Perspectives from ISB

Henkel, founded in 1876, is publicly listed and family-controlled. The German multinational makes industrial and household products including detergent and glue. In the fiscal year 2015, Henkel reported sales of 18.1 billion euros and an operating profit of 2.9 billion euros. More than 80 percent of its 50,000 employees now work outside of Germany.

Its share price has more than tripled in the past eight years, and net earnings have risen nearly 60%. This phenomenal rise has largely been attributed to its past CEO, Kasper Rorsted. He brought in American-style intensity and profit focus that jolted the once-sleepy Henkel into action. He cut costs by moving jobs out of Germany, offering buyouts to workers, closing plants and reducing the company’s brands from 1,000 to 200. He also changed the company’s official language to English, stopped attending the annual workers’ council meeting and eliminated the company Christmas party.

However this Americanization of the company culture has left many employees disgruntled and demoralized. Now the successor of Rorsted, Hans Van Bylen, who became CEO of Henkel in May, faces the challenge of maintaining profitability at the German company while managing employee pushback against the Americanization of the company culture instituted by his predecessor.

Source: Wall Street Journal, July 28, 2016


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