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Most European multinationals were traditionally operated as multi-domestic companies with the people at the head office exercising their hold mainly through financial controls and authorities. In earlier years, the chairmen of both HLL and Unilever used to say that the control from the centre on the subsidiary was mainly in two areas, viz., capital expenditure and selection, and remuneration of top managers. This was in line with the control exercised by the British (or Dutch) Empire over the colonies. The Emperor sent out a Viceroy with full authority over local matters. As long as he remitted good revenue to the home country and did not ask for any additional resources, he was left to his own devices.

Periodically, royal visitors from the home country would visit the Empire and it was expected that suitable arrangements were made (including safaris, partying etc.) to make them happy and they returned home bearing valuable gifts and happy memories. Many of the British companies followed this pattern and Unilever was no exception. Till 1961, the Viceroy was a Britisher who had to return home for a promotion, transfer or pension. So the powers at home had a very good hold on him. Before he was sat out he would have worked with them and earned their trust. The relationship was based on trust and a very generous measure of paternalism which made both the ruler and the ruled feel secure. When Indians came up the ladder in HLL, the paternalism continued. Prakash was very fond of Andrew Knox who cared for India as something he had discovered and built up for Levers. So the relationship was very much based on the personal trust and loyalty between Prakash and Andrew. When the responsibility at the centre passed on from Andrew to a less sensitive person, Prakash found it uncomfortable. Although he would probably have in any case responded to the call from the government to take up the State Trading Corporation (STC) job, l have a feeling that the cessation of that personal relationship with Andrew and its substitution with a lees acceptable one was a factor in his decision to leave HLL.

In Vasant’s case too, the change in the attitudes within Unilever in the early 1940s from being a paternalistic organization to a more commercial and impersonal organization had an impact. Unilever had to change in order to ensure its own profits and growth. In the mid-1960s it had changed its European organizational structure into “product groups” which superseded national managements in European countries. This change was necessary to coordinate more effectively the marketing, product development and manufacturing technology of the different product groups in what was becoming a multi-product group business. The national managements in Europe tried to resist this very logical and necessary change. They were eventually over-ruled. The Overseas Committee (OSC) was also beginning to feel the effect of this change. They had no expertise in marketing, product development or manufacturing. They were totally dependent on the European “product group” managements. So the OSC could only exercise commercial controls. Many overseas subsidiaries found it confusing and, at times, frustrating, especially if the OSC member happened to be a purely commercial person who tended to concentrate on the bottom-line without much understanding of the environment and the market-place. Both Prakash and Vasant came across such a situation when they prematurely departed.  

Excerpted from Page 146-148 of ‘To Challenge and To Change’ by T. Thomas