Behind the Scenes
"One Unilever" -- a program intended to implement a simple, common organization design for all operations in each of the countries in which Unilever operates -- was launched to allow the corporation to more effectively leverage scale within individual markets by ensuring a common face to key customers and suppliers.
The program also provided Unilever with significant cost benefits through a de-layered management organization, and functional excellence and shared services in its business support activities. "One Unilever" became the catalyst for global, transformational change and, ultimately, the outsourcing of transactional human resources (HR) and other business processes.
In January 2005, requiring expert advice in how to plan, structure, implement and manage such an enormous transformational initiative, Unilever turned to advisory firm EquaTerra. EquaTerra helped Unilever define a sourcing strategy across a number of functions, including HR and finance.
BREAKING NEW GROUND
Unilever was looking for a solution that historically had not been delivered on a similar scale. After a series of planning meetings in April 2005, EquaTerra helped create a "Sourcing Strategy for HR" document that evaluated 21 key "sourcing dimensions." This helped frame discussions within Unilever about the sourcing options, provide a structure to collate decisions as they were made and served as a communication tool for executive briefings. It was reviewed with multiple groups and revised multiple times before a final version was agreed upon in June 2005. Reviewers included HR transformation and HR leadership teams, global and regional HR expertise teams and country HR directors.
Unilever was looking for a solution that historically had not been delivered on a similar scale. After a series of planning meetings in April 2005, EquaTerra helped create a "Sourcing Strategy for HR" document that evaluated 21 key "sourcing dimensions." This helped frame discussions within Unilever about the sourcing options, provide a structure to collate decisions as they were made and served as a communication tool for executive briefings. It was reviewed with multiple groups and revised multiple times before a final version was agreed upon in June 2005. Reviewers included HR transformation and HR leadership teams, global and regional HR expertise teams and country HR directors.
In parallel with the sourcing strategy project, EquaTerra gathered extensive data, data collection workbooks were created, tested and finalized, and a series of data collection training meetings were conducted. A help desk to manage the data collection process was also created and it received, logged and answered questions from both HR and finance representatives.
Project team members performed in-country visits to validate the received information. The data was included within the RFP and used to drive pricing from the service providers.
Providers were given a series of questions to answer in their proposal, but were permitted to provide a free format response in a way they felt best sold their offer to Unilever. Further, throughout the proposal creation and assessment process, providers were encouraged to have an open dialogue with Unilever to better understand requirements and test and refine their proposals.
WHO TO CHOOSE
In selecting an outsourcing partner, EquaTerra asserted the importance of looking at the true capabilities of the providers, rather than the sales spin. Unilever used Europe as a key indicator of capability, and only providers with a credible offer in Europe -- who also had a realistic chance of responding on a global basis --were invited to bid.
In selecting an outsourcing partner, EquaTerra asserted the importance of looking at the true capabilities of the providers, rather than the sales spin. Unilever used Europe as a key indicator of capability, and only providers with a credible offer in Europe -- who also had a realistic chance of responding on a global basis --were invited to bid.
Unilever decided to run a collaborative assessment process with only three providers. The process from RFP to selection was just three and a half months long; limiting the time frame was critical in ensuring that all three providers assigned their A-teams to the Unilever account, while minimizing the amount they had to spend in order to bid.
Throughout this period, providers met Unilever, at junior and senior levels, formally and informally, to share requirements, expectations and ideas. It was stressed to all the providers that they should field their delivery teams, not their sales organizations. The open, collaborative assessment process afforded Unilever ample opportunity to shape each provider's offer into something acceptable, as well as get to know the character of each provider and the individuals in their teams.
PRICE POINT The main objective of the process was to select a provider based on the solution and fit to Unilever. Price was important, but it wasn't the sole decision driver. EquaTerra helped Unilever build a pricing regime that would support the broad objectives of HR transformation, be simple and promote continuous process improvement, reduce the year-onyear total cost of HR, provide an increasingly variable cost base, increased automation and use of HR and deliver a "smoothed" exit cost.
The pricing template in the RFP was used to request pricing information in eight major components that address the total cost of HR: in-scope transferred costs; third-party spend related to HR; retained HR costs; retention and redundancy costs; transition and transformation costs; asset purchases; rate card; and measurable business benefits.
Akey business terms document was also sent to the three providers as part of the RFP process. The terms were drafted by internal and external counsel, and reviewed by key members of the core HR transformation and HR expertise teams before distribution.
MAKING THE DECISION
Decision-making throughout the selection process took into account the ambitious nature of the project, the wide number of stakeholders and the relative immaturity of the market. Thus, one of EquaTerra's first project actions was to create a "decision rights" document that set out the decisions that would need to be made, who was responsible, and the timescales and key meetings that would be used.
Decision-making throughout the selection process took into account the ambitious nature of the project, the wide number of stakeholders and the relative immaturity of the market. Thus, one of EquaTerra's first project actions was to create a "decision rights" document that set out the decisions that would need to be made, who was responsible, and the timescales and key meetings that would be used.
Success was enabled by booking decision making meetings, including the associated board meeting, at the start of the project. Another early deliverable was the development of a set of "decision criteria," which included solutions for operations, geographic, HR information, transformation, transition, pricing and service, and provider experience, governance approach, cultural fit and managing risk.
Thus, EquaTerra developed a set of "decision support tools" to capture diverse input from multiple stakeholders. The decision support tools were evaluation workbooks, containing 110 questions, organized by each of the above decision criteria, and compliance workbooks used by specialist reviewers to evaluate specific items, such as compliance with the "statement of work" for a specific functional area.
Prior to the final down-select, Unilever participants were asked to score each provider on their RFP responses, their site visits, meetings and other interactions during the process. Those not part of the core HR transformation team were asked to feed their opinions into their team representative. More than 80 Unilever individuals were provided with decision support tools. Comparative analyses were made, and this process provided a means to evaluate and summarize individual provider responses, enabling the down-select.
FINAL FACTOR
Achieving an optimal relationship between the buyer and the service provider is critical to the success of any outsourcing arrangement -- especially one of this magnitude and complexity -- so EquaTerra introduced "outsourcing management and governance" at the outset of the project.
Achieving an optimal relationship between the buyer and the service provider is critical to the success of any outsourcing arrangement -- especially one of this magnitude and complexity -- so EquaTerra introduced "outsourcing management and governance" at the outset of the project.
Unilever understood not only the importance of outsourcing management and governance, but also that processes, procedures and teams needed to be established very early on. EquaTerra assisted Unilever with a wide range of related activities and decisions, including detailed design work after down-select and development of the contractual governance schedules and organizational design.
EquaTerra has subsequently assisted Unilever with the build of processes, and establishment and training of the outsourcing management and governance organization for HR as well as other functions.
Reg Bull, senior vice president of HR Transformation for Unilever says, "EquaTerra provided us with insight and advice throughout our journey and became a real business partner, standing shoulder-to-shoulder with us when things got difficult, and expertly helping us to work any issues through to resolution. Their participation has been a critical factor in the success of this venture."