When Johan Cruyff led the Dutch team to the runner-up position in the 1974 FIFA World Cup, he was often found in unexpected places. Officially he played center forward, but in the middle of a game he would suddenly switch roles. He would move to the defense while somebody else took his position. It was a system called Total Football, which required the whole team to have multiple skills. Succeeding at Total Football calls for versatility that is rarely available to most teams, but Cruyff was in a class by himself. In the 1974 World Cup, he was voted player of the tournament.
To adapt this concept to management, you need executives who are equally good at playing different roles. Otherwise you end up trying to force a lot of square pegs into round holes. That may be one reason why the Total Football style of Management (TFM) has not become mandatory reading at business schools.
Some organizations swear by it, though. An example is Mumbai-based fast-moving consumer goods (FMCG) company Marico, which had sales of Rs 1,144 crore ($259 million) in 2005-06. Marico makes products for hair care (pre-and post-wash items such as oils and creams), health care (edible oils and some categories of foods) and skin care (clinics and bathing soap).
In a restructuring announced in February, chief financial officer Milind Sarwate took over as the head of human resources and strategy. Vinod Kamath, who earlier headed supply chain and information technology, was named CFO. The head of HR, whom Sarwate replaces, left the organization to start his own consulting firm.
Such reshuffles are hardly unusual at Marico. According to Kamath, “In my 14 years at Marico, I have been the head of contract manufacturing; I have set up a greenfield project in Goa; I have run the same plant after commissioning; I have been head of SAP implementation, and in charge of commodity buying and commercial operations.” Noting that he is not an exception, Kamath points to Rakesh Pandey, CEO of Kaya Skin Care, Marico’s international chain of skin care clinics. Before Pandey got his job at Kaya, he was HR chief at Marico. “There are synergies in the two assignments,” says Pandey. “Both involve dealing with people.”
“Like Total Football, Total Management at Marico stresses teamwork, flexibility and empowerment as the basis for winning business strategies,” says Marico chairman and managing director Harsh Mariwala. “Also, when everyone from the team can play in more than one position, the leader can focus on being a visionary and a coach, cheering and whistling all the way, as they say, with one eye on the scoreboard.” Mariwala is a hands-off CEO, so he says the TFM system works well for him.
TFM seems to be working well for Marico, too. The company has transformed itself from a commodity player into an FMCG company. The five-year compounded annual growth rate in revenues is 13% and profits 15%. According to research house Batlivala & Karani, Marico will grow much faster than other FMCG companies, such as Hindustan Unilever and Colgate. Its stock price has been performing much better than the Bombay Stock Exchange FMCG index.
The key question is, can TFM work for others? Is it a model that can be applied to a range of companies? Observers point to other examples, though no company has tried TFM on the scale that Marico has.
S. Ramnarayan, a professor of organizational behavior at the Hyderabad-based Indian School of Business (ISB), says, “I am familiar with changes at (pharma company) Dr Reddy’s in Hyderabad. The HR chief there has taken over as CFO. They believe in moving people around.” The former CFO has moved to Europe to head operations there; Dr Reddy’s has recently taken over German company Betapharm.
K. Ramachandran, a professor of family business and wealth management at ISB, points to the South India-based Murugappa Group, a family-owned conglomerate with $1.2 billion in annual revenues, where there have also been changes at the top. And everybody mentions T.V. Mohandas Pai, former CFO of IT giant Infosys, who has now become head of HR.
HR seems a favorite destination for several senior executives. The reason could be that an acute shortage of talent haunts India today. Even top companies in sectors such as IT are facing 20%-plus attrition rates. Earlier, HR was not given sufficient importance; there is also a shortage of HR practitioners. Moving company stalwarts into the HR function at least signals to employees that this is an area of concern. “Human capital is becoming increasingly important in the Indian economy,” says Sarwate.
The Marico Experience
To some extent, TFM in many companies is neither implemented across-the-board nor actively planned. It’s different at Marico. “Great leadership is honed only through testing in diverse situations, across diverse businesses and functions,” says Sarwate. “Marico therefore promotes ‘spiral’ growth — growth through varied exposure across the wider group — as opposed to linear growth in the same business or function. Overall, the HR processes at Marico and the openness and empowerment promote an ambience that builds people for a shift from one function to another.
“Marico has always valued institutional or organizational roles being played by people at all levels. In fact, the Personal Development Plan process we follow provides for recording organizational or institutional roles played by a member. This has ensured that there is enough cross-functional thinking right from the time a person joins Marico, even at junior levels. At senior levels, the cross-functional mindset is a given simply because Marico works with a strong emphasis on team management as opposed to dazzling leadership at the individual level. Thus we have a theme of cross-functionality running through members at all levels.”
Sarwate believes the cross-functionality results in people being empathetic towards issues in other functions. It also helps in developing a first-hand understanding of other functions. “From this emerges the possibility of some of the members, with a passion for another function, developing greater insights and aptitude for that function,” he says. “Thus, in my case, my individual passion for HR had already pushed me to get involved with HR issues more than what the typical CFO would be.”
Is TFM just a fancy buzzword for humble job rotation? The latter is what happens at junior levels; in several companies, a trainee engineer, for instance, has to spend a couple of weeks in each department. This is an orientation program of sorts, a stepping stone on the road to higher job titles. TFM true believers argue that it should not be confused with a situation where function heads are switched.
Job rotation happens frequently in India, particularly among the newer companies. At LG Electronics India, a subsidiary of the Korean electronics giant, more than 1,000 employees have been switched around in recent years. It’s a feature at McDonald’s too. Among Indian companies, there are several examples, such as Asian Paints, one of the world’s top paint companies with revenues of more than $600 million, and infotech firms including Tata Consultancy Services and Infosys.
Supporters say that one of the key purposes of TFM is to identify and build well-rounded leaders. “One of the reasons for moving people around is to encourage the growth and development of high-potentials for general management positions,” says Pradeep Mukherjee, CEO of Mumbai-based HR consultancy Potential Unlimited. Mukherjee was until recently country human resources director of Citigroup India. “Executives also acquire a different thought process in managing and driving a function — typically when the function needs a different perspective given the strategic plans of the organization.”
“At the general manager level, people are not expected to be functionally loyal to any discipline,” says ISB’s Ramachandran. “They have a coordination role. They are loyal to the organization and its strategies.”
According to Ramnarayan, “We may look at organizational leadership as consisting of managing customer-facing process, supply chain process, innovation process and people process. A person should have been exposed to two or three of these streams to become a good hands-on CEO. If the person has only been exposed to a single function, it would not be good preparation for assuming the business head or CEO position. It is important to break loyalty to the function. You start off by being in charge of one function. If you are good, you move to another.”
“Your loyalty shifts from a function to the organization. This is healthy,” says Ramachandran, returning to his example of the Murugappa Group. “Before the recent changes took place, the family members were in charge of certain companies. They were silo heads; they became champions of their silos. What (former chairman) M.V. Subbiah did was to remove the silo-head mentality and make the family members head of strategy, technology, marketing etc.”
Like every modern mantra, TFM has its pitfalls. “You may not have the inherent experience of the function per se,” says Mukherjee. There is a solution to that. “You must make sure you have strong functional people below the function head to take care of this.”
The more important issue, says Mukherjee, is that the process has to be managed carefully and the person appointed has to have strong credibility. If wrongly handled, other employees in that function may feel that their group is not valued enough and may even leave the organization. “One thing you must remember is that if you are going to move people around, you must be very clear that the employees know what you are doing and why,” adds Ramachandran. “Communication across the organization is very important. Otherwise, some people may feel they are being shunted out, moved from a very attractive to a less attractive role. It must be clear that this is not a reward or a punishment.”
“Such movements should be done after careful thought,” says Ramnarayan. “Each function has its specialist requirements, and the person should be willing to invest time, energy and effort to acquire the needed expertise both in terms of specialist and generalist requirements.
“Besides, there are some people who are specialists at heart. There was an individual who moved from being the CEO of a small company to becoming CFO of a larger company. People who knew him felt that he made a much better CFO than a CEO. For being an effective CEO, an individual needs more of certain other attributes — networking, communicating and convincing abilities, ability to handle pressure and so on. Individuals who demonstrate these abilities should be identified for future business leadership roles. For them, well-thought-out exposure to other functions is very useful. It should be started from the early stages of their career. For others who excel in specialist roles, rotation might be restricted to related functions, and may be more oriented to sharpening the edges and building a broader understanding of the function.”
Not for Everyone
So isn’t TFM asking for more trouble than it is worth? Some companies certainly think so. Shanghai-based Milind Yedkar, who has been handling direct marketing for Dell’s enterprise products in China and Hong Kong in recent years, says, “During a campus interview, I had asked a company to help rotate me through marketing, sales and operations in my first 10 years on the job. The recruiters were shocked and rejected me.”
Much later, he did the “rotation” on his own. “I had been enjoying a reasonably successful career in supply chain management at Procter & Gamble (P&G) in India and Japan,” he recounts. “After a 16-year business career, I made an abrupt change to marketing and surprised everybody by starting afresh as a marketing associate for an important brand in P&G Japan. I competed with new hires as a marketing intern. I gave up my office cabin and secretarial support and reported to folks who were several years younger than me. It was stressful for both and the topic of much curiosity around the company. Starting out as an intern helped make me stronger as a marketer. I now know the nuts and bolts of the profession. I also brought a new perspective to the organization as a marketer with a strong operations background.”
Yedkar believes TFM is an excellent concept for an organization as it builds strong capabilities on the leadership bench. It also brings alternate viewpoints to the function and can hence spur innovation. For the individual, it is a growth experience. “It keeps each of us learning versus growing only in execution skills,” he says. “The downsides, of course, are the turmoil if too many people expect to be moved around too fast. Also, there is the risk that you may get ‘shallow’ managers who lack depth in any one function.”
But, at a senior level in any respectable organization, you should not be getting shallow managers. “These moves may not be as difficult as they may seem,” says Ramachandran. “A senior executive already has a great deal of insight into, say, HR or marketing. He serves on various executive committees. He has some insights and exposure. Of course, moves like HR to technology are not easy. But companies have training programs. Overall, such changes are beneficial to the organization. They bring in a breath of fresh air.”
Sarwate agrees that training programs are helpful. “We plan to support the new incumbent with extra domain expertise through external coaching as required,” he says. “We make sure that, while moving people from one function to another, we do not shortchange the recipient function. We are conscious of the dangers.”
Despite its risks, TFM may be becoming management’s flavor du jour in India. Chief Executive magazine’s recently published eighth annual Route to the Top survey, compiled with executive search firm Spencer Stuart, shows that “more and more of the people now running S&P 500 companies have worn a colorful collection of hats over the course of their careers. They jump between functions, companies and global locations. They seed startups and mastermind mergers. Even the ‘lifers’ who spend decades at one organization are likely to have held half-a-dozen different jobs within it. Over the past five years, the percentage of CEOs running the largest 100 companies in the U.S. who have been in one function throughout their careers has fallen from 25% to 9%.”
“Business ambience can be expected to get only more complex,” says Marico’s Mariwala. “As it continuously evolves, the kaleidoscopic complexity can be dealt with only through a constantly evolving management team.” And with any luck, such teams, like World Cup football players, will know how to score some goals.