Getting high
Mahesh Madhavan tastes success at revamping Bacardi India
Executive
Summary: In 2007, Bacardi India was floundering. Enter Mahesh
Madhavan. After successfully transforming the fortunes of
Bacardi Thailand, he took on the challenge of repeating the feat in India.
Madhavan quickly revamped the company, hiring new talent, firing
underperformers and steering it to a new set of longterm goals. In less than
five years, he transformed Bacardi
India - its
turnover has tripled and it is growing 40 per cent annually.
When Mahesh
Madhavan was appointed Managing Director of Bacardi India in August 2007, the
company was on a downward spiral. Bacardi Superior, a white rum that
constituted about 95 per cent of its spirits portfolio, was losing market share
at the rate of eight per cent annually. And while the industry was growing 18
per cent a year, Bacardi India was lagging behind at 11 per cent. (Retail
consultancy Technopak estimated the size of the liquor market in India to be
$1.64 billion in 2006.)
"The loss in
market share was because of many things," recalls Madhavan. The global
parent had cut investments in India between 2004 and 2007, and the brands
started to decline. "Investments were diverted to markets providing a
better return on capital." Sensing a decline, about 66 employees quit in
those three years. For a company whose headcount was 71 when Madhavan joined,
that was massive.
While conventional
wisdom would call for loyalty rewards, some of those who remained would face
the axe. "The team was a mix of different types. Some were very passionate
and talented, and some were floaters, who were sticking around simply because
they couldn't get a better job elsewhere," says Madhavan. "We had to
get rid of the deadwood and inject some fresh energy, ideas and passion."
Madhavan, who was the Managing Director of
Bacardi Thailand prior to his India stint, was not new to people problems.
Bacardi Thailand had a turnover of baht 300 million (around Rs 32.2 crore then)
when Madhavan joined it in 2000. The problems there also had to do with people.
"I got a lot of people off the bus, and a lot of people on the bus,"
he says. By the time Madhavan left, the company had a turnover of baht 1.2
billion (around Rs 129 crore). Perhaps, it was because of this turnaround that
he was picked to steer the Indian operations.
There were problems aplenty in India, most of
which were on the human resources (HR) front. The company did not have an HR
team. There were no clear processes, and no distinction between high and low
performers. "If I'm not performing, and you're doing a fantastic job,
you'll wonder why you're breaking your back. So we had to initiate a culture
based on performance," he says.
Madhavan also needed to hire people. But he
faced budgetary restrictions and had to find other ways to bring in talent. The
marketing director position, for instance, was vacant. But instead of a
replacement, he hired Arvind Krishnan as a marketing controller in February
2008, to work alongside Gautam Gangoli, who had joined a year earlier.
Krishnan joined the company from Luxor, a
writing instrument maker, where he was the Senior Vice President for Business
Operations. "Bacardi was in the process of charting a new career path, and
the challenge of turning things around attracted me to the company," he
says. Krishnan is now Vice President and Brand Managing Director for Bacardi's
Dewar's whiskey in the United States.
In 2009, a vision map was drawn up, detailing what Bacardi India wished
to achieve by 2015. Clear targets were set for senior managers.
People who performed
well and had good potential were identifi ed as top talent. They were groomed
for bigger roles in the company.
Today, Bacardi India
is growing 40 per cent annually, outstripping the industry average of 17 per
cent. Attrition rates have come down to 12 per cent.
"A marketing director may not have joined the company
then, as Bacardi was not doing too well and did not have resources. But for
mid-level professionals like Krishnan and me, it was an exciting opportunity to
turn things around and grow," says Gangoli. "Splitting the portfolio
between two strong midlevel marketing controllers who directly reported to
Madhavan helped," he adds.
Madhavan also initiated discussions with
consulting firm Right Management in November 2008 to give the company a clear
focus. "Mahesh was clear about where he wanted to take the organisation
but was not sure whether the team would be able to do it. He was extremely
transparent," says Chaitali Mukherjee, Country Manager, Right Management.
Bacardi India's global parent wanted long-term
business targets, from 2008 to 2014, and the initial meeting with Right
Management was about business goals. "But, as we continued our
discussions, we realised that the probability of success depended on the people
who would chase them," says Mukherjee.
In February 2009, a vision was drawn up for the
company, detailing what it wished to achieve by 2015. Clearly defined goals and
targets were set for Madhavan, those reporting to him and function heads across
verticals, such as sales, HR, and marketing.
The leadership competency - the parameter of the
'right leader' for Bacardi India - was defined in line with the global
organisation's requirements as well as local market requirements. "Using
that framework as the base, we assessed close to 30 key leaders to understand
their individual strengths and challenges," says Mukherjee. People who did
not match up were asked to leave.
Among those facing the axe was a senior
executive who headed a function and reported to Madhavan. "It was a tough
decision, as Madhavan was facing a leadership crunch, but he decided to do away
with him," says Mukherjee. The company's existing talent was also nurtured
with a 12-month executive coaching programme. Eight key leaders, including
Madhavan, Gangoli and Sanjeet Randhawa, who was Director, Finance, were coached
individually for larger roles by senior business coaches from Right Management.
The consultancy's team looked at past
performance data and drew up a Performance/Potential matrix for each executive.
People who scored high on both parameters were identified as top talent. Those
who scored high on one of the axes, or who were in key leadership roles but
came low on potential were identified as people who needed to be worked with.
Through these assessment systems, Bacardi India
was able to restructure the organisation in terms of interim and longterm
restructuring. Existing talent, including Gangoli, was groomed for bigger roles
and new talent was hired when the need arose.
The sessions were held once a month, and each
leader had a different coach. "I was someone who was impulsive and hot
headed. The coaching taught me how to think and act like a CEO, adapt to
different cultures, and look at things from a 360 degree angle," says
Gangoli. "I learnt about the paanwaala syndrome from my coach Sudhir
Chand. A paanwaala manages everything single-handedly. I learnt to be able to
handle things single handedly and I still use this approach when I am
stuck," he says. Gangoli was made Managing Director of Bacardi Thailand in
August 2011, and has now moved to China as a Commercial Director.
With investments picking up from 2010, Bacardi
India started introducing more brands and hiring people from strong and diverse
professional backgrounds. For instance, the new HR Director, Saurabh Upadhyay,
was hired from Nokia in 2010. The new Sales Director came in from Pernod
Ricard.
The company also instituted more town hall
meetings and ensured better communication with the leadership team through
offsite sessions. In addition, it rationalised performance bonuses and
salaries, rewarding top performers and letting go of the bottom five per cent.
Today, Bacardi India's revenues are growing 40
per cent annually, outstripping the industry average of 17 per cent. The company
has grown more than three times over the last five years. And attrition rates
have come down to 12 per cent. In 2007, it had just two senior leaders:
Madhavan and Randhawa. Today, Bacardi India has a fullfledged leadership team
in place, including function heads for sales, marketing, human resources,
operations, and finance.
Many leaders from Bacardi India have gone on to
take up larger, global roles. While Gangoli headed East, Krishnan shifted to
Miami, and Amit Dutta, a brand manager, moved to London this year as Global
Brand Manager in Bacardi's travel retail division.
Madhavan feels vindicated. "It takes around
four to five years to turn a company around. These postings show the global
team recognises Indian talent," he says with a sense of satisfaction.
