Henkel

Bob Simmons Strategic Transformation Case digest Henkel was a German manufacturer of laundry products. Went public in 1985. In 2008 it was 14 Billion pounds in 125 countries. Majority in EMEA. approximately of exe team up were German. Organized into three major job units Adhesive Technologies 48%(glue stick), Laundry and Home C atomic number 18 30%, Cosmetics/Toiletries 22%. Industry drawing card in gummys. Rorsted took over as CEO in 2008. Henkel was account gentle growth and profits with 8% growth.Second half of 2008 global financial crisis and economical slowdown had negative effect on Henkels key markets. wither demand and rising costs ca utilized business untis to fall in bite half of 2008. Rosted vowed to transform Henkel into a leaner, more than than capital punishment driven familiarity. staying where we are is no longer an option. We either shanghai up or move down we either become relevant or we will be made irrelevant. This exercise illustrates the trans formation of a CEO-led organization driven dilute endings, execution of instrument measurement and accountability.Kasper Rorsted become CEO of Henkel, the German personal care, laundry, and adhesive products manufacturer, in 2008, he was determined to transform the good enough unified culture cogitate on to win in the fierce rival in the market. In history, Henkel is a comfortable, inactive giveplace. Many employees have neer received a negative performance feedback. To overthrow a mainly compla centime attitude, Rorsted implementation of a multi-step change go-aheads, aimed at establishing a sweet culture. First, in November 2008, in 2012 he inform a series of pushy financial goals. With the financial crisis to disrupt the global economy, he reiterated his commitment to these goals, send a actualise signal, Henkel employees and external s retreatholders an excuse is no longer acceptable. Rorsted duties gear up a bracing set of v values replace the previous(preno minal) 10 values, these employees can recite the first memory an emphasis on the customer. He also set up a new, streamlined performance management system for evaluating management performance and progress of a four-point plateful of potential.The system also includes a forced ranking requirements, requiring a specify percentage of the various business units and party-wide staff was named the turn over, strong, medium, or low performance. These ratings importantly impact managements bonus compensation. In this case, where it is necessary at the end of 2011, when Henkel is a good way to achieve its 2012 target. Shed nearly half of the senior management team, as the site of many products and brands, Henkel fulfilms to be a leaner, more competitive, win the organization. Hide This case illustrates a CEO-led organisational transformation driven by stretch goals, performance measurement, and accountability. When Kasper Rorsted became CEO of Henkel, a Germany-based producer of perso nal care, laundry, and adhesives products, in 2008, he was determined to transform a corporate culture of good enough into one singularly focused on winning in a competitive marketplace. Historically, Henkel was a comfortable, stable place to work. Many employees never received negative performance feedback.Seeking to lower a pervasive attitude of self-complacency, Rorsted implemented a multi-step change initiative aimed at building a winning culture. First, in November 2008, he announced a set of ambitious financial targets for 2012. As financial turmoil roiled the global economy, he reaffirmed his commitment to these targets, sending a clear signal to Henkel employees and external stakeholders that excuses were no longer acceptable. Rorsted next introduced a new set of five company values-replacing the previous list of 10 values, which a few(prenominal) employees could recite by memory-the first of which emphasized a focus on customers.He also instituted a new, simplified per formance management system, which rated managers performance and packaging potential on a four-point scale. The system also included a forced ranking requirement, mandating that a defined percentage of employees (in each business unit and company-wide) be ranked as top, strong, moderate, or low performers. These ratings importantly impacted managers bonus compensation. In late 2011-the time in which the case takes place-Henkel is well on its way to achieving its 2012 targets.Having shed nearly half its top management team, along with numerous product sites and brands, Henkel appears to be a leaner, more competitive, winning organization. High quality global journalism requires investment. Please dole out this article with others using the link below, do not cut & spread head the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales. emailprotected com to debase additional rights. http//www. ft. com/cms/s/0/6a85b182-1128-11e2-a637-00144feabdc0. htmlixzz2ODYNf 8Gg The story.In 2008, Henkel, the German group with long-familiar 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. * * * * More On this story * Case speculate How a publisher exploited a bestseller * Case Study How an outsider institutes change * Case Study If P&Cs advanced staff performance Case Study Microsoft Lyncs bottom-up restructure * Case Study How to build a low-cost brand The challenge. Henkel faced several serious issues. For instance, while reporting solid sales, it was less profitable than its industry peers by a brim 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 scheme. 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 administer 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 advanced(a) for proposed efficiency measures. These included cutting the number of brands in order to spew more marketing resources behind its strongest labels consolidating manufacturing sites and shifting tasks to shared service centres. ? untried vision and values.Henkel had a vision statement and a set of company values. But they were neither well-known nor relevant to either day-to-day decision-making or evaluation of employee performance. In 2010, Henkel replaced the original list of 10 values with five new ones such as We put our customers at the centre of what we do. To crystallise sure these were communicated to the 48,000 employees, more than 5,000 workshops were held in which managers and teams discussed how the new values could apply to their work and how they could build a more positive company culture. Performance management. Henkel introduced a process to evaluate consistently the performance and potential of all management-level employees. They would be ranked on relative performance, which significantly affected managers bonuses. Each exclusive is reviewed in development roundtab les, interactive meetings where managers review and evaluate their direct reports across teams to create a broader perspective on their movements, development needs and promotability. What happened.For pecuniary 2012, Henkels global sales are forecast to exceed 16bn ($20bn), a rise of more than 2bn since 2008, and reach its profit margin target of 14 per cent. Emerging markets now represent 43 per cent of global sales, and more than 50 per cent of employees work in those territories. The number of brands is less than cd and manufacturing sites have been consolidated by around 25 per cent. Key lessons. To boost performance across a company, communicate a clear strategy that is backed up by setting ambitious targets.Simplify your vision and values, and take time to communicate them to all employees to ensure they provide practical guidance, specially when tough decisions may be needed. To focus everyone on successful execution, use performance management systems that link the ev aluation and compensation of key employees to achievement of the new strategy Write down in a metre or two your definition of a winning culture. What are the things that you kindred about Rorsteds approach? What are the risks? Assuming that the 2012 EBIT margin goal is achieved, how should Rorsted