Question:
1. Is Henkel’s approach to strategy execution shaped sufficiently by its mission and values? How does the company’s approach to staffing the organization and building organizational capabilities support its strategy? How do you rate CEO Rorsted’s initiatives to transfort Henkel’s unhealthy culture into a high performance culture?
2. What are the key features of Henkel’s organizational culture? Does this company’s culture support good strategy execution? Explain.
3. What business strategy recommendations would you make to Kaspar Rorsted, Henkel’s CEO? Should the company redouble its efforts to broaden its leadership and cultural diversity? Should the company consider new strategic partnerships or new acquisitions? What other potential strategic options does he need to consider?
1. Henkel’s strategy did not fit the values and mission. This was mainly due to two reasons. Firstly, the adhesive industrial business of Henkel did not resonate with the focus of the customers. Secondly, the tagline of Henkel did not portray a competitive culture that CEO Rorsted thought would help (Akremi, Roussel and TreÌÂpo, 2001).
The CEO Rorsted has realized that organization staffing would help the company to achieve their strategy. To focus on the strategies, the company should have clarity of the values. This would help in handling the strong choices that are needed to change into a challenging competitor (Chunawalla, 2009). The goals of the company are many, but very few of the employees feel the need to achieve it. Foundation for tough decision is to be made using core values.
During the years 2004-2008, employees earning was high where as the company suffered loss. The CEO suggested that the company was underperforming and striving for the second position that would no longer do any good. This is a right step on the part of the CEO.
2. With the inclusion of the new management system, Henkel organisation holds bonuses linked to the team performance, financial performance and individual performance. This is a key feature of the company. For group performance, the company sees the two or three key performance indicators. These indicators were ranked in the scale 0% to 200%. The KPI score was averaged to get an overall score. Team performance also followed the same formula where the things too achieve was possible through local or specific targets. The performance of individual was weighted 50% on each of the inputs i.e. the equally weighted two KPIs performance and DRT performance rating. Target bonus was available to each manager according to their job level. To calculate the bonus payout, the individual score was multiplied with the total score (Lawley, 2007).
The strategy will be implemented properly only if the culture of the company is supportive. The strategy that the company focuses on is to outperform. The company wants to manage their portfolio actively. The company focus on the high potential region so that it can make certain changes so that the strategies are fully executed.
3. For a company like Henkel that deals in a variety of products must try to divide its investment strategies. The company should focus on diversification and localization of products in the Southern European market. To gain market share, the company must focus in branding of products that are suited typically for Spain and Italy. This will help the company to increase its revenue by 50% and 20% approximately in Spain and Italy respectively.
With the changes being incorporated in the organisation, the company has successfully created a winning cultural diversity. Simone has visited many places and interacted with the leaders of the company and from them he got a positive feedback on the visions and ideals.
The company should take up the strategy of acquisition as it will help in optimizing the portfolio of the company (Rickertsen and Gunther, 2001).
References:
Akremi, A., Roussel, P. and TreÌÂpo, G. (2001). CEO compensation strategies. Jouy-en-Josas: Groupe HEC.
Chunawalla, S. (2009). Product management. Mumbai: Himalaya Pub. House.
Lawley, B. (2007). Expert product management. Cupertino, CA: HappyAbout.info.
Rickertsen, R. and Gunther, R. (2001). Buyout. New York: AMACOM.
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