.
  • The headcount was high, and the productivity was low
  • There was strong section of staff who were quite militant and had counterproductive behaviour.
  • The behaviour of employees was not in line with the standard of multinational company worldwide. For example, as is accepted in the country, employees used to report late for work.
  • Functions lagged in Regional benchmark of process performance

What did the Regional & BU team do?

  • The focus of the Regional team was P&L. Along with the BU team, they looked at every area of cost.
  • Each function was to look at productivity and headcount.
  • The Regional Head identified some employees who were counterproductivity to the culture of the organisation. The Regional Head had worked in the BU for some years and knew most of these people personally. First action was to move them out of the company.
  • HR worked with each function in identifying who are a better performer. A forced choice amongst the employees within the function was used to identify “the better” from “the worst”. A redundancy package was in place to weed such employees.
  • The Sales function developed some local specific product to boost the Revenue.
  • Key Performance Indicators (KPIs) and suitable reward system was introduced to improve the performance of the function.
  • There was a series of meeting by the BU Head where the results of company were shared with the employees every second month. Here the “Employee of the month” from each department got recognition

What was the result?

Within one year, the BU was reducing the loss and in the second year was able to be profitable. The risk of closing was averted. The BU went on to get some of the Regional awards for functional performance in the years to come. The most visible change was that the employees started coming on time, defying the practice of the country the BU was in.