Henkel: Winning Culture

Topics: Performance management, Percentage point, Organizational culture Pages: 3 (888 words) Published: December 3, 2012
The story: 

In 2008, Henkel, the German group with well-known brands ranging from Persil to Loctite, had reported comfortable growth and earnings. But its new chief executive, Kasper Rorsted, a Dane who had made his career in big IT companies, thought the 132-year-old, family-controlled company needed to shake off some of its complacency if it was to safeguard its success.

The challenge: 

Henkel faced several serious issues. For instance, while reporting solid sales, it was less profitable than its industry peers – by a margin of up to 10 percentage points.

But the majority of employees did not see any need for change. In fact, one analyst commented that it was characterised by “complacency and lack of competitive spirit”. Mr Rorsted determined to change the way the company was run and to create “a winning culture”.

The strategy:

Mr Rorsted and his new, young team set about introducing changes that would include both tangible financial and performance targets, and an overhaul of company culture.

* Ambitious targets. In November 2008, Henkel announced challenging targets for 2012 that would improve performance but would also energise the organisation by creating a sense of urgency.

Targets included an increase in pre-tax profit margins to 14 per cent; in earnings per share; and in sales, to above the market average. In addition, the share of sales in emerging countries would be required to rise from 33 per cent to 45 per cent by 2012.

* Efficiency and focus. With more than 1,000 brands, at least 200 production sites globally, and three separate business units, Henkel was ripe for proposed efficiency measures. These included cutting the number of brands in order to put more marketing resources behind its strongest labels; consolidating manufacturing sites; and shifting tasks to shared service centres.

* New vision and values. Henkel had a vision statement and a set of company values. But they were neither well-known nor...
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