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    Henkel: Building A Winning Culture: Group 09

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    sheersha kk
    Henkel needed to change its culture from being a "happy underperformer" to a competitive global leader. It implemented a new performance management system with an incentive plan to link bonuses to individual, team, and company performance. Stretch goals and a forced distribution method were used to increase pressure and competition. The transition involved changing the corporate tagline, setting ambitious 4-year financial targets, and initiatives to shift the mindset from complacent to a winning culture focused on excellence and outstanding performance.

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    Henkel: Building A Winning Culture: Group 09

    Uploaded by

    sheersha kk
    316 views11 pages
    Henkel needed to change its culture from being a "happy underperformer" to a competitive global leader. It implemented a new performance management system with an incentive plan to link bonuses to individual, team, and company performance. Stretch goals and a forced distribution method were used to increase pressure and competition. The transition involved changing the corporate tagline, setting ambitious 4-year financial targets, and initiatives to shift the mindset from complacent to a winning culture focused on excellence and outstanding performance.

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    Henkel needed to change its culture from being a "happy underperformer" to a competitive global leader. It implemented a new performance management system with an incentive plan to link bonuses to individual, team, and company performance. Stretch goals and a forced distribution method were used to increase pressure and competition. The transition involved changing the corporate tagline, setting ambitious 4-year financial targets, and initiatives to shift the mindset from complacent to a winning culture focused on excellence and outstanding performance.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    316 views11 pages

    Henkel: Building A Winning Culture: Group 09

    Uploaded by

    sheersha kk
    Henkel needed to change its culture from being a "happy underperformer" to a competitive global leader. It implemented a new performance management system with an incentive plan to link bonuses to individual, team, and company performance. Stretch goals and a forced distribution method were used to increase pressure and competition. The transition involved changing the corporate tagline, setting ambitious 4-year financial targets, and initiatives to shift the mindset from complacent to a winning culture focused on excellence and outstanding performance.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 11

    HENKEL: BUILDING A WINNING CULTURE

    Group 09
    About Henkel and the need for change…..
    • German Family
    • Competitors : 3M,P&G,Unilever and L'Oréal
    • Need for change:
    • “ The happy underperformer: always #2 or #3”
    • 58% drop in net profit in 2008

    Three major business units

    Adhesive Technologies (48%) Laundry and Home Care The Cosmetics/Toiletries (22%)
    (30%)
    Sealants and surface treatments Personal care products such as
    to industrial customers in Detergents and related home shampoos, hair coloring, skin
    various industries care products creams, deodorants, and toothpastes

    Brands: Loctite and Pritt glue Brands: Dial soap, and Persil Brand :Schwarzkopf hair care
    sticks laundry detergent products
    First one invented glue sticks
    As the leader of this business
    2
    Problem Analysis
    • Henkel lacked competitive spirit with a slow growth rate of 8%
    • Faced immense competition in laundry and personal care market
    • Global financial crisis and economic slowdown impacted business
    • Shifted focus to basic products, cutting down costs, increasing prices
    • Necessity to transform complacent nature of employees
    • The overall performance of company declined though the individual performance
    remained high
    • Hence necessity of overhauling performance management system
    • Focus towards entrepreneurship and accountability required

    3
    Conceptualization of Change process

    Before change Towards change….

    • Corporate Tagline: “A Brand Like a Friend”


    • Transformed Tagline:” Excellence is our
    • Henkel regarded as underperformer with low passion”
    competitive spirit
    • 4 years financial goals Established
    • Relatively low market shares and falling
    growth of business units • Transform organization into learner and
    performance driven
    • Strong family-owned foundation is relatively
    vulnerable

    4
    Vision for Change
    Vision A global leader in brands and technologies

    Change objectives Financial objectives(4 years):


    1. 14% EBIT margin
    2. 3% to 5% sales growth
    3. EPS- Growth (CGAR) of more than 10%
    Business objectives: stability of leadership and outstanding performance of
    employees
    Roadmap ● Establish a winning culture for changing the mindset of organization
    ● Conduct initiatives of redefining the value, to change the mindset of
    organization by communication system.
    ● Set out a new performance management system to improve managers
    capability.
    ● Launch a bonus compensation system to encourage employees
    performance.

    5
    Henkel - Transition state of change

    6
    Cheerleading-Incentive plan

    ● Evaluated two criteria : Performance and potential

    ● Bonus linked to team, group and individual performance

    ● Group Performance
    ○ Measured on basis of predefined KPIs
    ○ Rated on scale of 200

    ● Team Performance
    ○ Based on KPIs designed with respect to business unit or local targets
    ○ Weightage- 30% on company scores + 70% on performance scores
    ○ Rated on scale of 200

    ● Individual Performance
    ○ Based on KPIs(50%) + Rating based on DRT Process(50%)

    ● Individual bonus payout =Performance( [group + team]) * Performance(individual)

    ● Additional payout = Payout delivered is doubled if Financial goals are achieved

    7
    Stretch Goals
    • Required to transform the complacent culture towards a winning culture
    • Objective probability of attainment unknown but is seemingly impossible given current capabilities
    • Means of creating performance pressure to employees
    • Necessary to achieve full business potential and focus on customers and strengthen the team
    • Allows employees to understand negative consequences to company prestige
    • Recognize the employee efforts and implement strategies to achieve better goals
    • Bonuses linked to overall company performance pushed the employees to strive to improve performance

    How does it Benefit?


    • Makes the goals challenging and nurture entrepreneurship
    • Employees would be able to see the possibility of achieving
    • Applicable at all levels : More efficiency achieved with top performers

    8
    Forced Distribution method
    • Assigns employees to certain category based on their performance
    • Managers rank employees into 4 categories:
    • Top 10%
    • Strong 60%
    • Moderate 10%
    • Below par 5%

    Merits Demerits
    • Increases productivity • Quotas can pull down par performers
    • Increases competition and performance • Limits creativity and risk taking
    • Easy to target people for L&D and appraisals • Impact on corporate culture
    • Acts a rationale for benefits and layoffs • Demoralize employees
    • Unhealthy competition

    9
    Ways to improve the Change process
    • Incentive system to everyone : Raising the bonus for topper levels to encourage employees to
    raise their performance

    • Identify and manage best practices and communicate to everyone with manuals

    • Monitor change process in between to check the path travelling

    • Create L&D programs for Poor performers

    10
    Thankyou

    11

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