UK: THE DAVIDSON INTERVIEW - SIR MICHAEL PERRY.

UK: THE DAVIDSON INTERVIEW - SIR MICHAEL PERRY. - There comes a point in dealing with the largest multinationals when you have to acknowledge that what you are looking at is so big, so complex and so powerful that it is almost impossible for an outsider

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Last Updated: 31 Aug 2010

There comes a point in dealing with the largest multinationals when you have to acknowledge that what you are looking at is so big, so complex and so powerful that it is almost impossible for an outsider to get a grip of what's going on. Bigger and more powerful, in some cases, than a few national governments?

'Hahaha ...,' Sir Michael Perry, chairman of the food, soap and fragrance giant Unilever, gives a jowly chuckle, rather enjoying that one, I suspect. He had just been explaining to me how inefficiently the single European market had been implemented. Even so, he says, Unilever had managed to achieve most of what it wanted 'without inhibition', so a genuine single market would make little difference to its already burgeoning bottom line. Hence the company chugs majestically on, an unstoppable supertanker, thrusting its thousands of brands into kitchens and bathrooms round the world, researching new ideas, developing new products, sniffing out new markets and handsomely exploiting them. When William Lever wrapped his first bar of soap and branded it 'Sunlight' all those years ago, he didn't know what he was starting ...

Is it as simple as that? No, of course not, but it has to be said Unilever has weathered the recession well, increasing sales steadily from £22.7 billion in 1990 to £29.6 billion in 1994, and pushing up dividends for lucky shareholders from 18p to nearly 27p in the same period. There was a blip in pre-tax profits two years ago - when they dropped slightly - and there have been problems in the detergent market, not least with the clothes-shredding Persil Power launched last year, but the company now hopes to have put all that behind it. 'Steady-as-she-goes' said the commentators perusing the 1994 results in February.

So you would think that Perry, 61, one of the men entrusted with running this most influential and successful of companies, would be rather at ease on the morning we met, a good set of results behind him, a sunny day outside, a beautiful view over the Thames from his tastefully art-hung office in Unilever's charming Art Deco London HQ. But I don't think he is. To start, he sits straightbacked in a leather armchair, his hands on the rests, like a man contemplating his last moments in an electric chair. Perry, OBE, CBE, knighthood and all, is a private man, not fond of interviews. It is, perhaps, the only thing they don't train you for at Unilever.

He has a ruddy face, a strong nose, small eyes and a gently self-deprecating sense of humour that at times can make you feel like you are taking tea with a tense bishop. What does a Unilever chairman do? 'Oh, not a lot, um, gracious me,' he says, pausing to mull it over. If he was a cleric - and one of his pastimes is choral singing - he would not be of the medieval, stake-burning variety, more of the 'let's pull together, chaps' sort. For this is a company which prides itself on consensus management: the men who get to the top are those who are good at it, not Flash Harries, even if in some eyes that makes them seem a little dull.

Perry is not woolly-minded, though - indeed he has a rather meticulous line in corporatespeak - and he emanates gravitas through every pore of his pinstriped body, a factor which stands him in good stead in the City where long-time Unilever-watchers are impressed by his style and record. Deep down you would guess he is still a marketing man as he positively lights up when talking about how his brands are sold, or the joys of perusing a perfume counter at Harrods. He was the man responsible for bringing Elizabeth Arden into the Unilever fold in the late '80s, and kick-starting the company's push into the top end of the personal products market thereafter. Before that, personal products had been something of a Cinderella operation for Unilever. Now it's an 'earner-churner'. Perry has Augustus John's rather coquettish portrait of Arden hanging behind an armchair at one end of his office, so it would be fair to surmise that he must see the move as one of the defining moments in his rise to power at the company.

But power is a funny thing in Unilever. Being half-Dutch, the company is effectively split in two, with numerous checks and balances installed to prevent any one individual (or any one company) becoming too autocratic. Like Ancient Rome, nominal power is invested in the hands of a triumvirate, the two national chairmen and a vice chairman, known rather ominously as the 'special committee', but real power, it is said, lies in those ruling its far-flung territories. These regional and functional directors, and food and product executives, sit on a lower board. Then there is a further advisory board of outsiders, usually former bankers and civil servants, who make sure nothing gets out of hand. Pushing anything radical through all that lot, you feel, would be tough.

But it works. The Unilever brands - Birds Eye, Flora, Persil, Omo, PG Tips, Walls, Elizabeth Arden, Timotei, the list goes on and on - are hugely popular and the operating profits by sector (food £1.19 billion, detergents £505 million, personal products £481 million, speciality chemicals £330 million) are now more-or-less hugely impressive, after a sluggish time in the early '90s. Everything is just, well, huge - so perhaps it is no wonder they push decision-making down the line.

'We are a business with a very strong culture of decentralisation,' agrees Perry, 'and it stands us in good stead. The central linchpin of our creed is to put operational decisions in the hands of the people who run our businesses at the periphery. Our role at the centre is concerned with systems and processes which deliver Unilever and the rest of the world to the operating decision-taker in his local market.' To translate, those at the centre provide strategic input, technological input, and the experience of what Unilever has learnt in other markets. The rest is left to those on the ground.

The seemingly calm efficiency of the system has led some to think that the top bods are not important at all, as the business runs itself, and indeed that most Unilever chairmen are interchangeable because, British or Dutch, they are nearly always 30-year company men rubbed smooth on their way up through the firm. Perhaps, but according to Unilever watchers it is now a very different company from 15 years ago, when its fusty manner reminded many of the civil service. Nowadays Unilever chairmen tend to be hands-on business managers, with direct experience of a variety of markets, Nor are they frightened of pushing through major strategic changes.

Two of the changes going on at the moment are Unilever's renewed push for innovation and a gradual widening of focus away from the company's core European and American markets. China, for instance, where Unilever trebled sales to £130 million last year, is top of the list for expansion. This shift in emphasis is characteristic of the leadership of Perry and the former Dutch chairman, Floris Maljers, who stepped down last year. It is no coincidence, for instance, that Perry is one of Unilever's most-travelled chairman to date.

'I have worked in the UK, Holland, Thailand, Argentina and Japan. I have been involved in consumer goods, been the largest distributor of caterpillar tractors in the world, assembled motor cars, been a distributor of market-leading textiles in Africa, run tea plantations, sat on chambers of commerce in five countries, and been foreign investment adviser to the Thai prime minister.'

And all for one company. Small wonder that he greets questions about Unilever's reluctance to buy in experience with a dismissive shrug. His point is that a whole world of experience is available within the company, if you are prepared to work your way through the system. Buying in senior talent would be an admission that the system had failed.

Perry joined Unilever as management trainee with Lever Brothers in 1957. Before then he had an odd childhood which he won't much talk about, living first with his grandmother, then with his father in the Isle of Man, while his mother brought up his brother in the South-East. His father was entertainments officer for the Douglas corporation on the island. Perry himself went to a minor public school there and then to Oxford to read modern languages. When I ask him whether there were any significant events in his childhood that impelled him towards a business career the answer comes back, bluntly, 'no'. He has a wife, three grown-up children, a big house in Worcestershire and two Morgan cars for Sunday-morning tinkering. Any more personal details would probably have to be squeezed out of him under torture.

Such, of course, is the Unilever style. Executives stay out of the limelight; so indeed does the group name. In management terms, the style has been described thus: concerned, devolved, low-key, marketing-led but slightly bureaucratic and unimaginative. Perry thinks about it when I ask, and places the emphasis again on consensus.'I have been raised through nearly 40 years of experience in management teams where my view was always sought, if not always listened to. My judgment is that if people are ignored, they don't feel involved.'

Is that a different style to other multinationals? 'It's a different culture,' he says. 'I wouldn't say it is necessarily superior but it is a very international one. We don't have a very large home base. Others, such as Proctor & Gamble or IBM, start with a large American market. We come from two relatively small countries, and we are not constantly exporting ideas from our own markets. It makes us much more inclined to place responsibility for innovation and development out there in the field.' It also means, he adds, that Unilever has relatively few preconceptions about where its management should come from.

The company has, however, been criticised for the lack of women in senior positions - there is not one on any of its top boards which, if you think about it, is fairly remarkable for a multinational whose consumer base is predominantly female. Perry will have none of it. 'Not enough women? Absolute rubbish. We operate in 80-90 countries with 300,000 employees, and in some countries the whole thing is run by women. No, there are no women on the boards and we would like to see that changed but only if the right people come through. The ratio of women through various levels of management has been steadily improving, but at the end of the day it takes 20-30 years to generate the right sort of person to move onto the Unilever board.'

Those who have worked in Unilever say the problem is simply the overseas working. To date, somewhat like the Army, Unilever survives on the willingness of wives and families to trot docilely after their breadwinners. The husbands of women managers have been somewhat less flexible, leaving many female executives stranded on the lower rungs of the career ladder.

It is interesting to note how this insistence on international experience filters down to Unilever's product strategy. Perry, for one, is not a believer in business's remorseless march towards global products. Despite the evidence that the world's marketplaces are becoming more homogenous, Perry insists that it is understanding the differences between different peoples that will give companies competitive advantage. 'I still believe that greater opportunities are going to come from building on difference and recognising difference - recognising that Mrs Smith of Bolton is really a very different person from Senora Lopez in Mexico City, and always will be. My task is to understand how I can derive advantage for Mrs Smith out of my experience of Mrs Lopez and the other way round.' That does not, of course, preclude that some products will have the same name worldwide, but it does mean that they may be different in different marketplaces.

They will probably be differently priced, too, an intriguing point given the discussion of the benefits so far over the introduction (or partial introduction) of the single market in Europe. Most manufacturers like Unilever have used the legislation to make themselves more competitive, which has meant simply getting rid of plant and workforce it no longer needs, but in general the changes don't seem to have brought lower prices.

That, counters Perry, is because everyone had too much installed capacity to deal with the actual market requirements. Diminishing competitiveness, he adds, is the fundamental issue that Europe faces. 'We in business have to concentrate on all those things that improve the quality of what we have to offer to the consumer and the value. We should set ourselves against things that get in the way of that, so the extent that the political debate wanders from that, it wanders into increasing irrelevance.'

So is Unilever chomping at the bit for a single currency in Europe? Not by 1997, says Perry. 'Obviously it is clear that if we are able to manufacture in one country and distribute to all other countries in Europe without the uncertainties of exchange rates that will be an advantage, but to seek to secure that certainty at the expense of a whole raft of other uncertainties would be quite wrong.'

He continues: 'Unless there is fairly clear convergence between the economies of the participating states, removing the ability to rebalance economies and currencies would be a massive removal of flexibility which would simply lead to other mechanisms having to be employed to create the rebalancing that would be needed. In other words, the convergence criteria - which everybody recognises would have to be in place before a single currency can be contemplated - are absolutely vital.'

We move on to talk about supermarkets and own-brands, which Perry had been rather agitated about last year when many manufacturers felt that the invisible line between imitation and copy had been crossed. But peace has broken out on that issue, with a working party of manufacturers and retailers drawing up 'recommendations'. So I shift the subject to Persil Power - a brand no retailer wishes to copy - and Perry suddenly goes rather quiet.

The problem, I admit, was that I had been asked not to mention it at all, but that seems a ridiculous approach to Unilever's biggest cock-up in years. The new powder, launched last year, caused a furore when it became apparent that it caused some fabrics, under repeated washing, to fall apart. The company included a £57 million write-off in its 1994 accounts to cover its winding-up. What went wrong? Perry is unequivocal: 'I have nothing more to say than what we have already said umpteen times about Persil Power. It will be on the market as long as there is consumer demand, it is an extremely effective product if used as recommended, and consumers all over Europe are doing just that.' Has there been a lot of internal soul-searching as to what went wrong? 'Yes.' Have people left the company because of what went wrong? 'No.' Is it something that has never happened before within Unilever? 'No.' Can you name me an equivalent problem? 'No. You know, you are only going to get monosyllables out of me on this subject.'

Perry at this point looks firm but exasperated. A moment later he is trying to wrap the interview up with a brusque 'How long do we need now? Because we have really gone on rather a long time ...' Eventually he regains his humour but it was an illuminating flash-point. Others explain it thus: 'They've speeded up the pace of innovation and inevitably there are going to be accidents,' says one analyst.'There is no business in the world that doesn't have accidents; the problem is they can ill-afford to have it in this area.' Unilever's detergent arm had been a poor performer in Europe in recent years, and there were also launch problems in America in 1993 with a concentrated liquid product.

ven so, it is perhaps surprising that as old and wise a campaigner as Perry gets tetchy on the subject, especially as Richard Giordano, chairman at British Gas where Perry has a non-executive directorship, had made a point of telling me how 'cool under fire' the Unilever boss had been during the difficulties last autumn. Unfortunately everyone at Unilever had underestimated the Press's voracious desire to keep the story going. 'It was a fiasco and it is not impossible that Perry feels it has tarnished his reign,' says one who used to work there. 'Your tenure tends to get associated with things like that. He has only been chairman since 1991. The next 12 months will be very interesting for him.'

Not least because they will be his last 12 months as chairman. Under the Unilever rules, no chairman can offer himself for re-election after his 62nd birthday. The old joke is that you spend your last year hoovering up non-executive directorships to keep you going in retirement. Is that true?

Perry laughs. 'No, I shall be spending the last year avoiding non-executive directorships.' After that, he says, he would like to devote more time to the Shakespeare Globe Trust, of which he is chairman. The project, which aims to rebuild the old Globe theatre on the south bank of the Thames, has received hundreds of thousands of pounds-worth of backing from Unilever, and a host of management volunteers. You can tell from the affection with which he speaks of it, and his sadness at the death of project founder Sam Wanamaker, that this is not the gloss-job that some corporate do-gooding can be.

Until then Perry won't be lost for things to do. There is Unilever's expansion in the Far East to oversee, and the directorships he has already taken on, at Bass and British Gas, to keep him warm, on top of which he also chairs a government committee which decides on the remuneration of senior civil servants. Ah, remuneration. British Gas, of course, has spent much of the year being flogged in the headlines for the salary of poor Cedric Brown, the chief executive MPs love to hate. Does Perry (no mean earner himself with an annual salary which tops £700,000) by any chance sit on that remuneration committee?

He groans and sighs. 'Oh dear, I was afraid you were going to ask me about that. Yes I do, but I can safely say that all those things were sorted out before I joined.' And he looks rather relieved that we are already standing and the interview is over.

Biographical Notes

1934

Born Eastbourne, 26 February

Educated King William's College, Isle of Man; St John's College, Oxford

1957

Joins Unilever as management trainee

1968

Marketing director, Lever Brothers, Thailand

1973

Chairman, Lever Brothers, Thailand

1977

President, Lever y Asociados SACIF, Argentina

1982

Chairman of Nippon Lever KK, Japan

1984

Joint managing director, UAC International

1985

Chairman of UACI and on boards of Unilever plc and Unilever NV

1987

Personal products co-ordinator and director responsible for marketing division

1991

Chairman of Unilever plc, vice-chairman of Unilever NV and member of Unilever special committee

Sir Michael Perry is also a vice-president of the Liverpool School of Tropical Medicine, a vice-president of the Chartered Institute of Marketing, president of the Advertising Association, and chairman of the Globe Trust

What People Say

'Michael has enormous international experience and at Unilever has been a successful builder of businesses all around the world.'

Richard Giordano, chairman, British Gas, on why he invited Perry to join his board

'Perry turned personal products into a major earner churner. He is a very tough manager.'

An analyst

'The difference between Michael and other Unilever chairmen is that he has spent more time overseas, and has broader international experience which is hugely relevant as the company becomes more and more dependent on non-European and non-American business.'

A former Unilever executive

'Michael simply has an excellent strategic grasp of business.'

Sir Ian Prosser, chairman, Bass, on Perry's contribution as a non-executive director

'Perry is not an immensely ebullient or chatty person, though he can be convivial privately. He has a naval background and there is something of the silent service in his manner. As a businessman he focuses strongly on quality. The quality question is like mother's milk to him, probably because of the time he spent in Japan.'

Lord Holme of Cheltenham, a long-standing friend.

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