Henkel: Building a Winning Culture

Posted: 9 May 2012

See all articles by Robert Simons

Robert Simons

Harvard University - Business School (HBS)

Natalie Kindred

Harvard Business School

Date Written: April 24, 2012

Abstract

This case illustrates a CEO-led organizational transformation driven by stretch goals, performance measurement, and accountability. When Kasper Rorsted became CEO of Henkel, a Germany-based producer of personal 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 overturn a pervasive attitude of 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 few employees could recite by memory-the first of which emphasized a focus on customers. He also instituted a new, simplified performance management system, which rated managers' performance and advancement 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 significantly 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.

Suggested Citation

Simons, Robert and Kindred, Natalie, Henkel: Building a Winning Culture (April 24, 2012). Harvard Business School Accounting & Management Unit Case No. 112-060. Available at SSRN: https://ssrn.com/abstract=2054738

Robert Simons (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Natalie Kindred

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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