Henkel: building a winning culture Essay

Introduction: CEO in 2008: Kasper Rorsted, Studied Economics and has experience in technological companies. Management style was based on face-to-face conversations and pushing for more efficiency. Henkel until 2008 Founded in 1876 as a producer of detergent, by 1920 it was a leading German detergent en glue producer.

After WWII: company restarted as a producer of detergent, glues and personal care products. In 2008: 14 billion euros sales over 125 countries: 2008: 14 billion in sales (+8%) EBIT-margin (10,3%) =>no competitive spirit?! (“The happy underperformer”) 2nd part of 2008: Financial crisis: Price increase by Henkel =>growth in all the business units fell. Reaction of Rorsted (CEO): transform the company into a leaner and more performance driven company by setting 4-year financial goals (2012) for Sales growth (3-5%) – Biggest acquisition ever of 3,7 billion euros for the adhesives and electronic material businesses of the National Starch and Chemical Company. – Dial brand: high investments in North-America =>top brand in body wash markets.

Selling underperforming brands. Vision and Values Focus on financial goals and priorities =>becoming a winning competitor 10 values (see exhibit 5): but they had little meaning inside the company BUT: the CEO Thought they had..2010: Henkel: ” a global leader in brands and technologies” putting customers central A lot of employees have careers of over 20, 30 or even 40 years within the company. 2009: new performance management system for 4 layers of management.

For each employee there was: 1) the current rating of his performance and 2) potential performance for the future. These were put in a grid (exhibit 7) with scores going from L (low), M (moderate) to T (Top) For potential performance numbers were used from 1 to 4 with 4 the limit of performance of someone. These rankings were set up during a Development Roundtable (DRT), a collaborative forum with a group head and his direct reports. Afterwards, the results were discussed during a one-to-one with the employee.

DRT-processes were done bottom-up. Targets were set about how many employees should be fitted in a certain category. E.g; 5% had to be L =>caused a different way of analysis within the business.

Bonus compensation Bonusses were linked to the overall company financial performance, team performance and individual overall performance.