Managing Organizations by addictivebuzz

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critically analyze the models of management of two companies, Nawaloka Hospitals PLC and Unilever Sri Lanka

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									1     INTRODUCTION
This group assignment is for the Postgraduate Institute of Management, University of Sri
Jayewardenepura. The purpose of this is to compare and contrast as well as to critically
analyze the models of management of two companies, Nawaloka Hospitals PLC and
Unilever Sri Lanka. In this effort, we have tried to understand and assess the current
organizational management style in relation to the four core management functions-
Planning, Organizing, Leading and Controlling. Further, an attempt is made to explain the
areas in which these companies need improvements and lack focus; the goals that the
companies should set and aim for with the ways or means to achieve those. Finally, we have
tried to give explanations as to why these two companies should strive for these heights or go
beyond them in order to evolve in to new paradigms of management.


2     OVERVIEW

2.1     Nawaloka Hospitals PLC
2.1.1    Vision
To be the hospital of tomorrow whilst maintaining the leadership and excellence in the health
care industry

2.1.2    Mission
To provide the best healthcare to the needy in a cost effective, timely and professional
manner

2.1.3    Company Brief
Nawaloka Hospitals PLC is the brain child of the visionary entrepreneur, late Deshamanya
H.K Dharmadasa. It was established in the year 1985 as a pioneering private hospital in Sri
Lanka with the objective of creating a center of excellence with innovative and
technologically advanced diagnostic, preventive and curative facilities. Healing of the sick
being the primary objective, “Healing with Feeling” became the slogan of this hospital of
tomorrow.
Nawaloka Hospital is the country’s largest single private hospital complex with 400 patient
beds, 15 operating theatres, three specialized intensive care units- Surgical, Medical and
Cardiac, modern Medical Imaging Labs and many specialized disease/treatment specific
centers- Centre for Liver disease, Heart center etc. The hospital is served by a high caliber of
medical specialists as well as highly skilled and trained medical and nursing staff.

During the last quarter century of its operations, the hospital has won many prestigious
recognition awards to its credit including the National Quality Award. It is also an ISO
9001:2008 certified company. Nawaloka Hospitals have many “Firsts” to their credit-
introduction of intensive care units, coronary care units, pioneering transplant surgeries and
beating heart surgeries to name a few (Nawaloka Hospitals).

2.1.4   Products & Services
Nawaloka Hospital’s main commodity being healthcare, offers many different services
within the hospital. From Out Patient Department to Serene Screening Centre, it provides a
great array of diagnostic, preventive and curative services to the Sri Lankan public. All these
services coupled with agreements with the corporate clients play a major role in bringing in
more customers and revenue to the hospital

2.1.5   Level of Competition
Nawaloka Hospital being one of the pioneering private hospitals in the country, has won
many hearts and minds of Sri Lankan public as being a cost effective provider of quality and
safe healthcare solutions. However, along with the many other new hospitals that have
entered the market, many loyal customers have learned that other new hospitals also have the
ability to offer similar, and at times, more advanced healthcare services. Currently, the
hospital faces a few but critically strong competition from hospitals like Asiri Group of
Hospitals, Lanka Hospitals PLC, Durdans Hospitals and Hemas Hospitals.

2.1.6   Finances
Nawaloka Hospitals PLC, in the year 2010/2011, has made Gross profits around 120 million
rupees compared with 78.5 million rupees in 2009/2010; it is a clear indication of the
confidence the hospital enjoys among the general public. (Nawaloka Hospitals PLC, 2011)



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2.2     Unilever Sri Lanka

2.2.1    Vision & Mission

Our vision is to add Vitality to life. We meet every day needs for nutrition; hygiene and
personal care with brands that help people look good, feel good and get more out of life.

2.2.2    Company Brief

Unilever Sri Lanka was incorporated in the year 1938 with brands such as Sunlight, Lux and
Pears Rose. Today it is home to 26 strong brands that are leaders in all the categories that
they operate in. With the local consumer being at the heart of their business, the company has
products ideally suited to the Sri Lankan consumer. (Unilever Cooperate Web Site, 2012)

Unilever Sri Lanka is part of the global giant, Unilever global that spans over 180 countries
worldwide which employs around 167,000 personal around the globe, and has as many as
400 leading brands under its belt. The company web site states that its products touch the
lives of over 2 billion people every day which indicates the scale of its operation. (Unilever
Global Web Site, 2012)

2.2.3    Products & Services

Unilever Sri Lanka is a fast moving consumer goods company with local manufacturing
facilities, reporting to the regional business groups for innovation and business results. It
operates in three major areas- Home care, Personal Care and Foods, and has a vast array of
products in household care, fabric cleaning, skin cleansing, skin care, oral care, hair care, tea,
spreads and personal grooming. Company has many popular brands like Astra, Ceylonta,
Flora, Dove, Fair & Lovely, Knorr, Lipton, Lifebuoy, Lux etc. (Unilever Coperate Web Site,
2012)




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3      PLANNING

3.1     Importance of Planning Function
Planning is defined as the act of determining the organization’s goals and the means for
achieving them. (Daft,2009), 210). Thus it requires an organization to state its goals clearly
and identify and establish the means by which those goals will be achieved while specifying
the necessary resource allocations, schedules, tasks and other actions. Planning is considered
to be the primary management function that precedes and the basis for the other functions of
managers (Certo), 125). The interrelationship of these four functions is depicted in the below
Figure 3-1
                          Figure 3-1 Functions of Management Process




                                                Achieving Objectives
                                                                          Controlling
                                                        Influencing
                                   Organizing




                                                     Planning



    Source: Modern Management, Samuel c. cetro Ninth Edition: 125

Thus it is evident that planning function lays the foundation for the organization to achieve
its objectives with the support of other three functions of management.




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3.2     Role of Mission in Planning Process
Mission is defined as the organization’s reason for existence (Daft R. L., 2009) 210. The
planning process begins with a well-defined mission for the company, which gives the
direction to the entire organization in defining the goals and priorities in achieving its set
business objectives.
When considering the mission statements for both companies Unilever seems to be having a
broader mission than Nawaloka hospitals. This gives Unilever more growth opportunities
with its vision of doubling the business by 2015.

Unilever in its mission has put consumer needs as the focal point while Nawaloka hospital
has put the basic standards of health care sector when defining their mission. While this will
give Nawaloka hospital a space to develop and grow short term, however it will not deliver
an edge against its competition in long term as cost effectiveness, timely service and
professionalism are the basic standards of service industry.

Unlike in Nawaloka hospital mission statement, Unilever mission statement also looks into
other vital areas such as motivating people to make small actions that make big difference
and reducing environmental impact which are positive signs of a sustainable business.




3.3     Robustness of Planning Process

3.3.1    Unilever Business Planning Process
Unilever business planning process is known as Integrated Business Plan (IBP) and is
conducted annually. The planning process will take a bottom up approach. Thus it will start
at the individual brand level through which the category plans are developed. Category plans
then will form the company business plan which then will be agreed at the top level of
management. All the agreed business plans will be put together to form the company
business plan. A simplified version of Unilever Sri Lanka business planning structure
therefore can be depicted in the Appendix 1.
IBP process consists of numerous steps to make sure the synergy among the brands in the
same category and integration among different functions so resources. This will ensure
resources are used effectively and efficiently to achieve the business objectives. Also global

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brand and category will be referred at the critical steps to ensure uniformity of the brand
across different countries since most of the brands have global presence. Appendix 2 explains
the key steps of IBP process along with their objective, input that goes into the step and the
output that step will deliver.

As described in the Appendix 2 each step of IBP process will have a defined objective and
the output of one step act as the input for the following step. IBP process for a brand will be
led by the respective brand manager and senior management and management will be
involved at relevant steps to see the alignment of the brand plan with its category strategy
and company business strategy. For example Jobs-to-Be-Done and final activity and
innovation calendars will be agreed with the management committee before proceeding to
the next step.

Therefore as depicted above Unilever considers the planning function as a critical function in
the management process hence allocate considerable amount of management time and
resource in implementing this year annually. Usually the IBP process will take about
6months period time for completion and will be monitored by a team consists of cross
functional members.

3.3.2   Nawaloka Hospitals Business Planning Process
Nawaloka hospital annual business plan is developed at the top management level and then
will be cascaded down to the operational level. As such the senior management and board of
directors will decide on the business goals and budgets for next financial year based on the
previous year performance and competitor information available. Once this is decided the
goals and budgets are sub divided into key business functions. This then will be
communicated to the senior management of each department for them to develop on the
operational plans for respective department. The business planning process will be completed
post or during the annual audit which will be the key information source for the process.
Following Table 3-1 provides a comparison between the salient features of the business
planning processes of both companies.




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Table 3-1 Comparison of Business Planning Processes


               Feature                  Unilever Sri Lanka                      Nawaloka Hospital
                              High. IBP process consider global
            Importance                                                 Low. Company vision is not
                              category and brand strategy in all the
    1      Given To The                                                considered in setting the business
                              critical steps to align plans with
              Vision                                                   goals.
                              company vision
                                                                       Top down. Board of directors will
                               Bottom up. Plan will start at the
                                                                       decide the goals and will be
            Management         individual brand level and will be
    2                                                                  communicated then will be
             Approach          complied to form the business plan
                                                                       communicated to the operational
                               goals for the company
                                                                       levels

                                                                       No structured process is available.
            Nature of the  Structured standard process is being        Planning will take place at the
    3
          Planning Process followed within a set period of time        convenience of senior management,
                                                                       prior the next financial year
           Involvement of
               Senior         Senior management will be engaged at Senior management will be engaged at
    4
            Management        the critical steps in the business plan the critical steps in the business plan
               Layer
           Involvement of     High involvement since the process is    Low involvement. Will only be
    5       Operational       driven by the managers in operational    involve in developing the operational
               Layer          layer                                    plan for respective department
            Integration
                              High integration. Brand plans will be A particular functions will not have
              Between
    6                         shared and agreed with all the relevant visibility to the plans of another
             Functions/
                              functions of the company                function as plans are not shared
            Departemets
            Information       An array of internal and external
                                                                      Only internal data and some
    7       Usage in the      information will be used to analyze the
                                                                      competitor information will be used
              Process         market, consumer and brand dynamics


                                                                       Attainability of the objective is not
    8     Quality of Goals All the goals should be SMART
                                                                       validated in the process

                              Once agreed goals/ J2BDs act as the
                                                                       Goals sets the direction however
          How Goals Will      yard stick and sets direction to the
    9                                                                  achievement of business goals is not a
             be Used          company brand and individual
                                                                       key performance indicator
                              performance




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3.4       Strengths and Weakness of the Processes
As the Table 3-2 shows there are dramatic differences between the planning processes of both
companies. Unilever puts significant amount of resources behind the planning process to
ensure a comprehensive and shared action plans are developed at the brand level to provide
guidance to the company. These acts as a key strength to the company as employees
synergized and committed to deliver as per the set plans. However Nawaloka completes the
process merely to arrive at financial targets for the next year without getting the operational
level involvement. Thus could cause demotivation and lack of commitment among the
employees.
Another weakness of Nawaloka is that it does not have a structured approach to the planning
process. Thus it does not look into evaluation of true potential of the industry.

Unilever evaluates information on market, consumer and brand in early stage of the process
to ensure that priorities are based on those. This can be considered as strength of Unilever
IBP process. However one weakness of Unilever IBP process is the time it takes to complete.
This could deter company’s focus on making improvements on other management functions.



3.5       Key Challenges for Nawaloka Hospitals
The above comparison highlights the areas in which Nawaloka Hospital could make
significant improvements in their planning process if the outcome of the process to be more
value adding to the business. However Nawaloka Hospitals face following key challenges in
making changes to the approach they are currently practicing;
          Given the nature of the industry and the competition Nawaloka finds it difficult to get
           quality information about the market and customer dynamics that would make
           considerable improvements to the process.

          Also given the autocratic structure of the organization where all the strategic
           decisions are made at the senior management level, it will be difficult to implement a
           complicated business process like of Unilever’s.




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4      ORGANIZING
Typical organization, in operation with sole motive of accomplishing its set vision & mission
in broader terms, as well targets & objectives in short run are complemented by the
organization structure. Thus “organizing” is a function of management that can be defined as
the deployment of organizational resources to achieve strategic goals (Daft R. L., 2009); 285.
In organizing, dual key factors in concern are “organizing structure” and “organizing design”

4.1     Organization structure
Organization structure is defined as a set of formal reporting relationships, lines of authority,
decision responsibility, number of hierarchical levels and span of manager’s control (Daft R.
L., 2009);285. Its the framework to organize the employees of a business to achieve its goals.
The hierarchy in an organization structure is represented graphically in an organization chart.

4.2     Organization design
The specific decisions that managers’ make in implementing an organizational structure is
called the organizational design. A proper organizational structure will coordinate activities
by clearly identifying task based responsibilities; thus reaching goals by reducing confusions.

4.3     Comparison & Contrast of Management Principle
Table 4-1 Comparison of Management Principles


      Element     Section              Unilever Sri Lanka                      Nawaloka Hospitals PLC

Basis of            4.3.1    Mainly functional based structure is        In contrast to opposite entity, here too
organizing          4.3.2    noticed.                                    we find significantly function based
                                                             Appendix3   organizing strategy.        Appendix 4
Environment         4.3.3    Structure reflects an organic system        Reflects a mechanistic system
surrounding the
organization
Strategy on         4.3.4    Organizing    is   for   “differentiation   Organizing    is   on   “differentiation
complementing                strategy”                                   strategy”
for Mission
Division of         4.3.5    Specific functions of work processes are    There are no significant features in
labor                        performed on piecemeal basis.               organizing process to evident division
                                                                         of labor.
Specialization      4.3.6    Members of the organization surpass         Here too we note specialization in
                             activities they are assigned with, in       practice for certain functions.
                             production     function.    Undergoing
                             principal behind this is the division of
                             labor.


                                                      8
   Element         Section             Unilever Sri Lanka                    Nawaloka Hospitals PLC
Applicability of    4.3.7    Unilever has a mechanistic (vertical)     When services are standardized a less
Technology                   system and being a service organization   centralization is noted in its structure.
                             they have an organic (horizontal)
                             system. Unilever Sri Lanka has adopted
                             a structure that has characteristics of
                             both extremes.
Human               4.3.8    Has a Bottom Up Approach                  Has a Top- Down Approach
Resources

4.3.1    Organizational structure of Unilever Sri Lanka

The organizational structure of Unilever Sri Lanka is attached in the Appendix 3.Unilever Sri
Lanka’s main structural framework is functional structure. However, they have a cross
functional teams that working on projects. But they all have a single reporting line.

Unilever global is a multinational organization where they have a divisional structure. The
structure is made in such a way that the divisions represent the main regions of the world.
Few salient features of Unilever Sri Lanka’s organizing structure are;

   Production process is functionally spread over to different plants based on brands (E.g.
    Sunlight manufacturing plant).
   Director – Brand Building and Strategic overlooks entire brand portfolio of Unilever.
   Sales function is outsourced; and activities are coordinated by sales coordinating officer
    reporting to Director – Sales and Customer Development.

4.3.2    Organizational structure of Nawaloka Hospitals PLC

The organizational structure of Nawaloka Hospitals is attached in Appendix 4. Nawaloka
Hospital’s main structural framework is functional as well. Their board of directors consists
of four directors. When we analyze the structure, it is evident that critical functions of the
organization have been administered by a single director/ general manager. Due to this
reason, there are some functions where the employees have to report to two directors.

4.3.3    Environment

Environmental aspects are the external factors that will affect an organization, for example-
legislation, government regulation, court orders, market characteristics, social issues, and
societal norms.

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Figure 4-1 Relationship between Environment and Structure




Source: Principles of Management, Daft 2009: 311

Large multinational companies have thousands of factors in the external environment
creating uncertainty for managers (Daft R. L., 2009); 87. Unilever Sri Lanka which is a
multinational organization has a structure that has the characteristics of an organic system.
Therefore, the existing structure of Unilever successfully conform the environmental
concerns explained in above Figure 4-1.

Being a local company, Nawaloka Hospitals PLC has less environmental concerns compared
to Unilever Sri Lanka. As explained in above section 4.3.2, organizational structure of
Nawaloka has characteristics of a mechanistic system. Their structural implementation in
environmental factors complies with the aspects explained in above Figure 4-1.

4.3.4   Strategy

There are several strategies that business firms can adopt. Two strategies proposed by Porter
are differentiation and cost leadership (Daft R. L., 2009); 309. Differentiation is when the
organizations deliver differentiated products and services to a broader target market. Their
focus is not the price but the specific product quality. Cost leadership is when an organization
tries to win the market share by appealing price-sensitive customers. This is achieved by
having the lowest prices in the target market.
Figure 4-2 below shows the different structural approaches required when strategizing the
organization.




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Figure 4-2 - Relationship of Strategic Goals to Structural Approach




Source: Principles of Management, Daft 2009: 310

According to the above Figure 4-2 cost leadership is more possible in pure functional
structure while horizontal teams are appropriate in differentiation.

Unilever Sri Lanka follows the differentiation strategy throughout all the categories they
work in. Their mission states that they want to win the market by “delivering superior
products, design, branding and marketing by bigger, better and faster innovations”. Thus
innovation plays a big role in their organization. Unilever global has a divisional structure
that focuses more on the differentiation strategy. Unilever Sri Lanka has a functional
structure with interdepartmental cross functional teams that deviate the focus slightly towards
cost leadership while keeping their main focus of differentiation intact. The reason for this is
that the Sri Lankan section has to give priority to efficiency and stability of the company as
well.

Nawaloka Hospitals’ mission statement “To provide the best Healthcare to the needy in a
cost effective, timely and Professional manner” comprehends both cost leadership and
differentiation strategies. However when firms try to follow two or more key strategies they
will end up in a scenario called “Stuck in the Middle” where they will have no competitive
advantage (Porter, 1998).

In reality, Nawaloka Hospitals concentrate on the quality of the healthcare service
compromising the low cost factor. Thus Nawaloka Hospitals PLC follows a differentiation
strategy. But as per the above Figure 4-2, differentiation strategy should coincide with a
more flexible structure than a functional structure in order for Nawaloka to succeed in
differentiation strategy.
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4.3.5   Division of labor

As far as Unilever is concerned, at production level, work processes are piecemeal activities
on a line. Activities are integrated at stages to complete a product at the end of the process.
Division of labor is the underlying concept of this work flow.
At Nawaloka, there is no precise way of segregating the service of providing health care.
While learning its service process, we note that patients are served basically as a common
activity of entire staff members.

4.3.6   Specialization

For instance at Unilever, quality assurance staffs at “laundry plant (Rinso, Surf Excel etc.)”
are much capable of gauging the quality of laundry plant items than QA staff at “Toilet soap
plant (Lux, Lifebuoy etc.)”.
At Nawaloka also we could see the same concept being applied by means of some functions
like scanning, X rays & CT scanning etc.

4.3.7   Technology

Unilever Sri Lanka is a combination of manufacturing and service organization. They have a
production function which follows mass production, and services functions which do direct
contact with customers. Being a mass production manufacturing organization, Unilever
should have a mechanistic (vertical) system, and being a service organization they should
have an organic (horizontal) system. Unilever Sri Lanka has adopted a structure that has
characteristics of both extremes.
Nawaloka Hospitals PLC is a service organization. Their service technology is an intangible
output where the services are immediately perishable. The services of Nawaloka are
standardized. When services are standardized a tight centralized structure can be effective
(Daft R. L., 2009):314.

4.3.8   Human Resources
“Human Resource Function Auditing” analyze the current situation of the organization and
help the senior management to change the organization structure if necessary to meet the
strategic goals of the company. Autocratic approach is when the organizations’ high



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management has more power in decision making. The bottom up approach is when the whole
staff supports in decision making process that enables innovation, high employee motivation.

Unilever Sri Lanka being a multinational organization follows the bottom up approach. Their
key strategy being differentiation and critical success factors are innovation and quality of
products which thrive only in democratic structure.

Nawaloka Hospital being owned and managed by a family traditionally follows with top
down (autocratic) approach. Good leadership and quick decision making helped them to
become success in the local market. But employee demotivation and lack of support for
innovation hinder the development of Nawaloka Hospitals PLC into a very successful
organization.

5     LEADING
The success of planning and organizing purely depend on their execution and therefore,
leading and controlling play a crucial role in ensuring that the plans are effectively executed
and the expected results are achieved. While Planning and organizing answer the question of
‘what’ (to achieve), leading and controlling answer the question of ‘How’ (to achieve).

5.1   Organizational Leadership
(Daft R. L., 2009) stated that “No topic is probably more important to organizational success
today than leadership. Leadership matters. In most situations, a team, military unit, or
volunteer organization is only as good as its leader”. Therefore, it is important to understand
what leadership is all about in an organizational context. Leadership can be defined as the
ability to influence people toward the attainment of goals (Daft R. L., 2009). There are six
key elements, which are illustrated in Figure 5-1, in leadership namely intention, influence,
followers, shared purpose, change and personal responsibility & integrity (Daft R. L., 2009;
17)
                 Figure 5-1 Leadership Involvement




                 Source: Leadership by Richard L Daft (2005)
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5.2   Leadership Structure at Unilever
In Unilever, everything is about winning and therefore, leading people has no exception.
Unilever has explicitly expressed its recognition towards the contribution of its people to
achieve its vision. The compass, an internal document of Unilever which has outlined the
strategy in winning has ‘Winning with people’ as one of four non-negotiable areas. Wining
with people has three different outcomes in contributing to the achievement of Unilever’s
ultimate purpose. Though Unilever is a multinational giant, it has no leadership competency
framework describing the expected leadership behaviors to be demonstrated at different
levels in place as far as Sri Lanka is concerned. Instead, Unilever has something unique
called SOL – ‘Standard of Leadership’ whilst ‘the compass’ acts as the ultimate guiding start
in leading and achieving organizational goals and objectives. The Standard of Leadership is
not as descriptive as a competency model outlining the specific behaviors to be demonstrated
at different levels yet it has five dimensional framework within which leadership actions are
expected to be taken. They are namely growth mindset, consumer and customer focus, bias
for action, accountability and responsiveness, and building talent and teams. These are acting
like a sounding board providing self-explanatory definitions to reflect upon one’s leadership
behavior. Within ‘Standard of Leadership’ Unilever has something unique called ‘Leadership
Moments’ which is directly related to the fifth dimension which is building talent and teams.
Under this, each and every leader at different levels are encouraged and expected to make use
of every possible employee interaction and encounter to give feedback to individuals and
teams, guide them to improve both their functional and behavioral competencies. Though
Unilever has a structured annual learning and development plan in place based on the
organizational requirements these unstructured and spontaneous ‘Leadership Moments’ have
helped a great deal in creating informal learning culture within the organization.
Unlike a detailed specific competency framework, ‘The compass’ does not outline specific
behaviors but it has broadly defined the desirable states of the organization in the future. It is
difficult to say that ‘Winning with people’ which is the only people related component in ‘the
compass’ has been influenced by a specific leadership model or framework and no effort has
been made to recognize such model. Therefore, ‘the compass’ is an internally developed



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framework which is more business oriented to be in line with Unilever’s market oriented
business philosophy.

Unilever has a clear leadership structure as a multinational organization which enables their
approach of ‘Local roots with global scales’. The four leadership levels namely global
leadership team, regional leadership team, and functional leadership team and locational
leadership team make decisions on their respective areas prioritizing its efforts in winning in
the chosen market places. The decisions taken at top levels are systematically cascaded down
to the operational employees who are the execution arm of the organization to ensure smooth
day to day operations. As far as Unilever Sri Lanka is concerned, it has taken a few steps to
ensure that the organization is on the right path as it is the main responsibility of the
leadership teams to avoid any negative deviations. Reviews are taken place at regular
intervals, mainly monthly, as mentioned below to ensure the above.

   1. Sanvada - a monthly meeting where Chairman updates all the functions on company
       performance while reiterating the priorities of the company to motivate everyone.
   2. Functional leadership forums – senior leaders of the functions get together once a
       month to make decisions on the way in which the function is being operated
   3. Sub Committees – These are formed with a cross functional teams with the objective
       of driving company’s common objectives e.g.: minimizing business waste, driving
       safety among the employees. Newsletters and blogs are used to update all the
       employees on milestone achievements and latest updates on the organization.




In Unilever, all people related areas are recognized as part of leading people. The areas such
as talent acquisition, talent development, performance evaluation and reward and recognition
are systematically organized and in place. All these activities are governed by ‘The compass’
and in line with what it entails. Unilever believes that an effective leadership can take place
where there are empowered followers who are essentially employees of the organization.
Therefore, due importance has been given to talent acquisition to ensure that the organization
has a healthy talent pipeline to meet the future business requirements. However, a
competency based recruitment process is only available for management trainees who will be


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earmarked for future leadership opportunities. Various learning and development activities
are organized and facilitated at different levels to equip the employees with right skills,
knowledge and attitude towards the ever changing business landscapes. Star performers are
given regional and global training opportunities with the objective of providing them with
international experience and exposure to prepare them for future leadership positions. A
worldwide exchange program is in place in developing functional and regional leadership.
The performances are rewarded and recognized based on the results achieved in turnover,
bottom line and market share in terms of being true to the ‘Standard of Leadership’ and the
quality of the same. These results are measured using three parameters namely delivered,
under delivered and over delivered based on the above mentioned two criteria.

5.3   Leadership structure at Nawaloka Hospitals PLC
In comparison, at Nawaloka, there is no sufficient evidence to say that the efforts have been
made to adopt a formal and structured leadership model. Nawaloka which started as a family
business is still in the process of transforming itself into a center of excellence in the health
care sector after going public. Though it has been almost a decade as a public quoted
company the process of bringing in some world class practices has been delayed due to the
lack of readiness among the top management and their resistance to change. Nawaloka still
has its initial management roots which are more skewed towards more autocratic, and top to
bottom decision making and communication approach. It is evident that the strategically
important decisions are made by the top level leadership whereas the functional and
operational managers are given a considerable amount of autonomy to make decisions with
regard to day to day operations. Similar to Unilever, even at Nawaloka, the decisions taken
by the top management are cascaded down and disseminated among employees. Given the
nature of the business, and amount of knowledge workers in the value chain who are not full
time employees of Nawaloka such as specialized medical practitioners, sometimes it is not
feasible to have a structured leadership approach in certain areas. Instead, Nawaloka
demonstrates a great deal of combination of various leadership styles which are at work in
different situations. It is evident that the leadership style at Nawaloka has more similar
characteristics of a contingency approach to leadership known as ‘the path-goal theory’
according to Evans M. G. (Daft R. L., 2009)According to the path-goal theory, the leader’s
responsibility is to increase followers’ motivation and clarify the path to attain personal and

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organizational goals. This model has two sets of contingencies: leader behavior and the use
of rewards to meet subordinates’ needs (House R. J. 1971 as cited in Daft R.L. 2009). It is
quite evident that the fourfold classification of leader behavior namely supportive leadership,
directive leadership, participative leadership, and achievement leadership, (House R.J and
Mitchell T.R. 1974 as cited in Daft R.L 2009) is visible throughout Nawaloka. Though
Nawaloka conducts regular training sessions targeting at development of employee skills,
there is no sufficient evidence to say that those sessions focus on leadership development and
succession management to ensure the long term business continuity. Use of rewards is also
evident at Nawaloka based on performance delivered annually and as per the recent
management communiqué, the performance will be measured bi-annually and reward will be
given based on 10 parameters, nine out of which are directly related to behavioral
competencies such as reliability, work attitude, leadership, inter personal relationship, public
relations, general conduct, career development, and punctuality. These behaviors are
measured from excellent behavior to unacceptable behavior.
In summary, Unilever being a multinational organization with outstanding market records
has a broadly defined and structured approach to organizational leadership in its management
process. This enables every single employee at Unilever to demonstrate a uniform, decisive
and premeditated approach in various business and organizational contexts which will
ultimately result in helping the organization to achieve its desired results. This also helps
Unilever to mold up and coming leaders in a unique way preparing them for the future states
of the organization ensuring the business continuity. On the other hand Nawaloka being a
leading national player which started as a family business is still far behind when it comes to
organizational leadership. This essentially promotes individual personalities with different
personal leadership styles which will not necessarily be beneficial to the organization while
promoting the winds and fancies of individuals. Both organizations make a conscious effort
to reward and recognize the individual and group contribution towards the organizational
success based on their home grown management philosophy.




                                              17
6     CONTROLLING
Controlling as a core management function can be considered as the steering wheel of the
journey to the desired end. The universal law that emphasizes the decaying nature of any
substance or process inevitably asks the managers to interfere in the control process with
equal importance as the planning, organizing & leading functions. Lack of effective control
can seriously damage an organization’s health, hurt its reputation, and threaten its future
(Daft R. L., 2009) Controlling make sure that the company reach the stipulated goals in an
efficient & effective manner by regulating the activities so as to maintain the consistence.

The controlling process may be feed forward where the issues & problems are expected &
making steps to avoid them at the input level as preventive actions. It maybe concurrent
where the actions are initiated as & when the issues are arising. On the other hand the
feedback control approach is adopted where the actions are taken after the problem occurs &
mainly on the output side.

6.1    Controlling process at Nawaloka hospitals & Unilever Sri Lanka


Key Areas         Exposure
Standards and     Nawaloka is certified with (ISO 9001:2008) where all functions are
work              centered on a well-defined set of procedures & specifications under which
procedures        all functions are monitored & controlled.
                  Nawaloka has given top priority for the risk management in identification,
                  assessment, and prioritization of risks and its importance for the business
                  continuity. The Company has appointed a risk officer during a financial
                  year and given authorities to monitor the risk exposure of the company
                  with selected risk committees & sub committees (Appendix 5)
                  Unilever strictly adheres to its quality policy hence QA carries out an audit
                  whenever they sign agreements with a new supplier. The SLS certification
                  proves that they comply with the quality standards of its products whilst
                  COBP (Code of Business Principles) controls the disciplines and service
                  agreements of the company




                                               18
Key Areas     Exposure
Control       Both companies have adopted the bureaucratic control methods to monitor
approach      & influence employee behavior through rules, policies, hierarchy of
              authority to enhance the organizational efficiency as well as decentralized
              controls based on cultural values, shared beliefs & trust to develop the self-
              discipline among its employees.
              Nawaloka has given more weight age on a bureaucratic approach where the
              controlling is based on task related descriptions compared to Unilever Sri
              Lanka which focuses on result based descriptions.
Flexibility   Nawaloka adopts a flexible approach towards innovations and to the
              changes of the environment where as Unilever Sri Lanka has a rigid
              controlling approach where the activity plans are frozen for 3 months and
              innovation projects needs to go through an assessment period of 6 months
              which hinders their flexibility to industry changes.
              Unilever delivers it outcomes based on a global platform hence the
              innovation limits have to be clearly defined. Unilever Sri Lanka is allowed
              to customize their products according to the culture and perceived values
              of the local consumer without tarnishing the global image that a particular
              brand possesses.
Challenges    Having being operated in FMCG market Unilever faces rapid changes in
              the environment and uncertainty due to the increasing competition. To face
              such turbulent times the managers across the company take part in
              numerous meetings on weekly/monthly and yearly basis.
              Despite being the pioneer in the industry Nawaloka has also failed to make
              a regulatory framework for the clinical treatment process & to set up a
              credential evaluation process for the consultants.
Accuracy of   Due to the nature of the business of health care Nawaloka faces a difficulty
information   of obtaining medical statistics to arrive at strategic decisions while
              Unilever Sri Lanka equip necessary & accurate data at any given time to
              smoothen their decision making process.



                                          19
6.2     Feed Forward Control Approach


Nawaloka Hospitals                                               Unilever Sri Lanka
     Each service provided by Nawaloka hospital                    To identify and prevent deviations
      is identified by a unique identification mark                  before it occur, Unilever Sri Lanka
      which could either be name of the customer                     carries out monthly activity plans in
      or code. The creations and allocation of new                   order to review activities that are
      type     of      identification      mark       is   the       scheduled three months ahead. This
      responsibility of the department head.                         method helps the employees to
     Each and every department is allocated with                    forecast trends in the environment so
      a calculated budget for their operations & the                 that the contingency plans are drawn
      company          has    given     the     decentralized        to manage the risk effectively and
      freedom to exceed the budgets with clear                       efficiently.
      justifications.                                               Unilever       Sri   Lanka      absorbs    its
     Create high quality medical and safety                         employees        based     on    the      SOL
      standards to make sure that the company is                     (Standards of Leadership) followed
      always less prone to any medical or safety                     by   3      weeks     of     comprehensive
      hazard that would arise.                                       induction programme and the depth
     Job rotation and staff training for multiple                   of the induction programme depends
      skills      so     that     the     employees        are       on the role of the employee.
      knowledgeable in the total process & that                     Each department has an academy to
      will enhance the overall efficiency.                           conduct training programmes based
     Focus on maintaining excellent employee                        on    the       employee        performance
      relations        pays     off     daily    in    staff’s       evaluations and the organization has
      commitment and dedication to their duties.                     links with professional bodies like
      The management has gone to great                lengths        The Chartered Institute of Marketing
      to ensure an ethical and transparent work                      to sharpen important t skills.
      environment, with employees being highly
      rewarded based on their performance, and                      QA team plays a responsible role of
      has created an atmosphere of                    positive       auditing the new suppliers to ensure
      motivation                                                     they comply with the quality policy

                                                           20
   Company evaluates credit worthiness of                     of the company before signing the
    companies before granting credit and debtors               service agreements.
    and has a good credit policy so as to                     Advertising      budget      monitoring
    minimize the risk involved with loss of                    meetings that are conducted once a
    finance.                                                   month helps the management to
   Restrict access to information and theft to                forecast the expenses that are likely to
    ensure     employee         awareness      of   the        occur.
    importance of the confidentiality of patient              Comprehensive consumer researches
    data     where     this    acts   as   a   boundary        are being conducted by an outsourced
    controlling method.                                        party before launching a new product
   Maintaining         a      sound       management          to the market.
    information system so that the required data
    & information is easily assessable to
    everyone      in     any     operational     matter.
    Furthermore the system is designed to
    backup data & this process is monitored
    daily & produced with monthly backup
    reports.



6.3 Concurrent Control Approach
Nawaloka Hospitals                                         Unilever Sri Lanka
   The risk management committee meets                      Demand planning meetings which are
    formally on a regular basis to formulate                  conducted on a monthly basis review
    business objectives and strategies in the                 last month’s sales vs. forecast sales and
    short term to achieve the vision and                      take corrective measures to bridge the
    mission in the long term.                                 variance.
   Weekly meetings – to analyze critical                    Network meetings & development
    things like bed occupancy rate, customer                  review meetings are conducted to
    satisfaction etc. based on last month figures             discuss about the innovations and
    and competitor actions.                                   product launches/re-launches on


                                                    21
   Work environment conformance checklists              monthly or weekly basis depending on
    are prepared at the outset of any function           the urgency and the importance of each
    for maintenance, electrical, ICU, wards,             project.
    laboratory,   kitchen,   operating   theatre,       Performance appraisals are done on a
    pharmacy, linen room & laundry, stores to            quarterly basis so that the employees
    make sure that the intended quality                  are aware of their performance levels
    standards are maintained                             and can take actions to improve.


6.4 Feedback control approach.
Nawaloka Hospitals                                   Unilever Sri Lanka
   Corrective action as a part of an active            Unilever highlights “winning with
    program of management planning is always             people” as one of their key strategies
    practiced and whenever nonconformity is              hence they conduct a Global People
    detected, the cause of the non-conformity            Survey annually to measure employee
    investigated, corrective action shall be             satisfaction.
    selected, documented & practices shall be           The strategy of “Winning the market
    changed to prevent recurrence.                       place” cannot be achieved without
   Internal audits are conducted at least once in       consumer/shoppers       insights.    Hence
    six months & annually to make sure that              Unilever Sri Lanka has out sourced it’s
    everyone is adhered to the standards.                authority          to               measure
   Direct customer communication to get                 consumer/customer satisfaction levels
    customer feedback is used to capture the             in order to maintain the quality of their
    information about the service that is                end product.
    important to the customer.                          Annual corporate audit asses the
   Market research and customer satisfaction            implementation of the IBP process to
    data on delivered service /product quality           identify the variance between the
    survey functions are used to make any                performance standards that are set vs.
    changes.                                             the actual performance.




                                               22
7   RECOMMENDATIONS
Company     Observation            Recommendation            Output            Outcome
 Unilever   No leadership          Developing a              Systematically    Systematic
            competency models      comprehensive             developed         leadership
            in place (In Sri       leadership competency     leadership        development
            Lanka)                 model with the expected   competency        programs and
                                   behaviours to be          models based      thereby,
                                   demonstrated at           on market         sustainable
                                   different levels          realities and     leadership
                                                             future business   pipeline to
                                                             requirements      compete for the
                                                                               future
            Lengthy processes    Customization of the        Safe guard of     Financial
            for innovations.     procedures based on         the market        stability.
                                 the market &                share.
                                 competition
            Long meetings        Set up an online            Time saving       Improvement of
                                 network system where                          the overall
                                 the employees can                             efficiency.
                                 contribute regularly
                                 with their reviews and
                                 feedback on a
                                 particular issue
            Planning process     Implement current           Simpler           Managers will
            takes place          IBP process every 2/3       planning          have more time
            annually and takes years a simpler               process which     to focus on other
            about 6months for process that validates         takes place       three functions
            completion           the key steps every         annually and      of the
            limiting the quality year.                       IBP process to    management
            time to implement                                be implanted      process
            and monitor and                                  every 2/3 yrs.
            control the
            implementation
Nawaloka    Subjective             Develop a more            Depersonalized    High performing
            performance            objective performance     performance       culture and
            management and         evaluation process        management        motivated
            reward process         which can measure         process with      employees
                                   performance based on      more
                                   deliverables              quantifiable
                                                             descriptions
            There is no clinical   Make a regulatory         Consistent &      Safe healthcare
            protocol to follow     protocol for the          clinical          service &
            for the staff &        clinical conduct.         treatment.        goodwill.
            consultants
            No credentialing       Set up a credential       Credible          Bench mark for
            or evaluation          evaluation procedure.     consultant        the healthcare
            system for the                                   service.          industry

                                              23
             consultants.                                                     professionals.
             Lack in timely        Formulation of a         Traceability of   Evaluation of
             medical statistic     statistical data bank.   medical           the healthcare
             data.                                          statistics.       status.
             Autocratic (Top       Implement                High              High quality of
             Down) structure       democratic (bottom       employee          service
                                   up) approach             motivation.
                                                            Backing
                                                            Innovation.
             Lack of structural    Change the functional    Competitive       More
             support for           structure to more        Advantage         innovations for
             Differentiation       flexible structure                         the patients
             Strategy
             Does not possess a    Develop a structured     A structured      Can identify
             structured            planning processes       planning          more growth
             planning process                               processes         opportunities
             that identifies the                                              Will motivate
             opportunities and                                                employees to
             threats for                                                      achieve its
             business                                                         business goals
                                                                              Nawaloka can
                                                                              gain a
                                                                              competitive
                                                                              advantage over
                                                                              competition
             Does have             Carry out a market       Quality           Better
             information about     research to identify     information       understanding
             the industry and      the industry and         for planning      about the market
             customer              customer dynamics        and decision      and customer
                                                            making            will provide
                                                                              better plans to
                                                                              exploit growth
                                                                              opportunities



8   CONCLUSION
Planning, organizing, leading and controlling are equally important functions for every
business if it is to be successful. Unilever being a multinational company with its experience
has succeeded in most of the areas. For example, it’s well thought out planning process
presents ample growth opportunities for the company with its critical focus on changing
dimensions in consumer needs and market conditions. However, it still shows some room for
improvement, in areas such as controlling in making the process lean, and in leading in

                                               24
building local talents at local company level, even though it’s geographical structure for
global company and functional structure for local company has helped the company to utilize
its resources effectively and efficiently in building globally renowned portfolio of brands.

Nawaloka on the other hand shows areas for improvement in the planning processes taking a
more structured approach while changing organizational structural changes to facilitate the
processes to gain a competitive edge in the industry. Being the pioneer healthcare provider,
Nawaloka rated first in introducing the new technology & new methodologies though. Also,
its leadership approach can be improved further to create a performance culture within the
organization. These dramatic changes will definitely require rigorous controlling processes in
place if it is to be a success. Thus it is evident that the success or failure of any management
function will depend on the efficiency of other functions as well for the achievement of
business goals. Therefore, any organization aspiring to be a successful company should
carefully follow these management processes giving equal attention to all functions.




9   LIST OF REFERENCES


    [1]. Certo, S. C. (2002), Modern Management, 9th Edition: Prentice Hall.

    [2]. Daft, R. L. (2005), Leadership, New Delhi: Cengage Learning.

    [3]. Daft, R. L. (2009), Principles of Management, New Delhi: Cengage Learning.

    [4]. Nawaloka Coperate Web Site, http://www.nawaloka.com/index/intro, retrieved on 2nd
         February,2012.

    [5]. Nawaloka Hospitals PLC, (2008), ISO 9001 Quality Manual,Colombo.

    [6]. Nawaloka Hospitals PLC, (2011), Annual Report,Colombo.

    [7]. Porter, M. E. (1998),Competitive advantage: Creating and Sustaining Superior Performance
         : With a New Introduction,Simon and Schuste.

    [8]. Unilever Coperate Web site, http://www.unilever.com, retrieved on 17th February ,2012.




                                                 25
Appendix 1


Unilever Sri Lanka Planning Structure




                                        26
Appendix 2
            Step                        Objectve                               Input                       Output

                                                                   Global Category Strategy
                         Establish the performance of the                                         Draft list of Issues and
                                                                   Brand Vision Plan
                         category and the brand in terms of                                       Opportunities pertaining
       Category and                                                Market information
  1                      market parameters, consumer                                              for a brand which should
       Brand Audit                                                 Consumer data
                         parameters and brand health                                              be adressed if brand is to
                                                                   Brand health information
                         parameters                                                               deliver sustainable growth
                                                                   Competitor intelligence

                         Finalize Issues and Opportutines
        Identifying      looking at audits completed by other
                                                                   Brand audit                    Final list of Issues and
        Issues and       critical functions such as supply chain
  2                                                                Customer audit                 Opportunites for the
       Opportunities     and customer marketing (Sales and
                                                                   Supply chain audit             respective brand
          (I&O)          Customer Development) for the
                         respective brand
                         To confirm the locally relevant growth
                         opportunities
                                                                                                  Quantified and prioritised
         National        Align the brand strategy with category    Global Category Strategy
                                                                                                  category growth drivers
         Category        strategy                                  Brand Vision Plan
  3                                                                                               Execution guidline for
       Building Plan     Prioritization of brands in the same      Previous year NCBP
                                                                                                  each brand (distribution
         (NCBP)          category                                  Final list of I&O
                                                                                                  channelm prorities etc)
                         Prioritization of distribution channels
                         for the brands
                                                                   Brand vision plan
                                                                                                  Maximum five jobs to be
      Brand Jobs to be Proritise strategic tasks the brand has     NCBP
  4                                                                                               done for the respective
       Done (J2BD)     to undertake in the given year              I&O
                                                                                                  brand
                                                                   Last year's J2BD
                         Review and align the regional
                         communication packs to suit local
                                                                   Think big packs – global
                         market in terms of local jobs to done,
                                                                   J2BDs                          Agency brief for key
                         local target market with the views of a
  5      Think Big                                                 Draft budget                   campaigns planned for
                         local cross functional team ( creative,
                                                                   Understanding of local         next year
                         activation and media agencies, sales
                                                                   consumer & media landscape
                         team, supply chain team and finance
                         team
                                                                                                  Final prioritized channels
                         Finalize and agree the channel
                                                                                                  and communication and
                         priorities, campaigns that are proposed Local think big pack
  6     Think Tight                                                                               activities for the year
                         to be executed in think big considering Media agency input
                                                                                                  Agency briefs for key
                         the resources available
                                                                                                  campaigns
                                                                   Draft activity schedule Local
                                                                   agency response on local
                         Finalize activity schedule for total      IBCO
  7     Integration      brand and cascade and agree with all      Brand plan for same &         Finalised activity schedule
                         the other functions                       different categories Customer
                                                                   plans
                                                                   Finalized budgets
                         Adjust and optimise plans where           Measurable J2BDs
      Implementation                                                                              Brand activity plan
  8                      required based on continuous tracking     Final activity schedules
       and Tracking                                                                               Innovation calendar
                         and monitoring                            Budget changes




                                                         27
   Appendix 3

   Organizational structure of Unilever Sri Lanka

                                                     Chairman



 Director-Brand            Director-                 Director-            Director-    Director-
 Building &                Sales &                   Finance &            HR           Manufacturing
 strategic                 Customer                  IT
                           development
Brands managers            Sales                    Finance managers    HR senior      Production
Asst. managers             coordinators             Mgt. accountants    managers       managers
Activation managers        Marketing                Asst. accountants   Executives     (Brands)
Media managers             Managers                 IT coordinator                     Supervisors
                                                                        Junior staff
Corporate                                                                              Production
relationship manager                                                                   staff (Brands)
Market intelligence
manager


   Appendix 4
   Organizational structure of Nawaloka Hospitals PLC


                                              Board of Directors


                                               General Manager




       Director              Director                 Director            Director           Director


       Health              Procurement                Finance                 HR                IT
        care

                           Managers/                 Managers/           Managers/         Managers/
    Managers/
                           Executives                Executive           Executives        Executive
    Executives/
                                                         s                                     s
     Doctors


                                                     28
Appendix 5

Table 5.1: Risk Management Sub Committees at Nawaloka Hospital
Sub Committee                               Responsible Risk

Medical                                     Clinical risk

Financial                                   Credit risk, Financial risk

General operations                          Procurement risk, Technology risk, Assets
                                            risk, Human resources risk, Reputation Risk
                                            & Operational Risk
IT steering                                 Information technology risk

Marketing                                   Competitors risk

Legal and Compliance                        Legal & regulatory        environment   risk,
                                            Intellectual risk
(Source: Annual Report 2010/11)




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