A new way forward

The simple Oreo biscuit, or cookie, is known the world over – but that doesn’t mean the product itself is universal. American fans will taste a slightly different snack to those in China. The recipe for the Indonesian Oreo is different again – and that’s exactly what its manufacturer wants.

Varun Bhatia, Vice President of HR, Kraft Foods Asia Pacific, says that product diversity is one of the positive effects of the multinational’s unique decentralisation programme, in play over the last two years. It’s also helped to build a more engaged, empowered and enthusiastic workforce across the Asia region and beyond. And he says there’s still more to come.

A move to the country (level)

Bhatia says the move was part of a much-needed reorganisation that began in January 2008. Prior to this, he admitted Kraft Foods was in a sorry state. “It was a company that was really going nowhere;” he said. “We were not growing; and our strategy was not very clear.”

New global CEO Irene Rosenfeld, who joined the company in 2006, piloted the “Organising for Growth (OFG)” strategy, to both rebuild the culture and, importantly, change the focus of the Kraft business.

“Over the years, we’d built an organisation that was very functional, very process-oriented and more global;” Bhatia said. “(But that had taken us) further and further away from our consumers.

“OFG is about investing heavily in the organisation where it was closest to our customers; at the business unit level.”

In Asia, that meant taking resources out of the regional head office and rebuilding significant structures in each of the countries where Kraft Foods operates. In this way, the key decision making would take place not at the regional or global levels but at each of these individual business units.

“(Employment) came down in most regional organisations by 30-40%,” Bhatia says. “But resources were reinvested into the business units.

“The role of the regional headquarters changed; from making daily decisions and tactical metrics, to measuring and building capability.”

That capability is an important pillar holding up the decentralised structure. Bhatia says placing day to day responsibility with each of the business units in countries like Indonesia, the Philippines and China means having strong people in place there, people who actively seek out new ways of doing things.

“You can’t flip the switch overnight,” he says. “You’ve got to build capability.”

In doing so, Kraft Foods sent several Asia Pacific regional leaders back to the business unit level – but it also hired externally. After 18 months, some two thirds of the top 100 leaders in the country were new hires.

This was a significant shift for the company, but Bhatia says, a necessary one. Given the new structure, with each business unit responsible for its own marketing, product development, manufacturing and cost-control, Kraft Foods needed a different type of capability in place. Bhatia says he needed staff who could easily accept that autonomy and empowerment, and thrive under those conditions.

“We went outside where we had gaps – not only capability gaps but also mindset gaps,” Bhatia says. “We brought in talent who could more easily, and more comfortably, work in a more decentralised environment.”

That environment means the company is working much closer to its consumers, particularly in Asia. Each business unit has taken some of the company’s strongest brands – the Oreo biscuit, Philadelphia cream cheese, and the Tang powdered beverage – and adapted the products and marketing to their domestic markets. In rapidly-growing Asia, that’s been a powerful weapon in the battle for market share.

Danone LU and Cadbury

Bhatia admits to some of luck in the cultural overhaul. In particular, Kraft Foods drew great strength from its 2007 acquisition of the Danone LU biscuit company. It came with a similar structure to what Kraft Foods was working to put in place, therefore bringing talent which would both adapt easily to the Kraft environment and, importantly, add to its key objectives through fresh eyes and experience.

“That acquisition brought a great set of people and talent – talent which thought very differently but more in line with where we were driving the organisation,” Bhatia said. “Danone worked with a more empowered business model so they brought that mindset.”

This created a positive environment throughout the merged company, making integration a smoother effort. “Retaining talent of the acquired company is always difficult,” Bhatia says – but he notes that Kraft Foods spent a lot of time and effort putting the “right” retention and engagement programmes in play. It also sought to promote Danone Lu leaders into positions managing some of its most important brands and business units.

Today, the leaders of Kraft Foods in China, Indonesia and the Philippines are all former Danone LU staff. “That’s encouraged other Danone people to stay,” he said.

Bhatia says this experience gives Kraft a tested “playbook” for integrating new companies. That’s something that will come in handy as the company begins its US$18.9 billion takeover of Cadbury this year. That deal to create what Kraft calls a “global confectionary leader” was finalised on 3 February.

Only the “right” kind of people

Kraft’s new order in Asia and beyond demands a particular type of person and mindset. It’s not just skills and competencies that the company needs, it’s the personality and enthusiasm to make the most out of the empowered organisational structure. As such, Bhatia looks for four things when making recruitment decisions.

The first is “pride of ownership”. He wants staff to “own” every piece of the business and take responsibility for enhancing and developing the company even outside their own individual area of expertise.

Secondly, staff need to be “scholar warriors”, sporting a balance between strategic thinking and the ability to “roll up the sleeves” and execute.

Bhatia says it’s also important that Kraft Foods employees, no matter where they are stationed in the company, have a sincere passion for food. “We do want to build a company of “foodies” because we are in the food business.”

Finally, he and his recruiting teams look for staff who can work on a cross-functional basis. “We are hiring people who are functional leaders but who can think like general managers.”

Bhatia says this is a rare mix of traits and competency and it can sometimes take time to hire for key positions. But the new organisational structure relies on the company having trust and faith in its staff – and that only comes with knowing those staff are skilled and competent through thorough assessments at the recruitment stage.

“The whole foundation of this change is based on building the right capability at both regional and business unit level; and then trusting them to make the right decisions.”

Building leaders

It’s been a busy few years for Kraft Foods and its HR teams – but that hasn’t meant a slowdown in the natural training and development opportunities made available for staff. Indeed, even during the reorganisation effort – and last year’s worldwide economic downturn – the company’s training spend in Asia has actually increased.

“Most companies cut down on training and travel (during the downturn),” Bhatia said. “We increased our training dollar spend by 40% across the (Asia Pacific) region.”

From the “First Bite” onboarding programme, to the core coaching and business accumen development courses, all professional staff have access to targeted and relevant training options – a key tenet of the reorganisation process.

Bhatia says that’s already having dividends for the company in Asia, with a significant 20% increase in the rate of internal promotions over the last year alone. That has allowed Kraft Foods to put more locals in key responsibility areas, ensuring a stronger connection with local consumers in each market.

“We’ve consciously changed the profile of expatriates in Asia,” Bhatia said. “Over last 18 months have changed to have 60% more Asians in international assignments (both in the Asian region and overseas).”

But Bhatia’s proudest training programme is the leadership development course for the region’s 50 highest potentials. Developed in Singapore, this sees each leader take on a real business problem and see the changes through to completion. “We’re making a disproportionate level of investment in these next-generation leaders,” Bhatia says.

“Clearly our intention is to see some of these people going on to board-level positions at the global level.”