A changing business environment
As a company we have to keep pace with our competitors. We need to offer consumers affordable prices at a time when the cost of raw materials continues to rise.
To achieve this we have had to transform our structures and ways of working. Our aim has been to create a leaner, more flexible structure which will enable us to compete more effectively and help us maximise the advantages of our buying, manufacturing and marketing scale.
As well as transforming our portfolio of brands, we have focused on three major areas: restructuring our organisation, developing employee skills and capabilities and looking at our culture and behaviours.
A leaner, fitter business
Our One Unilever programme is already streamlining our business by creating single operating companies for each country and outsourcing parts of our information technology, human resources (HR) and finance functions.
In 2007 we announced plans to accelerate our change programme further by developing more 'multi-country organisations' (MCOs) – clusters of countries with a single centralised management. MCOs reduce duplication and free up resources to focus on customers and consumers. In Europe, for example, we consolidated our operations in Belgium and the Netherlands into one MCO and in Africa, we formed an MCO from operations in six countries.
We continue to work with Accenture to outsource HR support services. Accenture is now running core HR and recruitment services in 17 countries and our new web-based learning management system brought access to training to 81 000 employees in its first year.
Leadership development
A key part of the business transformation has been equipping our people with the skills they need to help deliver our business strategy. Our focus has been on developing our leadership teams and investing in the skills of those working in consumer marketing and customer development.
All Unilever Executive members as well as 26 senior leadership teams from across the business underwent team effectiveness training. An updated training programme for high-potential managers was rolled out to help build a strong pipeline of future business leaders. Around 600 managers went through this programme in 2007.
In 2007, we revitalised our in-house leadership learning institute at Four Acres in the UK, transforming it into a centre of excellence for our managers worldwide.
During 2007 our new 'Standards of Leadership' framework was rolled out across our operations and is now being used by more than 90% of our managers. This programme promotes a set of behaviours aimed at ensuring that every manager takes personal responsibility for delivering Unilever's strategy. This programme uses the new learning capability, with a single curriculum (addressing General Management and Leadership Skills), one technology infrastructure and one learning process.
Restructuring
Some of the restructuring has led to a reduction in employee numbers. Decisions which have an impact on employees' lives and livelihoods are never taken lightly. We always seek to uphold our values and treat people with respect, integrity and fairness. During the process of restructuring our approach is to communicate regularly to ensure that people understand what is happening. Where redundancy is necessary we make every effort to help employees find alternative employment.
As a result of restructuring and divestments in 2007, the number of people we employed worldwide decreased by around 5 000. Europe was most strongly affected with a number of factories and offices being closed, leading to a reduction of 2 200 employees. Further closures were also announced for 2008.
Health & safety
In the midst of this change, the safety and well being of our employees remains a priority. A key measure of our progress is our total recordable accident frequency rate, which decreased from 0.33 accidents per 100 000 hours worked in 2006 to 0.26 in 2007. Most regrettably, in 2007, three employees and one contractor lost their lives. The lessons from these incidents have been learned and will be communicated throughout the organisation.
For more on our health and safety performance and activities in 2007 see Health, Safety and Well-being section of this report.
People vitality
Our People Vitality Charter was finalised in 2007. This sets out the range of health and well-being benefits that all our companies will offer to employees by 2010. It will include coaching on exercise, nutrition and mental resilience, and monitoring progress through regular follow-ups.
This programme also has clear business benefits with evidence showing that it can lead to more productive and engaged employees and lower levels of absence due to ill health. A study carried out by our UK business, and published in the American Journal of Health Promotion, found that the return on investment for such programmes was around £3.70 for every £1 invested.
New video conferencing facilities at four of our regional headquarters are also encouraging people to travel less and improve their work-life balance. In their first six months of operation, these facilities saved €1.5 million in travel costs and lowered our carbon footprint by 425 tonnes of CO2.
Listening to employees
We have been keen to continue listening to our employees. In 2007 we carried out our biennial Global People Survey.
The survey was open to all Unilever employees and it was translated into 52 languages reaching over 2 500 sites around the world. 100 156 people responded to the survey, a response rate of 78%.
The 2007 survey was significantly revised and enhanced, principally to introduce the new concept of employee 'engagement', a broader concept than just measuring employee 'satisfaction'. 'Engagement' measures the extent to which employees feel satisfied with Unilever as a place to work, feel willing to refer friends and family to work here, intend to remain employed here and feel proud of working for the company.
The results gave Unilever a score of 66% on employee engagement which is higher than the external benchmarks. There are positive trends in the areas of 'job satisfaction' (71%) and 'opportunities for growth and development' (64%). There is room for improvement in areas such as employees feeling their 'contribution is recognised' (47%) and having 'opportunities for advancement' (45%).
Diversity
We embrace diversity across our business. Diversity at Unilever is about inclusion and embracing differences. More than physical differences – such as race, gender and nationality – it is about creating an atmosphere that inspires different individuals to contribute in their different ways within a framework of shared values and goals.
Our leadership has made diversity a core business priority. Among our top level group of 113 managers we have 21 nationalities. Our Global Diversity Board draws together 15 leaders from all business functions and is chaired by our Group Chief Executive. The board focuses on driving our diversity agenda into our business processes and tracking the progress of our initiatives. It also champions new ways of working to boost employees' personal vitality.
Living our values
Each year, country chairmen provide positive assurance that their business adheres to our Code of Business Principles. The Code provides a clear set of ethical guidelines to enable employees to uphold our business integrity. Our prohibition against the giving or receiving of bribes is absolute. Moreover, we make clear that no employee will be penalised for any loss of business resulting from the rejection of bribery. The Code is communicated to all employees and translated into 47 languages, with processes in place to raise concerns and report breaches. In 2007, we dismissed 54 people (compared to 68 in 2006) for breaches of our Code.
We abide by core ILO labour standards and our Code sets out requirements on protecting labour rights. In 2007 we surveyed our 45 largest businesses which showed that our youngest employee, aged 15, is in Germany, compliant with local legislation.
In all these countries, wages paid by Unilever is at least equal to, and in most cases exceeds, the minimum wage established by the relevant national authority. It is not always possible to collect information about the number of employees who are members of trade unions for legal reasons; however, in the countries where this information is available it reveals 37.1% of our eligible employees are members of trade unions.
Safeguarding human rights
Our Code of Business Principles sets out our stance on human rights, including our prohibition of child and forced labour and our support for freedom of association and collective bargaining. We take these commitments seriously and in 2007 strengthened our approach by clarifying our management guidelines and reviewing compliance monitoring.
Since November 2006, three separate complaints have been brought to our attention by the International Union of Food Workers (IUF), regarding site closure, freedom of association and collective bargaining at factories in India and Pakistan. Under the terms of the OECD's Guidelines for Multinational Enterprises, the IUF has referred its complaints to the OECD's national contact point in the United Kingdom for further investigation. We are in dialogue with both organisations to provide information and seek resolution to each of these cases.
