Company culture is a funny thing.
It can be hard to establish, hard to maintain and sometimes even hard to define.
But not for John Kahl.
The CEO of Henkel Consumer Adhesives Inc., a division of Dsseldorf, Germany-based Henkel Group, knows his company culture, understands how it ties into the success of the organization and spends a lot of time nurturing it. In fact, the culture has grown beyond the walls of the company and starts a mile from its Avon headquarters.
At a nondescript four-way stop where Chester and Nagel roads intersect, the eastern part of Chester Road becomes Just Imagine Drive. Down that road, you’ll find a few small businesses, some old houses and, eventually, Henkel’s facility. It’s the only road that leads to the company, and Kahl wanted employees to start thinking differently before they even got to work.
“32150 Just Imagine Drive sounds a whole lot different than 32150 Chester Road,” says Kahl. “Our culture starts with turning down the road and changing the outlook of the person coming down the road and wondering what they are going to find here.”
What they’ll find is a company filled with employees who have as much knowledge about Henkel’s day-to-day business as some chief operating officers. They’ll find a Henkel cheer to close the regular Thursday meeting and employees who are called partners.
It’s all about putting them in a mindset to be empowered to make a difference at the company, which makes tape, adhesives and home products. Kahl wants his employees to be the growth engine that drives the company forward.
“Our culture is the underlying fabric of the whole business,” says Kahl. “It’s what we think defines the organization and makes us different than the rest of the world.”
The culture is so different that Kahl says some people think it’s more like a cult — a label he is quick to avoid.
“A cult is a strong word and not something I would want associated with our business,” says Kahl. “It tends to have a negative connotation. But the fact that people realize that we are a very close-knit group and as much a family as a business, I think that is a positive.”
There’s a large rock near the entrance to Henkel’s facility that displays the statement, “People make the difference.” That statement is core to everything the company does. By creating a culture where employees are happy, informed and empowered, Henkel can react faster and be more innovative than the competition.
“If we have the right people, then we can win this game through our cultural norm, not strictly on products and prices and the hard sciences of business,” says Kahl. “We’re talking about the soft side of it. We think it can make a big difference from that perspective.”
Motivating employees
Walk through the halls of Henkel, and you are greeted by smiles and hellos with enough enthusiasm that you’ll feel like a close friend who’s been away too long.
“I’ve had customers and visitors say that there is something about this place that you feel when you walk in the door,” says Kahl. “One lady left the company for various reasons but came back within a year. She said nobody smiled or said good morning at her new company. Here, first thing in the door, people are smiling at you and saying good morning. You are part of the team. It’s really a family.”
Kahl spent extra money to create a nicely landscaped area for the employees to enjoy, including a patio in the back of the building that is mostly surrounded by woods. Deer and wild turkeys are regular visitors to the grounds.
In a pleasant environment, people tend to be happier and work becomes less stressful, Kahl says.
“It creates an environment of, ‘I want to get up and come to work. I’m doing something here that’s meaningful, I like who I work with and I’m not dragging ass to get over here,’” he says. “For some people (at other companies), they don’t enjoy their jobs. They put in their 8 to 5 or 9 to 5 and they’re out.
“We have people who are substantially more dedicated to us — our business — because they like what they are doing and who they are doing it with. They feel that there is a purpose way beyond making money.”
Kahl generates that purpose in his employees by sharing detailed information about the company.
The traditional business culture is one of secrecy, in which employees know little, if anything, about the business. If information is shared, it’s very broad-based numbers with little context and even less understanding as to how each employee affects that number.
Kahl wants to make sure everyone knows as much as they need and want to know.
“I would say we probably overdo it on some communication, but I would rather do that than not have enough of it,” says Kahl, who took over as CEO from his father, Jack, in 2000. “This goes way back to early in the founding of the business in the ’70s, when most business owners were telling my father and the management team that it’s their company and play it close to the vest. Don’t tell the employees what’s going on with the profits because if you are making more money, people will want more money.”
Both Kahls subscribe to a philosophy that came from Sam Walton: Tell people what you want to do and why, and you’ll get so much more out of the world than if you were keeping it all to yourself.
A regular Thursday morning meeting was instituted to make sure people know what is going on. It’s an hour-and-a-half of talking about what the company is doing, what’s happening with customers, the progress of new product development, delivery issues and community events.
“If you’re a salesman and you are traveling here and there and say you are responsible for Ace Hardware, when you come to the Thursday morning meeting, you get exposed to what’s going on in marketing,” says Kahl. “You get exposed not only to the products for Ace Hardware but also exposed to what’s happening in our stationery business or our housewares business.
“You are going to hear about what’s going on in the world of freight and how freight costs went ballistic with the cost of gas. You are going to hear how this time of year shipping containers are sparse because there are more goods coming in from China than there are containers to bring them in.
“These are all things you learn as an individual in this company that most likely you wouldn’t be exposed to in another organization because there isn’t a forum to do so.”
Anybody can attend the meetings, which run from 7:30 to 9 a.m.
“When I look out, I’ll see maybe 90 people,” says Kahl. “I see members of customer service. I see some brand new faces and finance and salespeople and some who have just started who have taken it upon themselves to come and learn because they realize to move faster, knowing more about the business will help them achieve more and make the best decisions.”
Kahl acknowledges there are risks with sharing such detailed information with everyone.
“We’re sharing strategy and handing out issues both pro and con about customers and products,” he says. “If we have a problem, we’re letting everyone know. A traditional company would say, ‘Don’t you dare let them know we’re struggling in this area with this customer or that supplier because people will get frightened.’ So we talk a lot about that inside the company. You have the luxury of knowing what’s going on in the business, but you also have to deal with the difficulties.”
Communication is emphasized at every level and in as many ways as practical. An e-mail newsletter keeps everyone informed about new developments and accomplishments, and a printed newsletter has a different theme with each issue. For example, the December issue focused on philanthropy and corporate giving and how Henkel benefits from its charitable programs.
Kahl also has a Monday morning meeting with his operating team to talk about data from the previous week.
“We get the team together and discuss what is going well and not so well,” says Kahl. “Who is going to do what and when? We chose Monday because it gives us the whole week to get things done rather than on Thursday or Friday, where if you don’t get through it, it spills into the weekend and loses its intensity.
“We come back on Thursday (with the employees) with a little broader picture where we are more communicating direction and not so much nuts and bolts.”
Besides the written and verbal communications, there is also a year-end event called Duck Challenge Day.
“We get a lot of notoriety from this because there’s always some crazy challenge associated with it,” says Kahl.
How crazy? If the company hits its goals for the year, you might find Kahl wearing a dress made from the company’s Duck Tape brand of duct tape, or you might find him face-first in a tub of 125 gallons of hair gel. The stunts are all part of breaking down barriers between management and employees.
“It humanizes us as individuals and shows that we like to have fun like everyone else and can make a little fun of ourselves as well,” says Kahl.
“The idea of the event is to recognize and reward people for the previous year’s achievements and lay out next year’s goals. We can do that in a staged business way where we put on our suits and communicate what we did and here are the goals, or we can do it in a fun way, in a unique and memorable fashion, and make it an entertainment event.
“It helps people remember it to a certain degree, builds tremendous team spirit and, most importantly, it humanizes myself and every member of the management team to the point where there are no barriers between myself and the guy who runs a piece of machinery on the factory floor.”
Empowered employees
All the fun and focus on team spirit has a purpose. With a work force that relates to management and fully understands the business, Henkel can react quicker and make decisions that are based on the organization’s broader goals.
“It helps us because these individuals are now educated to make better decisions,” says Kahl. “They understand the decisions are within a framework and they won’t make a decision over here and not know that it will have an impact over there in some way. Or when they make a decision, they know there needs to be a communication to other teammates.
“I think it creates a more well-rounded, almost general-manager type of individual rather than having individuals as a silo in a department.”
Besides being given access to the business information in general, new employees are taught how that information applies to each area of the company so they better understand the context.
“When you come in here as a new hire, in the first 90 days, there is a passport program you have to go through,” says Kahl. “You basically have to meet people in every department of the company — finance, IT, sales, marketing, operations and legal. It helps you get an understanding of the business. You have 90 days to go around and meet with them and understand how they do their job and how it connects.”
The company is in the process of instituting a similar program for managers.
“People get the information and understand it and have done an unbelievable job in their environment driving their customer or product category and know the impact they have on other people, but they have not had the formal training necessary for managing other people,” says Kahl.
Henkel is using the same passport concept to create checkpoints that deal with management issues such as performance reviews, constructive criticism, interviewing and hiring. It will use both internal resources, such as mentorship programs, and external programs, such as Dale Carnegie leadership training.
“People make the difference, and this is one way through our company that we can help them do better,” says Kahl. “As companies get larger, I think one of the things you see happening is things get formalized. When we started, everybody knew everybody else and knew what everybody was doing.
“Now there’s 650 of us, and as you develop that group of people, you have to have a lot more structure, processes and procedures in order to make sure you are doing the right things around training and making sure we are helping people make the best decisions by giving them the information needed.”
The goal of all this empowerment is for the employees to make a difference by allowing the company to react faster than the competition and do it in a manner that is consistent with the organization’s goals.
“We are not in an environment where everyone is asking permission or waiting for authorization,” says Kahl. “People realize that they know what we are trying to do … and have a broad perspective of the business. They can make a decision. They can accept the risk factor and don’t have to constantly wait on two, three or four people at the top of the company to pull the trigger.
“So we created a tremendous amount of empowerment, and I know that word gets overused quite a bit, but if you went out and talked to the troops out here, they will tell you they feel authorized and empowered to run their business. They are the CEOs of their department or product category or of their customers and they can make decisions.”
Empowered employees can make the organization nimble, but you still have to guard against mistakes of inexperience or someone failing to act.
“There is a giant sense of accountability that comes with being empowered,” says Kahl. “If you are going to be accountable and rewarded for making more good decisions than poor decisions, then you want to know what’s going on, and that’s why we tell people as much as we do.
“It’s trust, but verify. We have a tremendous information technology system that can measure just about anything and everything that we want, so the reporting I get every Monday morning gives me a view of the business and quickly brings problems to the forefront. If someone has made a poor decision or no decision, you can generally see that. It’s not Big Brother looking over your shoulder per se, but we put in good controls.”
The technology allows Kahl to push the decision-making down closer to the customer without losing control of the organization.
“We put in the necessary system for measurement, put in the necessary communication tools and we started to let go of the reigns,” says Kahl. “That’s kind of how it works with new hires now. The experienced folks are riding on their own, doing their thing. The new folks have to go through a learning curve, and they may come up the learning curve over a year or so before we turn them loose.
“Even if it’s a fairly senior person we bring in, we want to make sure they are not overwhelmed. They have got all this quality and quantity and plethora of information providing them help to do their job better. We want to make sure they grasp and understand it before we turn them loose.
“That goes along at a pace that a lot of companies struggle with, and I think one of the things we’re renowned for is our pace. People say, ‘We call you because we know we’ll get a response before sundown, while some other guys take a week or 10 days to get it done.’”
Innovative thinking
An important part of Henkel’s growth is based on creating innovative products, or adding innovative twists to existing ones.
But encouraging employee innovation in a company means accepting risks and accepting failure.
“Failure isn’t a bad thing,” says Kahl. “Failure is a learning opportunity. I’m not interested in making the same mistake over and over again, but we don’t fire the first guy that makes a mistake. That’s not the way we operate.
“Otherwise, people would be afraid to act on ideas, and we’d be right back to having three or four guys make all the decisions, which makes us slow, lethargic and bureaucratic. We don’t want that. I’d rather have some mistakes of aggression than sin by being slow. The world won’t permit it. It’s moving too fast.”
With the culture Kahl has created, employees are reacting quickly to opportunities and making decisions based on the goals of the organization. Everything the company does ultimately hinges on its culture.
“The culture is the underriding bedrock of what we built the rest on,” says Kahl. “Any talk about growth or innovation builds off that bedrock. Our culture throughout doesn’t change.”
Henkel Consumer Adhesives last reported sales of $286 million in 2002. Kahl says the company no longer reveals sales numbers separately from Henkel Group, but says his goal is to generate $1 billion in sales for the parent unit and that he is currently more than halfway there. If he’s to get there, he knows it will be the people that will make the difference.
“I tell our people our strategy is going to change, our tactics are going to change, our products are going to change and even some of our people are going to change over time. It’s inevitable,” says Kahl. “What isn’t changing and hasn’t changed since we’ve formed the company are these core values and this cultural bedrock about how we want to go about doing business.”
How to reach: www.henkelca.com
