Henkel: Building a Winning Culture

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Henkel:  

Building a Winning Culture

Case Study Analysis

Team 2

19/12/2016

1. What challenges did Rorsted face when he became CEO of Henkel in 2008? How did he address these challenges?

Challenges

1. Although Henkel was the industry leader in the adhesives business, it was relatively small player in the laundry and personal care markets.
2. Henkel enjoyed comfortable growth and profits which are €14 billion in sales, an increase of 8% over the previous year, and an EBIT margin of 10.3%. However, more seriously, the existing atmosphere in company was complacent. Employees and even many managers continued their work thinking they are doing a great job. It is not surprising that one company’s official notoriously called Henkel, “the happy underperformer”: always #2 or #3, because truly, it lacked competitive spirit.
3. The global financial crisis and subsequent economic slowdown came when Rorsted becoming CEO at that time. What also coincided was the rise in raw material prices.

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Solutions

Hard features:

They tackled the “hard” things before attempting the “soft” ones, for example, undertook the plant closings, divestitures and administrative consolidation. This, understandably, properly restructured their layout.

Soft features:

Faced with the deteriorating environment, Rorsted vowed to transform Henkle into a leaner, more performance-driven company.

He announced a set of ambitious four-year financial goals for sales growth, EBIT margin and EPS. On the other hand, what is crucial is that Rorsted knew that only by set financial goals could not thoroughly solve these problems. As a result, he was about to transfer the complacent spirit within Henkel into what he called a “winning culture”.

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2.What is a ‘Winning culture’? How did Henkel try to build such a culture?

A winning culture is one where there is singularity in objectives and goals, diversity in ideas and thought processes, and the feeling of being a part of something bigger and a very high sense of achievement which is measurable and shared across the whole company.

A sustainable winning culture is the one which establishes a clear mission statement in a company with a clear Vision. This culture incorporates shared values to achieve the mission and imbibes these values in their existing culture. It clearly reflects the overall communication strategy of how the company intends to be successful. It encourages to eliminate the complacency in the system and encourages leadership at every level across the company and entrepreneurial spirit among its employees. It is based on shared value and focused on customer needs and results.