Paul Polman: Unilever's clean winner in leadership

17 February 2015 -

This year's winner of the CMI Gold Medal award thinks people power is a force worth nurturing. We find out about his management style as a “social entrepreneur”

Ben Walker

Paul Polman believes people achieve more when you don’t tell them what to do. “Create things that make people get up in the morning,” he says. “Too much of the world is focused on things that have nothing to with what will be in your eulogy when you pass on. We all think it’s great to have your market share go up one million, and your profit go up, but who cares? We want people who want to make a difference, want to be valued, want to be part of the success. So that is where we put most of our emphasis. And that’s why I say that my job is the easiest job, because all I have to do is to make others successful.”

His optimistic view of human nature, a key part of his leadership style, contrasts sharply with his view of governments, which, he suggests, often do harm in their search to do good.

He cites a recent proposal by the European Commission to force companies to publish the difference between the chief executive’s salary and their average salary as “totally ridiculous”. The instrument is blunt, says Polman, because the ratio depends largely on the nature of the business. Highly skilled, high-salary firms will command smaller salary ratios than consumer goods multinationals such as Unilever, which have thousands of workers in low-wage parts of the world.

“You might be versus McKinsey!” Polman says, citing the global management consultancy. “So [McKinsey chief executive] Dominic Barton might have a ratio of five because he has all these brains running around. We have tea plantations in Pakistan – that is the bulk of our work [PG Tips and Lipton are among its brands]. “And we’re trying to create more plantations,” says the 58-year-old. “And the more we do, the more my ratio changes… So it’s a totally stupid thing, to be honest.”

Polman is baffled too about why regulators obsess over the composition of organisations’ steering groups. “The UK government is overly focused on boards,” says the Dutchman. And it’s done on the political level, and it’s done at a level by people that don’t understand how society functions… If people are on four or five boards and they only meet seven or eight times a year, the expectations that politicians have about the role of boards are overrated. For the times that the boards do meet, the politicians have stifled them with so much corporate governance [regulation] that they cannot do anything else.”

Optimising capital

The phrase “social entrepreneur” is usually applied to smaller operators whose companies command – or at least claim – a social purpose. But you sense Polman sees himself as one, even if he might not describe himself that way. He believes in the capitalist system, he says, but worries it is too targeted on optimising financial capital, which means the maximisation of social and environmental capital becomes a side issue. “If you broaden the definition of financial capital to also social and environmental capital, [people] will also [learn] how to optimise that,” he says.

Redefining the bottom line may not be easy, but changing up management styles is crucial, he says, if we want the world to survive, to thrive. “As long as we don’t value social capital, you’ll have a lot more environmental disasters,” says Polman. “So we have to put a price on environmental and social factors.”

Unilever has abandoned quarterly reporting to discourage executives chasing short-term goals at the expense of realising long-term, sustainable ambitions. And nor does it issue guidance to its managers: Polman’s belief is that human beings have to be driven by something innate, that prescriptive frameworks don’t cut it. “When we stopped giving quarterly reporting and guidance, people said: ‘How did you do this?’,” Polman recalls. “I said: ‘I just did it’. In fact, I did it the first day I was here, because I figured: ‘They can’t fire me the first day they hire me’. It worked out well… you need to give a lot of people the courage, the permission, to do it. We want businesspeople that have deeper purposes that guide them long-term.”

Polman acknowledges that Unilever – a behemoth with an annual turnover of around €50bn – is far from a charity. Yet he is emphatic that it is a force for good – whether that is helping the developing world or improving people’s self-confidence through the enormously successful Dove Real Beauty videos.

“For the purpose of improving the world, you cannot have all of our people go out and be in the Peace Corps,” he says. “We have to produce products, we have to sell them, we have to make money, so it’s sustainable. But we do this with a very deep sense of purpose. We sell our toilet bowl cleaners, like Domestos, to fight the issue of open defecation – 1.4 billion people not having a toilet – but we also realise that, if they have a toilet one day, we will sell more Domestos.

“We sell our bar soaps, like Lifebuoy, to fight infectious diseases. Four million children die every year under the age of five because of infectious diseases like pneumonia and diarrhoea. By simply having bar soap, you can cut that by 70, 80%. So we’re saving lives. We are selling Dove, obviously so you can have your body wash and your shampoo, but it’s also about women’s self-esteem, and that’s why our Dove sketch has had 170 million people watching it.”

Mustering the “B Team”

As a fully paid-up member of Big Capitalism’s liberal wing, Polman has joined with like-minded entrepreneurs to form the B Team – a lobby group that provides a platform for powerful interests to advocate social change. “We have a group of people – Mary Robinson, Noah Abraham, myself, Richard Branson and others – who speak out,” says Polman. “We put out statements on human rights, or on the [oppression faced by] homosexuals in Africa. You have to have a group of people that is willing to say: ‘Guys, we need to move forward on a global basis’.”

It is not that Polman lacks his critics, nor that he is unaware of them. “You can Google ‘Paul Polman criminal’ and a lot of things will come up!” he laughs. “Papers write cynical articles.” He cites recent reports that played down Unilever’s work to reduce deforestation (it uses Global Forest Watch monitoring systems to engender better forest management in palm oil production). “[The papers say] it’s because it’s to our own benefit, or that we are squeezing smallhold farmers. There is a group of cynics out there. It is obviously the lowest form of responsibility: they get pleasure putting it in the paper, otherwise it doesn’t seem to be news.”

People power

The consequence of this, he says, is that people’s passion for such projects dampens. “People are not willing to step up,” he says. “So what we said was: ‘We have to provide an umbrella where people can step up.’ In Holland, we created a sustainable growth coalition, where we asked the former Dutch prime minister to do that.”

But, regardless of the frameworks, the right people – people who have a sense of purpose and a desire to make money but change the world for the better at the same time – still need to be trained so they can deliver. Unilever’s leadership programme, Unilever 2020, aims to forecast what skills gaps will exist half a decade from now, and how to fill them. “What is most important to me is obviously to ensure that – for the longevity of this company – there is a pipeline of talent that can take any job, including mine.

“It’s clear that you need leadership skills that are focused on things like adaptability, resilience [and] systemic thinking. First, you have to be a normal human being. If you don’t understand yourself, you’re no good at understanding what your strengths and weaknesses are. So we focus on that quite extensively.”

This need for authenticity and self-awareness is a favourite theme of Polman’s. He’s a people-firster – not much of a believer in government regulation as a catalyst of change, sceptical of the power of boards to shape businesses, an opponent of topdown guidance to managers.

Find the people, help them find themselves, and you’ll get there, he believes: “For us, the standard is to spend a lot of time on the standards of leadership that we expect from people: being authentic, having high levels of integrity, a deeper sense for the common good. We would say it’s simply putting the interests of others ahead of your own, and wanting to make an impact in the world.”

Milestones

2009 Unilever CEO

2008 Executive director to the boards at Unilever

2008 Nestle S A executive vice president, zone director Americas

2006 Group president Europe and officer of The Procter and Gamble Co

2001 Group president Europe and officer of The Procter and Gamble Co

1979 Joins Procter and Gamble

The Morals of Managers

CMI chief executive Ann Francke quizzed Paul Polman and Unilever vice-president Leena Nair about CMI’s seminal MoralDNA report, which showed managers often left their ethics at their front door. Here is how their conversation played out…

Ann Francke The MoralDNA report shows that managers generally have too low of an ethic of care.

Leena Nair Was there a difference between genders?

AF Yes, and the women are better. They score 5% higher than men on the ethics of care at work.

Paul Polman It would not surprise us that the women are better, because one of the main reasons why we are pushing women here is you need more partnership, you need a longer-term view and you need to be driven by more purpose and – scientifically – women possess more of these skills than men. If you look at some of the major, bigger things that are being run, like the World Food Programme or UN Women, or the climate change negotiator Christiana Figueras and Helen Clark, administrator of the UN Development Programme and former prime minister of New Zealand, and these organisations are all run by women. It is not a coincidence.

AF And religious people, irrespective of the religion, also have higher MoralDNA, it’s interesting.

PP Yes, right. In fact, religions all have the same set-up, in the sense that it provides some space in your life to think about things other than yourself. I think that’s the broad thing that we need to do. That’s why we like people with different degrees, because you need to have empathy, you need to have engagement. The good thing now is, in the US, more graduates want to teach or enter the Peace Corps than go to Goldman Sachs.

AF So you think that teaching more, seeing the value in academic pursuits, helps create more “rounded” people?

PP Yes. Philosophy, psychology or business: you have to have that broader thing.