Case Study: Unilever’s Performance Culture

1. Unilever Overview

Unilever is a multinational consumer goods company founded in 1929. The company, headquartered in London, produces beauty, personal care, home care, nutrition, and ice cream products, and their products are found in over 190 countries. Some of their brands include Dove, Vaseline, and Ben and Jerry’s. Unilever has 128,000 employees, with profits of $7 billion and 300 factories across 69 countries. They are ranked 122nd overall on the Forbes Global 2000 list.

Unilever has a “performance culture” (or high-performance work system) to drive their success. This is one of three overarching goals identified on their website along with “productivity & simplicity” and “faster growth.” These goals are aligned, such as spurring growth by focusing on the most successful brands and using this simplicity to set fewer, clearer goals for employees. As part of the high-performance work system, Unilever links compensation to achievement toward these goals (“Strategy”, n.d.).

The company demonstrates many of the strategies we have discussed throughout this challenge in terms of organizational design for high performance.

2. A Performance Culture

One of the first steps Unilever took was to change the organizational structure. They changed the structure by reducing the number of business units, layers, and roles, to create a simplified way of working. This allows for more flexibility, clear accountability, and collaboration. For example, they moved away from a matrix structure and divided their company into five distinct business groups, which include: beauty and well-being, personal care, home care, nutrition, and ice cream. Each group is fully responsible and accountable for their group’s strategy, growth, and profit.

While the restructuring resulted in layoffs, Unilever focused their efforts on “administrative bloat” rather than simply eliminating low-level positions and increasing workloads for others. The new structure reduced senior management roles by 15%, more than twice the overall staff reduction.

think about it

How do you think reduction of senior management roles and flattening the organization impacted long-term company strategies and goals? How does this contribute to employee accountability and efficiency?

Unilever also took several actions to create HPWS to meet their goal of a “performance culture.”

First, they created a program called U-Work. U-Work is similar to contracted employees but offers security and benefits as a “regular” job. Employees with U-Work do not have a fixed role. Rather, they work on a variety of assignments, and between assignments, they have freedom and flexibility to do other things. For example, it allows people to take longer breaks for travel, managing children’s schedules, and similar. Not only does it help the individuals who want more flexibility in their work, it helps the company since there is a steady stream and availability of skilled people that are ready to work. This creates HPWS because everyone benefits from flexibility.

In 2021, Unilever did an analysis and introduced principles to guide how office space is used. Based on this analysis, they allow employees flexibility and choice, as employees can work a hybrid model, with up to 40% of their job being performed remotely. This flexibility allows for autonomy for staff and supports a work-life balance, while still providing opportunities for social support and collaboration. Unilever says, “we see a future where we focus primarily on what people produce, not on where or when they work” (“The Future Workplace”, n.d.).

Unilever has also experimented with a four-day work week. After a trial study in New Zealand, over 67% of Unilever employees reported a better work-life balance and improvement of individual well-being; 33% of employees reported less stress.

Also contributing to HPWS, Unilever hosts a platform called IdeaTrophy, which collects innovative ideas for company growth. This platform encourages collaboration within teams to create innovative ideas, and teams are rewarded with prizes and awards for creative ideas.

In terms of hiring and promoting within, Unilever leverages an AI-powered talent marketplace called FLEX Experiences. This platform connects talent with open positions, helps use succession planning tools, and allows employees to work on projects outside their current job, and build current and new skills. The talent development tool has helped Unilever increase employee engagement and satisfaction.

Company culture is yet another important factor in HPWS. Unilever has created and even encouraged a culture where it is “OK to fail” and learn from mistakes, creating a supportive, internal locus of control culture. Unilever, in fact, created a “nano factory” that fits in a 40-foot shipping container. The container allows flexibility to create small production runs to test a market before producing in full scale. The mini production line is completely digital and requires no factory workers, but instead, instructions are fed from a remote user. The tiny production facility only requires three on-site operators. Creating such an endeavor required a culture open to innovative ideas, and the support of management.

Besides the many other elements of HPWS, Unilever encourages innovation, such as the creation of a mini factory in a shipping container to assist in producing small runs of products for test marketing.

Unilever is also committed to fair pay. They tout a livable wage for all positions, in all countries they operate in. There are also significant bonuses as part of their profit sharing program. The average bonus for a Unilever employee is $8,000.

Based on these examples, we can see Unilever meets the principles of HPWS. They have selective hiring, job security, decentralized decision making, training, information sharing, and performance-based rewards. In addition, Unilever has an 84% employee engagement score.

3. Unilever’s Performance Management System

Unilever also focuses on a performance culture and takes proactive steps to build and manage a culture focused on performance. For example, everyone at Unilever has three business goals and one personal development goal so they can align individual actions with outcomes. Rewards are also linked to performance on the yearly goals. Unilever regularly asks for employee feedback, and in terms of performance culture, employees believe that management deals with poor performers, they have a clear understanding of how their performance is evaluated, and they state their immediate manager regularly talks with them about their individual progress toward goals and quality of work.

As you can tell by this case study, Unilever highlights the many benefits of effective job design, creation of high-performance work systems, and improvement of organizational performance through the people that work for them.