Case study
Private equity firm Terra Firma bought the troubled music giant EMI Music in
late 2007 amidst severely declining retail conditions and much scepticism
about any chance of a successful turnaround. Nevertheless, in January
2008 Terra Firma announced the global restructuring of the business across
26 countries, with the loss of 1500-2000 jobs and cost reductions of £200
million. This feat was to be achieved within six months and without disrupting
the everyday running of the business.
As specialists in major corporate restructuring programmes Independent
was parachuted in to facilitate the transformation of the organisation.
A complex and challenging project, successful outcomes included the
trebling of operating profits and securing job reductions without business
disruption or individual claims.
HR requirements and achievements
- Global organisational restructure - one of the first tasks of the
restructuring programme was to appoint highly experienced senior
leaders at board level who would drive change through the
organisation. Once in place, this operating group set about changing
the business model from one with a geographical focus, where
each country within the EMI Group managed its affairs autonomously,
to a global functional matrix. This was critical to minimising waste
and achieving efficiency throughout the business.
- HR restructure - the new structure of the organisation
was mirrored within the HR function itself, with global business partners
taking the place of HR managers. An HR Service Centre with improved
global HR data collation and reporting was also created to improve
efficiency.
- Head count reduction - A key element of the EMI restructuring
programme was an almost 40% reduction in head count over a six
month period. This involved establishing appropriate consultative
mechanisms with UK employee representatives. Across the rest
of Europe attention was also paid to the formation and agreement
of social plans as well as extensive negotiations with Works Councils.
A key feature of the programme was a commitment to regular
communication and consultation so that employees were kept
fully informed of developments. At the peak of the change
programme, some meetings were held on a daily basis. All
employees were given the chance to apply and be selected for roles in
the new, streamlined organisation, feedback was given to successful
and unsuccessful employees and support mechanisms such as
outplacement were also put in place. As a result, job reductions
were achieved within the specified time frame and to the agreed
budget and critically, without individual claims.
- Cultural transformation - in an industry where senior executives had
been receiving substantial remuneration packages without any
reference to personal performance, the introduction of a global
performance management system was an early priority for the new
company leadership.
- Vision and values - communicating a return to EMI's core vision
and values was an essential part of the new drive for efficiency,
cohesion and improved performance, with the core vision focused
on re-establishing EMI as the premier consumer-led global music
company.
- Talent management - the implementation of an online Global
Talent Review, which reviewed the top 70 leaders across the globe over
a six week period, accelerated the deployment of the best talent.
High Potentials were identified to provide a global senior
management succession plan and talent pools were created of
individuals who could best continue EMI's transformation and drive
the development of a new digital business.
- Global reward strategy – This accurately reflected market conditions
as well as the revised business model. Innovative board packages and
long term incentive plans were established to encourage staff retention
and stability and meet the business needs of EMI's private equity
owners. A global levelling project was undertaken to ensure consistent
benchmarking, while contractual arrangements, rewards and benefits
were harmonised against external best practice.
