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. 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 $2012.$ Rorsted next introduced a new set of five company values$-$replacing the previous list of $10$ values. 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. 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.

Session Preparation

$1.$ Write down in a sentence or two your definition of a winning culture. Be prepared to share your definition with the class.

$2.$ What changes has Rorsted made to Henkel$$s strategy? Does this provide Henkel with a competitive advantage?

$3.$ What do you like about Rorsted$$s approach to strategy execution?

$4.$ What are the risks?

$5.$ Assuming that the $2012$ EBIT margin goal is achieved, how should Rorsted motivate high performance for the next five years?