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2/25/13

Mahesh Madhavan tastes success at revamping Bacardi India : Business Today

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Mahesh Madhavan tastes success at revamping Bacardi India
Anumeha Chaturvedi April 30, 2012

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."

MESSAGE IN A BOTTLE THE PROBLEM Sales of Bacardi's top brands were declining. Market share was falling THE CHALLENGE
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Country Manager.in/storyprint/23743 2/6 . "Splitting the portfolio between two strong midlevel marketing controllers who directly reported to Madhavan helped. you'll wonder why you're breaking your back. But for mid-level professionals like Krishnan and me." he says. businesstoday. the company had a turnover of baht 1. it was an exciting opportunity to turn things around and grow. where he was the Senior Vice President for Business Operations. Madhavan also initiated discussions with consulting firm Right Management in November 2008 to give the company a clear focus. was vacant. The problems there also had to do with people. most of which were on the human resources (HR) front. who had joined a year earlier. to work alongside Gautam Gangoli. Madhavan also needed to hire people." says Chaitali Mukherjee. Bacardi Thailand had a turnover of baht 300 million (around Rs 32. was not new to people problems." he says. who was the Managing Director of Bacardi Thailand prior to his India stint.intoday." he says." says Gangoli. There were problems aplenty in India. Right Management. Krishnan joined the company from Luxor. and a lot of people on the bus. it was because of this turnaround that he was picked to steer the Indian operations. By the time Madhavan left. and no distinction between high and low performers. he hired Arvind Krishnan as a marketing controller in February 2008.2 crore then) when Madhavan joined it in 2000. But instead of a replacement. Perhaps. He was extremely transparent. But he faced budgetary restrictions and had to find other ways to bring in talent." he adds. "If I'm not performing.2 billion (around Rs 129 crore). "I got a lot of people off the bus. and the challenge of turning things around attracted me to the company. Krishnan is now Vice President and Brand Managing Director for Bacardi's Dewar's whiskey in the United States.2/25/13 Mahesh Madhavan tastes success at revamping Bacardi India : Business Today People in the company lacked the skills needed to drive performance THE SOLUTION A complete revamp of HR processes THE RESULT The buzz is back and so are sales Madhavan. The marketing director position. a writing instrument maker. for instance. The company did not have an HR team. "Mahesh was clear about where he wanted to take the organisation but was not sure whether the team would be able to do it. So we had to initiate a culture based on performance. "Bacardi was in the process of charting a new career path. There were no clear processes. as Bacardi was not doing too well and did not have resources. and you're doing a fantastic job. {blurb}"A marketing director may not have joined the company then.

Eight key leaders. Those who scored high on one of the axes. we realised that the probability of success depended on the people who would chase them. including Madhavan. and has now moved to China as a Commercial Director. A paanwaala manages everything single-handedly. who was Director." he says. The consultancy's team looked at past performance data and drew up a Performance/Potential matrix for each executive. a vision was drawn up for the company. Finance. as we continued our discussions." says Mukherjee. People who scored high on both parameters were identified as top talent.was defined in line with the global organisation's requirements as well as local market requirements. "I was someone who was impulsive and hot headed. "It was a tough decision. and look at things from a 360 degree angle. and marketing. but he decided to do away with him.the parameter of the 'right leader' for Bacardi India . and each leader had a different coach. including Gangoli. For instance.2/25/13 Mahesh Madhavan tastes success at revamping Bacardi India : Business Today Bacardi India's global parent wanted long-term business targets. Bacardi India started introducing more brands and hiring people from strong and diverse professional backgrounds. Gangoli and Sanjeet Randhawa. Among those facing the axe was a senior executive who headed a function and reported to Madhavan." says Gangoli. such as sales. I learnt to be able to handle things single handedly and I still use this approach when I am stuck.intoday. Through these assessment systems." says Mukherjee. In February 2009. The sessions were held once a month." says Mukherjee. People who did not match up were asked to leave. Existing talent. we assessed close to 30 key leaders to understand their individual strengths and challenges. "Using that framework as the base. With investments picking up from 2010. The leadership competency . Bacardi India was able to restructure the organisation in terms of interim and longterm restructuring. Gangoli was made Managing Director of Bacardi Thailand in August 2011. were coached individually for larger roles by senior business coaches from Right Management. and the initial meeting with Right Management was about business goals. the new HR businesstoday. The company's existing talent was also nurtured with a 12-month executive coaching programme.in/storyprint/23743 3/6 . "I learnt about the paanwaala syndrome from my coach Sudhir Chand. Clearly defined goals and targets were set for Madhavan. adapt to different cultures. HR. detailing what it wished to achieve by 2015. was groomed for bigger roles and new talent was hired when the need arose. from 2008 to 2014. as Madhavan was facing a leadership crunch. The coaching taught me how to think and act like a CEO. or who were in key leadership roles but came low on potential were identified as people who needed to be worked with. those reporting to him and function heads across verticals. "But.

EXPERTS SPEAK PEOPLE AGENDA There is considerable learning in this case. Madhavan feels vindicated. which. Bacardi India has a fullfledged leadership team in place. Saurabh Upadhyay. While Gangoli headed East. These are fundamental questions in any organisation Bacardi has tackled people very boldly and effectively. can lead to the sort of situation that Bacardi faced in 2006/07. The company has grown more than three times over the last five years. Today. businesstoday. Making the 'People Agenda' the top boss' agenda is the starting point. not just for similar companies. it had just two senior leaders: Madhavan and Randhawa.in/storyprint/23743 4/6 . "Tell me how I am doing". Full marks to Mahesh Madhavan and his team. if not challenged. And attrition rates have come down to 12 per cent. but for India Inc as a whole. These postings show the global team recognises Indian talent. most organisations shy away from tackling these issues head on and carry on believing (rather erroneously) that they will get addressed somehow. Many leaders from Bacardi India have gone on to take up larger. outstripping the industry average of 17 per cent. moved to London this year as Global Brand Manager in Bacardi's travel retail division. That is a self-limiting belief. unlike many organisations. operations. In India. it rationalised performance bonuses and salaries. unlike many organisations: Sridhar Ganesh worldwide. Krishnan shifted to Miami. It has tackled people issues very boldly and effectively. In 2007. They often forget that it is not the process but the "spirit behind the process" that needs to come alive. "Help me to perform better". The company also instituted more town hall meetings and ensured better communication with the leadership team through offsite sessions. including function heads for sales. marketing. global roles. providing answers to the universal questions that every employee asks: "Tell me what I am supposed to do". Bacardi appears to have got its basics right. In addition. Today. human resources.intoday. Bacardi India's revenues are growing 40 per cent annually. which flirt around people issues." he says with a sense of satisfaction. and finance. "It takes around four to five years to turn a company around. a brand manager. and Amit Dutta. It has addressed the core. was hired from Nokia in 2010. rewarding top performers and letting go of the bottom five per cent. The new Sales Director came in from Pernod Ricard.2/25/13 Mahesh Madhavan tastes success at revamping Bacardi India : Business Today Director.

Identifying the right talent and placing it in the right role can dramatically increase efficiencies and returns. People were convinced they were valued and being prepared for bigger roles. Research and Consulting. The other interesting thing Bacardi did was to bring performance-reward clarity. Gurgaon The next challenge for Bacardi in sustaining enthusiasm levels and interest the board: Asha Bhandarker Did Bacardi India address the problem effectively? Would you have approached the businesstoday. The next challenge will be in sustaining the levels of enthusiasm and interest across the board. This partnership is a rare phenomenon. what is common is the lament from either side about how uncaring and incapable the other is. Potential identification and talent management was another important step. MDI. Murugappa Group VISIONARY LEADERSHIP Bacardi is a case of good turnaround management. The company was losing market share rapidly. Director HR and Lead Director Diversified Business Group. The growth story highlights the power of line and HR working together to create a magical workplace.2/25/13 Mahesh Madhavan tastes success at revamping Bacardi India : Business Today Another great takeaway for me is the close cooperation between Madhavan and the HR consultant. Above all it builds clarity of direction and trust. Clarity has a powerful and positive effect on performance. and people were demoralised. Sridhar Ganesh. we see it rarely. and is a good way to start getting the organisation back on track. which motivated high performers to reach tough targets.intoday. Any vision/mission exercise brings the team together. RML Chair Professor of Leadership Studies & Dean. where both results and people-care not only co-exist but actually flourish. Madhavan participated in the exercise along with the team and together they charted the path to be taken in the medium term. the troops get together and pull things through. Instead. Asha Bhandarker. attrition rates were impossibly high. Mahesh Madhavan brought a 'fresh eye' to view the situation. thereby living with sub-optimal performance. This sort of exercise builds morale and people bond together to build their collective future. in any difficult situation. One of the biggest mistakes companies make is to not take the role-talent fit seriously. This is because. It takes only that little step to come together but alas.in/storyprint/23743 5/6 . but after a while monotony may set in and reward/recognition practices will need to be creatively addressed. Setting a vision for the organisation (with the support of its consultant) was a crucial step. In such a situation.

com.businesstoday. Your views will be published in our online edition. and the best comment will win a Harvard Business School Press pocket mentor.intoday.in/storyprint/23743 6/6 .html @ Copyright 2010 India Today Group. Print Close URL for this article : http://businesstoday.in/casestudy. businesstoday.in/story/bacardi-recovery-case-study/1/23743. Previous case studies are at www.intoday.2/25/13 Mahesh Madhavan tastes success at revamping Bacardi India : Business Today company's HR challenge any differently? Write to us at btcasestudies@intoday.