Managing Corporate
Culture at Henkel
Applying the Denison Organizational
Culture Survey
Daniel Denison and Rolf Schlue
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Table of Contents
To the Reader 4
Preface 6
Managing Corporate Culture at Henkel
1. Overview:
The Purpose of this Case Study 10
2. About Henkel: The Business,
the Organization, and its Culture 11
3. Organizational Culture and
Performance: The Denison Model 16
4. Henkel's Decision to Apply the
Denison Model 23
5. Sur
v
e
y Im
plement
ation:
Results from 2003 and 2004 26
6. Lessons Learned 32
7. The 2006 Survey 33
8. Discussion
3
4
References 36
The authors 37
Publications 38
To the Reader
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To the Reader
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To the Reader
Lived corporate culture and exemplary leader-
ship as success factors were at the centre of the
Carl-Bertelsmann-Prize 2003. The "International
Network Corporate Culture", a group of at pre-
sent eleven multinational Europe-based compa-
nies, was founded as a follow-up to the Carl-
Bertelsmann-Prize 2003. Its objective is not only
the exchange among the participating compa-
nies but also the development, publication and
dissemination of good practices in corporate cul-
ture.
Against the background of globalisation, inter-
nationalisation and increased competition, the
question of whether corporate culture and eco-
nomic success of a business are related gains
even higher importance than before. Even com-
panies that belong to the most successful world-
wide in t
heir respectiv
e indus
tr
ies and leav
e no
doubt that they consider their specific culture
relevant for their success are moved by the
question of how this corporate culture can be
correlated with performance parameters.
The network's first working phase was dedicat-
ed t
o this cont
e
xt. Wit
hin the fr
ame
work of the
network activities, a broad study was commis-
sioned to investigate existing international mo-
dels that assess this link with a view to their
practicability, relevance and set of criteria. The
s
tudy
Assessment, Ev
aluation, Im
pr
o
vement:
Success through Corporate Culture
, produced by
Professor Dr. Sonja A. Sackmann, Bundeswehr
University Munich, and published by the
Bertelsmann Stiftung in 2006, assembled
best practice models.
One of the most important results of the study
was the insight that a direct connection between
corporate culture and success can be established
with the surveyed models. However, corporate
leaders need a clear understanding of their ob-
jectives in applying a specific assessment tool.
A measurement is only the description of a spe-
cific state. It may show strengths and weaknes-
ses and thus the need for improvement. From
the entrepreneurial perspective, an analysis
must aim at determining potential for improve-
ment and help develop mechanisms to make
sustained use of such potential.
One of the assessment methods identified as
particularly apt for this purpose is the Denison
Organizational Culture Survey. Henkel, a For-
tune Global 500 company and one of Germany's
top-performing companies, applied the system
developed by Daniel Denison, Professor of Mana-
g
ement & Organization at the IMD Int
er
national
Institute for Management Development.
Within the framework of the International Net-
work Corporate Culture Professor Denison and
Henk
el ag
r
eed to develop a case study on the
basis of their cooperation. We are particularly
Liz Mohn
Ulrich Lehner
pleased as this study is the first in a series of
case studies on approaches successfully and
satisfactorily developed and/or applied in com-
panies.
We would like to thank both Professor Denison
and the IMD most cordially for helping make
this case study possible. Particular thanks
should also go to our colleagues at Henkel, Rolf
Schlue and his team.
Prof. Dr. Ulrich Lehner
Chairman of the
Management Board of
Henk
el, Dusseldorf
Liz Mohn
Vice-President of the
Executive Board and
Member of t
he Board of
Trustees of the
Bertelsmann Stiftung,
Gütersloh
to return on shareholders' equity, customer
satisfaction, sales increase.
The DOCS offers a number of starting points for
required changes. Change can be based on the
assessment within a particular unit or firm and
the resulting high and low scores, on the one
hand, and/or on the comparison of the unit's or
firm's score with that of an existing benchmark
database, on the other.
In research, the DOCS has been applied both in
the US and in other national contexts such as
Russia, Europe, the Middle-East, Africa and Asia
(Hongkong). Denison and his US-based consult-
ing firm have also widely applied the instru-
ment in companies such as Daimler Chrysler,
Norsk Hydro, Clariant, Danfoss, Swiss Re, IKEA,
R
oche, Shell, UBS or Cr
edit Suisse.
Henkel, a multinational Fortune Global 500 com-
pany with its headquarters in Germany, also ap-
plied the DOCS. The initial reason for doing so
was dissatisfaction with the traditional employee
satisfaction surveys which, Henkel felt, had be-
come less ef
f
icient o
v
er time and wer
e no longer
up to the company's requirements. The DOCS
seemed to be the most adequate tool given its
focus on establishing a link between corporate
culture and corporate performance.
In the 2003 Carl Bertelsmann Prize on lived cor-
porat
e cultur
e and e
x
emplary leader
ship, Henk
el
r
ank
ed among the top 10 European companies.
The company is also a member of the Interna-
tional Network Corporate Culture initiated by the
Ber
t
elsmann Stiftung. One of the key interests of
the International Network Corporate Culture is
the link between corporate culture and economic
success. An immediate output of the project was
a survey over 25 internationally relevant models
to assess this link as well as a smaller volume
depicting six recommendable instruments in
more detail. In order to show how companies
make such models operational, the obvious thing
to do was develop a case study on the appli-
cation of the DOCS at Henkel's.
As the following case study shows, Henkel con-
siders its decision to apply the DOCS a major
success in itself. Expectations and objectives
were fully met, not only did the work yield a
clearer picture of the Henkel culture as it was
perceived and lived in the company over the five
years under investigation, but it also provided
highl
y rele
v
ant insight int
o req
uir
ed changes
and amendments. Major survey results showed,
for example, the need to improve communi-
cation about existing strategies throughout the
whole company and a great demand to foster
cross-divisional cooperation. Such issues were
immediately tackled with obvious success.
Main challenges upon applying the DOCS at
Henkel's turned out to be the operationalisation
of the tool (intervals of the survey, anonymity
etc.) and communication about the survey and
its r
esults. In addition, Henk
el at a lat
er stage
will check to what extent involvement of more, if
not all, em
plo
y
ees r
ather than f
ocusing on
manag
ement le
vels only will be possible.
Two conclusions from the final chapter are
w
or
th being quoted as they best show what lies
Preface Preface
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Corporate culture counts. Simple and self-evi-
dent as this sounds, it is difficult to prove. It is
even more difficult to prove if objective evidence
is demanded to show in "hard factors", such as
return on investment.
Research over the past 20 years has, time and
again, focused on the link between corporate
culture and the bottom-line performance of a
company. Yet research was based on different
concepts of corporate culture; reduced corporate
cultures to different dimensions and compo-
nents; used different approaches to defining per-
formance; and took place in companies differing
in size and coming from different industries.
This did not really facilitate comparability and
gave enough leeway to doubt the overall validity
of results.
This is probably why companies are still in
search of useful instruments to assess their cor-
porate culture and its relevance for corporate
success. The catch, however, is in the word "use-
ful." Each assessment must be preceded by a
clear determination of its goals. The end ought
t
o justify t
he means, i.e. what kind of cultur
e
assessment is chosen crucially depends on why
a company wants to assess its culture in the
first place. Does it aim at basically gaining clari-
ty about the existing culture in general? Is com-
par
ing oneself wit
h o
t
hers in the same (or an-
other) industry, of the same (or another) size
e
tc. t
he objectiv
e? Is an int
eg
r
ation with ano
t
her
com
pan
y, e.g. in the course of creating a strate-
gic alliance of M&A activities, to be accom-
panied by a clearer understanding of "the other
cultur
e" in or
der to avoid or, at least, better deal
with conflicts? Does the company wish to find
out what is at the heart of performance deficits
or, on the contrary, success factors?
In the latter cases, in particular, a culture as-
sessment would ultimately lead to managerial
intervention. This might be the consolidation of
individual aspects or components of the existing
corporate culture to make better use of the po-
tential. Yet it might as well be the contrary, i.e. a
change of individual aspects of the existing cul-
ture or even an overall rearrangement in order
to unleash still hidden potential.
At any rate, a culture assessment geared at
change and improvement requires an under-
standing of the culture first.
An ins
trument whic
h aims at doing bo
t
h is the
Denison Organizational Culture Survey (DOCS),
developed and applied by Professor Daniel
Denison, currently Professor of Management &
Organisation at the International Institute for
Management Development (IMD) in Lausanne.
The DOCS assesses organizational culture in
t
erms of f
our cultur
e traits and tw
elv
e manag
e-
ment practices, identifies vulnerable areas and
links culture as assessed to performance meas-
ures. It makes culture accessible to managers
and frames it in terms of dimensions that are
r
ele
v
ant for business performance. Every organi-
zation is seen to need capabilities in the areas of
mission, consist
ency
, adap
t
ability, and inv
ol
v
e-
ment. These f
our k
ey concepts are related to dif-
ferent performance measures, such as profitabi-
lity, market share, sales growth, innovation, and
em
plo
yee satisfaction. Moreover, they are linked
Preface
at the heart of using the DOCS at Henkel's: the
effort "has grown into a strategic tracking tool
that closely monitors the human capability of
the organisation." Moreover, "Henkel learned to
use survey results and the survey process to
continuously improve the capability of the orga-
nization." As the Henkel case impressively
shows, assessing and understanding culture and
culture awareness within the organisation is a
key to monitoring and improving performance.
Preface Managing Corporate Culture at Henkel
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Gabriele Schöler
Project Manager Competence Centre Corporate
Culture / Leadership
Bertelsmann Stiftung
Daniel Denison
Professor of Management & Organization
International Institute for Management
Development
Rolf Schlue
Corporate Vice President Human Resources
Henk
el KGaA
A
A
c
c
k
k
n
n
o
o
w
w
l
l
e
e
d
d
g
g
e
e
m
m
e
e
n
n
t
t
s
s
This project would not have taken place without
the concerted efforts of all the partners involved.
We would like to gratefully acknowledge their
contributions: Bertelsmann Stiftung, for their
original vision for this case study; Henkel, for
supporting this project and sharing the insights
and lessons from their point of view; and IMD,
for their steadfast support of this project.
W
e would lik
e at t
his junctur
e to e
xpr
ess our
thanks to Professor Daniel Denison for his
exceptional assistance in the promotion of our
corporate and performance culture at Henkel.
Managing Corporate Culture
at Henkel
Overview | The Purpose of This Case Study About Henkel | The Business, the Organization, and its Culture
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1. Overview:
The Purpose of this Case Study
This case study presents a detailed account of
Henkel's recent efforts at building their corpor-
ate culture and aligning their most valuable
resource — their people — with the principles and
objectives of the corporation. In particular, the
case study describes Henkel's application of the
Denison Organizational Culture Survey as a key
focal point of their efforts to build the culture of
their organization in a way that would increase
their competitiveness as a business enterprise.
Henkel has used employee surveys in the past,
but this effort put a performance-based culture
metric at the center of the company's on-going
efforts to improve their culture, and created a
foundation of accountability that had not existed
in their previous efforts.
Working in close cooperation with IMD, this pro-
cess continued t
hrough 2006, wit
h a clear com
-
mitment to extend their approach in future years.
The learning curve over the first few years is
significant, and these insights are a key part of
our case study. The application of these lessons
to Henkel's future efforts is also an important
part of our discussion. We are grateful for
Henk
el's vision and their cour
ag
e in sharing
their insights, so that they can continue to
improve and that others can learn from their
insights.
This case s
tudy begins wit
h an o
v
erview of
Henkel, both as a business and as a human or-
ganization with a r
ic
h tr
adition and highl
y
dis
tinctiv
e culture. Next, since the approach
that Henkel has chosen for building their own
culture has been closely integrated with the or-
ganizational cultur
e model de
veloped by Denison
and his colleagues, we briefly describe that
model and the research that supports it. Follow-
ing this, we give some of the background on
employee surveys at Henkel, including their
rationale for choosing the Denison approach.
These sections are followed by an overview of
the survey implementation, the results from
2003 and 2004, and an overview of the action
planning, follow-up, and implementation steps
taken after each survey. At the end, we summa-
rize some of the key lessons learned from the
experience at Henkel, and give some hints on
the continuance of the project in 2006.
What makes a company successful? How does a
company convince its employees to adopt a tar-
get-led approach in contributing to its corporate
success? How can attitude, conduct and actions
be molded into a coherent, performance-enhanc-
ing corporate culture that delivers success to
shareholders, stakeholders and customers in
equal measure?
For Henkel, the answers to these questions are
particularly important because corporate culture
plays a major role within this company. As in
the past, it continues to be significantly influ-
enced by the owner families and their descend-
ants, who have constantly exhibited a high level
of commitment to the corporation through an
investment approach aligned to the long term.
The significance of the culture that has deve-
loped over the decades is clearly expressed in
the firmly established corporate principle: "We
preserve the tradition of an open family." This is
one of ten values that Henkel has adopted as the
framework for its corporate culture. The full set
of maxims reads as follows:
2. About Henkel: The Business,
the Organization, and its Culture
- We are customer driven.
- We develop superior brands and technologies.
- We aspire to excellence in quality.
- W
e s
tr
iv
e for innovation.
- We embrace change.
- We are successful because of our people.
- W
e ar
e committ
ed to shar
eholder v
alue.
- We are dedicated to sustainability and corporate social responsibility.
- We communicate openly and actively.
- We preserve the tradition of an open family company.
Figur
e 1. Our values
Henkel is a leader with brands and technologies
that make people's lives easier, better and more
beautiful.
Founded in 1876, "Henkel — A Brand like a
Friend" is today a leader with brands and tech-
nologies that make people's lives easier, better
and more beautiful. Henkel, a Fortune Global
500 company, operates in three strategic busi-
ness areas — Home Care, Personal Care, and
Adhesives, Sealants, and Surface Treatment. In
fiscal year 2005, Henkel generated sales of
Within its three strategic areas, the Henkel
Group holds leading market positions in all four
business sectors, and continues to expand these
on a global scale:
Laundry & Home Care. This business sector
holds leading market positions worldwide, driv-
ing expansion from a strong European and
North American base. 2005 sales in this sector
were
€ 4,088 million.
Cosmetics &Toiletries. This business sector
also holds leading world market positions. The
focus of its development effort is to further tap
€ 11,974 million and profits of € 1,162 million
with more than 52,000 employees worldwide.
People in over 125 countries around the world
trust in brands and technologies from Henkel.
About Henkel | The Business, the Organization, and its Culture About Henkel | The Business, the Organization, and its Culture
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existing growth potential with innovative pro-
ducts. 2005 sales in this sector were
€ 2,629
million.
Consumer & Craftsmen Adhesives. The pro-
ducts in this business sector are world leaders in
their markets. 2005 sales were
€ 1,742 million.
Henkel Technologies. This business sector also
leads the world in its markets, offering products
and services based on extensive know-how of its
customers' processes. 2005 sales in this sector
were
€ 3,266 million.
Figure 3. Business Portfolio
• Sales 11,974 mill. euros • 125 countries • 52,000 employees
Figure 2. Henkel Worldwide
T
T
h
h
e
e
H
H
e
e
n
n
k
k
e
e
l
l
C
C
u
u
l
l
t
t
u
u
r
r
e
e
The innovative talents, flexibility, quality orien-
tation and market focus of the organization and
its employees are major factors driving Henkel's
success. The company's human resources stra-
tegy has created the framework and set of condi-
tions designed to promote the development of
these essential performance drivers and ensure
that this potential is converted into reality.
This human resources strategy fits nicely with
Henkel's traditionally appreciative attitude
toward employees and one of its key corporate
values: "We are successful because of our peo-
ple." Henkel expresses its recognition of its
52,000 employees worldwide as the force driv-
ing corporate performance and the pillars of
Henkel's corporate culture. This awareness can
also be f
ound in the commemor
ativ
e v
olume
written back in 1916 to mark Henkel's 40th
anniversary. There, company founder Fritz
Henkel writes: "A company in itself has no
intrinsic strength from which to develop and
grow. It is in the selection of its employees that
its fate — its success or failure — ultimately lies."
This cor
porat
e pr
inciple is the logical e
xtension
of these historic roots and the approach that has
been consistently adopted by the company - at
first through the actions of the Henkel family
itself and later through the managing partners
of t
he com
pan
y
. In 2006, then Executive Vice
President Human Resources, IT, Infrastructure
and Purc
hasing K
asper R
or
s
t
ed f
or
mulat
ed the
f
ollo
wing remit: "We have to get the best people
for our company. If we are successful in this,
we will also need to invest appropriate funds in
or
der t
o retain them within our organization."
I
I
n
n
m
m
e
e
i
i
n
n
e
e
n
n
M
M
a
a
i
i
l
l
s
s
k
k
o
o
n
n
n
n
t
t
e
e
i
i
c
c
h
h
n
n
o
o
c
c
h
h
k
k
e
e
i
i
n
n
g
g
e
e
s
s
e
e
n
n
d
d
e
e
t
t
e
e
s
s
G
G
r
r
u
u
p
p
p
p
e
e
n
n
b
b
i
i
l
l
d
d
f
f
i
i
n
n
d
d
e
e
n
n
.
.
About Henkel | The Business, the Organization, and its Culture About Henkel | The Business, the Organization, and its Culture
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Over the past decade, Henkel has expanded sig-
nificantly across the globe. Of the 52,565 total
workforce employed by Henkel as at the end of
2005, 64% (33,731) work in Europe/Africa/
Middle East, 14% (7,271) in North America, 8%
(4,208) in Latin America, and 14% (7,355) work
in Asia-Pacific. Today Henkel is one of the most
international German companies with more than
80% of its employees working outside Germany.
Figure 4. Employees 2005
Organizational Culture and Performance | The Denison Model
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Mission. Successful organizations have a clear
sense of pur
pose and direction, whic
h allo
w
s
them to define organizational goals and strate-
gies and to express a compelling vision of the
organization's future. Leaders play a critical role
in defining mission, but a mission can only
succeed if it is w
ell under
s
t
ood top to bottom. A
clear mission provides purpose and meaning by
defining a com
pelling social r
ole and a se
t of
e
xt
ernally defined goals for the organization. A
sense of mission also allows an organization to
shape current behavior by envisioning a desired
futur
e s
tate. Being able to internalize and identi-
fy wit
h an organization's mission contr
ibut
es t
o
both short and long-term commitment to the
organization. Lik
e all of the tr
aits, Mission is
measured by three indexes, each of which has
five survey items:
Strategic Direction and Intent. Clear strategic
int
entions con
v
e
y the organization's purpose
and make it clear how everyone can contribute
and "make t
heir mar
k" on t
he indus
try
.
Goals and Objectiv
es.
A clear se
t of goals and
objectives can be linked to the mission, vision,
and strategy, and provide everyone with a clear
dir
ection in t
heir work.
Orga
nizational
Lea
rning
Str
ate
gic
Dir
ect
ion
& In
ten
t
Goal
s &
Obj
ect
ive
s
Vis
i
o
n
Core
Valu
es
Agree
m
ent
Co
o
rd
inat
i
o
n &
Int
eg
r
at
io
n
Cap
abili
ty
Dev
elopm
ent
Tea
m
Orientation
Empo
wer
ment
Customer
Focus
Creating
Chan
ge
Adaptability
Mi
ss
i
on
Involvemen
t
C
onsi
st
ency
External Focus
Internal Focus
Stable
Flexible
Beliefs and
Assumptions
Adaptability
Pattern...Trends...Market
Translating the demands of
the business environment
into action
“Are we listening
to the marketplace?”
Involvement
Commitment...Ownership...
Responsibility
Building human capability,
ownership, and responsibility
“Are our people aligned
and engaged?“
Mission
Direction...Purpose...Blueprint
Defining a meaningful
long-term direction
for the organization
“Do we know where
we are going?”
Consistency
Systems…Structures…
Processes
Defining the values
and systems that are the
basis of a strong culture
“Does our system
create leverage?”
Figure 5. The Denison Organizational Culture Model
Organizational Culture and Performance | The Denison Model
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Jugendarbeitslosigkeit
in Europa–Konsequenzen
für Deutschland
The basic premise of Henkel's approach to man-
aging their corporate culture is a compelling one:
The culture of the organization and the capability
of its people are an important source of com-
petitive advantage
. But where is the evidence to
support this point of view? Building an organi-
zation based on these principles may be the
"right thing to do," but in order to survive over
time, the culture must also be one that has a po-
sitive influence on performance. The powerful
principles traditionally held by the Henkel family
are the foundation of the company, but how will
we know the best way to apply them in the fu-
ture? Organizational cultures are a collection of
habits, good and bad, that have developed over
time. How do we decide which ones are most
important to us in the future? How do we decide
the meaning of these time-honored principles in
a w
a
y t
hat pr
eser
v
es our vision f
or t
he future?
Over the past twenty years, Denison and his col-
leagues have studied the link between organiza-
tional culture and business performance, trying
to understand the cultural traits of high per-
formance organizations. Out of this research
t
hey
ha
v
e de
v
eloped an appr
oac
h, based on the
Denison Organizational Culture Survey, which
is widely used in diagnosing organizations and
helping to drive the change process. Henkel's
approach to managing their culture has adopted
t
his appr
oac
h and used it in their own unique
way as a key component to help build their cul-
ture. This ne
xt section of t
he case s
tudy giv
es a
br
ief o
verview of the culture model, the survey,
and the research that lies behind it.
T
T
h
h
e
e
D
D
e
e
n
n
i
i
s
s
o
o
n
n
M
M
o
o
d
d
e
e
l
l
The Denison model is based around four key
traits — mission, adaptability, involvement, and
consistency that are summarized below. The
focus on these four traits has evolved from a
series of studies over the past two decades that
have compared cultural traits and patterns of
business performance. A brief research biblio-
graphy is presented at the end of this case. This
model is the basis for a 60-item survey that was
the core of Henkel's approach to measuring and
managing culture over the past few years. A
summary of this model is presented in Figure 5.
3. Organizational Culture and
Performance: The Denison Model
sensual support. These implicit control systems
can be a more effective means of achieving coor-
dination and integration than external-control
systems that rely on explicit rules and regu-
lations. These organizations have highly commit-
ted employees, a distinct method of doing busi-
ness, a tendency to promote from within, and a
clear set of "do's" and "don'ts." This type of con-
sistency is a powerful source of stability and
internal integration. In the model, this trait is
measured with three indexes:
Core Values. Members of the organization
share a set of values which create a sense of
identity and a clear set of expectations.
Agreement. Members of the organization are
able to reach agreement on critical issues. This
includes both the underlying level of agreement
and the ability to reconcile diverse points of
vie
w when the
y occur
.
Coordination and Integration. The different
functions and units of the organization are able
to work together well to achieve common goals.
Organizational boundaries do not interfere with
getting work done.
Lik
e many cont
em
porar
y models of leadership
and organizational effectiveness, this model has
focused on a set of tensions or contradictions.
For example, the trade-off between stability and
flexibility and the trade-off between internal and
e
xt
er
nal focus are the basic dimensions underly-
ing the framework. In addition, the diagonal
t
ensions in t
he model ar
e also im
por
t
ant to un
-
der
s
tand. Achieving both internal consistency
and external adaptability is easier said than
done, while reconciling mission and involvement
r
eq
uire that firms resolve the inevitable tensions
between top-down direction and bottom-up
influence.
At the center of this model in the graph in
Figure 5 are underlying beliefs and assump-
tions. This addition to the model reflects the fact
that "deeper" levels of organizational culture
(Schein, 1992) are difficult to measure using
comparative methods. Nonetheless, they provide
the foundation from which behavior and action
spring. Beliefs and assumptions about the orga-
nization and its people, the customer, the mar-
ketplace and the industry, and the basic identity
of the firm create a tightly knit logic that holds
the organization together. They represent the
core "DNA" and underlying logic of the firm.
None of the four cultural traits are unique to
t
he model present
ed in t
his paper
. They ar
e all
closely linked to central concepts in manage-
ment theory. Furthermore, they all have close
parallels in Henkel's own values and vision. The
organizational culture model simply serves to
integrate these concepts, develop a set of valid
measures, show their close link to organi-
zational per
f
or
mance, and t
hen apply t
hem as
a method for diagnosing the key strengths and
challenges of an organization.
L
L
i
i
n
n
k
k
i
i
n
n
g
g
O
O
r
r
g
g
a
a
n
n
i
i
z
z
a
a
t
t
i
i
o
o
n
n
a
a
l
l
C
C
u
u
l
l
t
t
u
u
r
r
e
e
a
a
n
n
d
d
P
P
e
e
r
r
f
f
o
o
r
r
m
m
a
a
n
n
c
c
e
e
Published studies o
v
er t
he pas
t two decades hav
e
e
xplor
ed many aspects of the link between or-
ganizational culture and business performance.
These studies have examined the link between
t
he f
our basic traits in the culture model and
Organizational Culture and Performance | The Denison Model Organizational Culture and Performance | The Denison Model
|
1
1
9
9
1
1
8
8
|
Vision. Effective organizations hold a shared
view of a desired future state. It embodies core
values and captures the hearts and minds of the
organization's people, while providing guidance
and direction.
Adaptability. A strong sense of purpose and
direction must be complemented by a high de-
gree of flexibility and responsiveness to the
business environment. Organizations with a
strong sense of purpose and direction can often
be the ones that are the least adaptive and the
most difficult to change. Adaptable organizations
translate the demands of the organizational
environment into action. They take risks, learn
from their mistakes, and are good at creating
change. They continuously improve the organi-
zation's ability to provide value for its customers
b
y creating a sy
s
t
em that tr
anslat
es signals from
the environment into internal systems that en-
sure the organization's survival and growth.
This trait is measured with three indexes:
Creating Change. The organization creates
adaptive ways to meet changing needs. It is able
t
o r
ead t
he business envir
onment, react q
uic
kly
to current trends, and anticipate future changes.
Customer Focus. The organization understands
and reacts to its customers and anticipates their
future needs. It reflects the degree to which the
organization is dr
iv
en b
y a concern to satisfy its
customers.
Organizational Lear
ning.
The organization
t
ak
es risks, learns from its mistakes, and con-
stantly integrates this knowledge to improve the
organizational system.
Involvement. Effective organizations empower
and engage their people, build their organiza-
tion around teams, and develop human capabili-
ty at all levels. Organizational members are
highly committed to their work, and feel a
strong sense of engagement and ownership.
People at all levels feel that they have input into
decisions that will affect their work. They also
feel that their work is directly connected to the
goals of the organization. This allows high invol-
vement organizations to rely on informal, volun-
tary, and implicit control systems, rather than
formal, explicit, bureaucratic control systems.
This trait is measured with three indexes:
Empowerment. Individuals have the authority,
initiative, and ability to manage their own work.
This creates a sense of engagement, ownership,
and r
esponsibility to t
he organization.
Team Orientation. Value is placed on working
cooperatively toward common goals for which all
employees feel mutually accountable. The orga-
nization relies on team effort to get its work
done.
Capability Development. The organization
continuall
y inv
es
ts in the de
v
elopment of
employees' skills in order to stay competitive
and meet on-going business needs.
Consistency. Organizations are most effective
when t
he
y ar
e consistent and well integrated.
Behavior must be rooted in a set of core values,
and people must be skilled at putting t
hese
v
alues int
o action by reaching agreement while
incorporating diverse points of view. Consistent
organizations develop a mindset that supports
an int
er
nal system of governance based on con-
performance measures such as profitability,
sales growth, quality, innovation, and market
value. The research has also examined these
links in over twenty different countries. A com-
plete review of this research is well beyond the
scope of this paper, but many of the studies are
cited in the bibliography at the end of this paper.
The most basic question addressed by this
research is a simple one: Do companies that
possess the traits described by the culture model
indeed have higher performance? One simple
answer to this question is presented in the ana-
lysis in Figure 6. This study used data collected
from 161 publically traded companies that had
completed the Denison Organizational Culture
Survey. Figure 6 contrasts the culture results for
the top 10% and bottom 10% of that sample. Since
this is a contrast between the companies with
the best and worst culture profiles, it is no sur-
prise that the profile on the right shows much
higher scores than the profile on the left. But the
more interesting finding is that the companies in
the profile on the left side had a 6% profit ratio
their service experience at the dealership. The
culture profile on the right is the profile of those
dealerships in which more than 80% of the cus-
tomers reported that they were highly satisfied
with their service experience at the dealership.
Figure 8 presents a bar chart summarizing the
differences in the culture scores on each of the
twelve indexes between the high and low satis-
faction dealerships.
Organizational Culture and Performance | The Denison Model Organizational Culture and Performance | The Denison Model
|
2
2
1
1
Organi
zati
onal
Lea
rnin
g
Str
ate
gic
Direc
tio
n
& Inte
nt
Goals &
Obje
ctive
s
Vis
ion
Core
Values
Agreement
Coord
ination
&
Integration
Capa
bil
ity
Devel
opme
nt
Team
Ori
entat
ion
Empowerment
Customer
Focus
Creat
ing
Change
Adaptability
Miss
ion
Inv
olvemen
t
Consistency
External Focus
Internal Focus
Stable
Flexible
Beliefs and
Assumptions
21
24
20
17
19
15
9
21
14
20
20
22
Low Performing Culture High Performing Culture
Average ROE = 6% Average ROE = 21%
Organi
zati
onal
Lea
rnin
g
Str
ate
gic
Direc
tio
n
& Inte
nt
Goal
s &
Obje
ctiv
es
Vis
ion
Core
Values
Agreement
Coord
ina
tion
&
Integration
Cap
abi
lity
Devel
opme
nt
Team
Ori
entation
Empower
ment
Customer
Focus
Creat
ing
Chang
e
Adaptability
Miss
ion
Involvement
Consistency
External Focus
Internal Focus
Stable
Flexible
Beliefs and
Assumptions
79
82
80
80
67
84
77
80
83
70
81
77
Organi
zational
Lea
rnin
g
Str
ate
gic
Direc
tio
n
& Inte
nt
Goals &
Obje
ctive
s
Vis
ion
Core
Values
Agreement
Coord
ination
&
Integration
Capa
bil
ity
Devel
opment
Team
Ori
entat
ion
Empower
ment
Customer
Focus
Creat
ing
Chang
e
Adaptability
Miss
ion
Inv
olvemen
t
Consistency
External Focus
Internal Focus
Stable
Flexible
Beliefs and
Assumptions
21
34
40
35
53
54
58
30
35
50
39
40
Below 50% Highly Satisfied Above 80% Highly Satisfied
Organi
zati
onal
Learnin
g
Str
ategic
Direc
tio
n
& Inte
nt
Goal
s &
Ob
je
cti
v
e
s
V
is
ion
Core
Values
Ag
re
e
me
nt
Co
o
r
d
ina
t
i
o
n
&
I
n
t
eg
r
at
io
n
Cap
abi
lity
Devel
opme
nt
Team
Ori
entation
Empower
ment
Customer
Focus
Creat
ing
Change
Adaptability
Mi
ss
i
o
n
Inv
olvement
C
onsistency
External Focus
Internal Focus
Stable
Flexible
Beliefs and
Assumptions
81
83
78
92
91
79
80
79
75
84
90
91
Figure 6. Return on Shareholder Equity Figure 7. Organizational Culture and Customer Satisfaction
(ROE), while the companies in the profile on the
right side had a 21% profit ratio (ROE). Thus, the
companies with high culture scores appear to be
more than three times more profitable than
those with low culture scores.
This research has also led to interesting results
with respect to customer satisfaction. Figure 7
and Figure 8 present the results from a study of
automotive dealerships in the USA. The culture
profile on the left is the profile of the dealer-
ships in which less than 50% of the customers
reported that they were highly satisfied with
2
2
0
0
|
Employee surveys have been a regular feature
within the Henkel corporate environment since
the 1980s. Henkel's longstanding commitment
to a dialog aimed at promoting the "common-
alities" of the company has been supported by
these surveys. Projects have typically been
implemented every five years, to determine
respondents' attitudes, their satisfaction, and
their identification with the company. Within
Germany, and also in the wider international
context, Henkel was one of the first corporations
to analyze such employee orientation on the
basis of scientifically based questionnaires.
The last employee survey prior to adopting the
Denison model was conducted in 1995 with
2012 managers responding. It was found to be
a highly suitable method for
- providing insight into the company's internal
image. Was Henkel an attractive employer?
Was employee identification with their work
generally high? Were they satisfied with their
decision to join Henkel?
- assessing the levels and quality of cooperation
wit
hin units and crossbor
der
.
- discovering attitudes with regard to working
conditions, compensation and benefits.
- assessing the perceived quality of information
provided, Henkel's information policy, getting
inf
or
mation on time and in suf
f
icient detail.
- examining the leadership role. These ques-
tions focused on leader
ship t
opics suc
h as t
he
super
vision and discussion of w
ork; the provi-
sion of help and fair assessment; the assign-
ment of challenging targets for improvement;
and t
he accep
tance of guidelines.
The interval between the 1990 and the 1995
surveys provided a clear indication of the
changes that had taken place and the current
challenges and areas in which further action
and improvement were necessary. On the other
hand, there was also plenty of scope for inter-
pretation and detailed discussion was required
in order to determine which challenges and
changes had actually been revealed by the re-
sults of the questionnaires.
But it also became apparent that the 110
questions included in these surveys addressed
so many different issues that employees developed
significant expectations that extensive and tan-
gible change was on the way. Partly because of
these high expectations, the activities and chan-
ges actually introduced were regarded as rather
insignif
icant and hardl
y r
egis
t
er
ed. Ov
erall, the
surveys gave rise to a latent impression that not
much had happened and that — consequently —
little change could be expected in the future. Such
perceptions have a major discouraging effect on
employee willingness to participate in surveys.
It also became incr
easingl
y ob
vious that sur
v
e
y
-
ing employee satisfaction, while having an in-
herent value, does not facilitate definition of the
factors driving the success of a corporation or
defining its cultural character. Henkel's in-house
anal
y
sis of t
his issue and the many discussions
conducted with experts clearly indicated that a
compan
y needed t
o kno
w mor
e than merel
y t
he
le
v
el of satisfaction of its employees. It had to
answer two questions: What drives success?
What cultural elements do we need to improve
in or
der t
o improve our performance?
4. Henkel's Decision to
Apply the Denison Model
These kinds of results and the stream of re-
sear
c
h t
hat has pr
oduced them sugg
est t
hat t
he
culture of an organization is indeed an impor-
tant asset that pays economic returns over time.
This grounding in business results was a critical
factor in Henkel's choice to apply the Denison
model as a means t
o be
tt
er manage their
culture.
Organizational Culture and Performance | The Denison Model Henkel's Decision to Apply the Denison Model
|
2
2
3
3
2
2
2
2
|
0 10 20 30 40 50 60 70 80 90 100
Organizational Learning
Customer Focus
Creating Change
Empowerment
Team Orientation
Capability Development
Core Values
Agreement
Coordination & Integration
Vision
Goals & Objectives
Strategic Direction & Intent
31
52
39
40
45
54
49
37
37
34
48
48
Differences Between High and Low Satisfaction Customers
Figure 8. Differences between High and Low Satisfaction Dealerships
Henkel's Decision to Apply the Denison Model Henkel's Decision to Apply the Denison Model
|
2
2
5
5
2
2
4
4
|
comparing Henkel results to 557 companies
from eight industries in 16 countries (75% North
America, 20% Europe, 5% Asia). This global per-
spective was also a decisive factor.
Measuring the cultural drivers that influence the
performance of a company was a completely dif-
ferent approach than the employee satisfaction
surveys conducted in the past. The results and
the improvements have fast, positive effects for
Henkel customers. The results increased the
awareness of managers of the importance of a
performance-oriented, entrepreneurial culture
and used relatively short (1-2 years) survey
cycles to rejuvenate the culture and keep the
organization "on its toes."
The survey process itself was also a compelling
adv
antag
e. Less t
han f
our week
s w
ere required
for data collection for a global survey with over
7,000 participants, and complete results avail-
able four weeks later. The internet-based data
collection process also saved time, effort, and
cost on Henkel's part. In the past, Henkel's
employee surveys would require two person-
y
ears f
or pr
oject planning, implement
ation,
evaluation, communication and archiving.
Henkel's effort using the Denison method was
reduced to around two person-months. Thus,
compared to earlier survey and evaluation
me
t
hods, t
he DOCS thus represented around
10% of the usual cost per cycle.
Around this time, major changes were also
occurring within the corporation, including orga-
nisational realignment, acquisitions, divestments,
strategic focus on brands and technologies and,
above all, the introduction of the Henkel Vision
and Values as the framework for the corporate
culture. Taken together, these conditions created
much more far-reaching objectives for surveys,
and caused Henkel — and specifically Human
Resources as the lead unit — to step away from
the traditional approach.
In September 2002 the principles and objectives
of the Henkel Group were realigned to a single
"Vision" and ten "Values." These were faithfully
derived from the traditional roots of the compa-
ny and chosen as the basis of a binding code
governing the attitude, conduct and actions of
t
he compan
y's 52,000 plus em
plo
y
ees w
or
ld-
wide. It is the managers and employees of the
Henkel Group alone who are responsible for
meeting the standards and achieving the ambi-
tions embodied in the Vision and Values. It is
the degree to which they identify with the
Vision and Values that determines the true vali-
dity of t
hese guidelines. Manager
s need t
o cre
-
ate the right opportunities for employees and to
encourage and empower people to "walk the
talk." This approach has led to a greater empha-
sis on cultural drivers and their influence on
t
he per
f
ormance of a company.
The searc
h f
or a suit
able sy
s
t
em t
o measur
e
t
hese cultur
al drivers of success within a cor-
poration led to IMD in Switzerland. Professor
Daniel Denison — first at the University of
Mic
higan Business Sc
hool and since 1999 at
the International Institute for Management Deve-
lopment (IMD) in Lausanne, Switzerland — pro-
vided the ideal platform for Henkel to complete-
ly revise the methodology applied in its manager-
ial surveys. Denison concentrates primarily on
the effect of corporate culture on internal coordi-
nation of participants. In this way, he effectively
positions culture as a key driver of corporate
performance.
From an operational point of view, Henkel also
wanted to answer the following questions:
- Which provider uses benchmarks as an inte-
gral part of its employee surveys to position
itself vs. industry/peers?
- Which method is the most cost-effective, with
less expense than in the past?
-
Can the r
eq
uir
ed analy
sis w
ork be carried
out quickly and within short intervals?
- Will the results be easier to communicate
and understand than in the past?
Through a pilot project in the North American
Technologies Division in 2002/03, Henkel tested
t
he accept
ability of t
his met
hod and judged t
hat
the Denison Model satisfied these requirements,
with an efficient analytical approach and easy-
to-understand results that were on target. They
felt that the method created high manager aware-
ness of t
he cultur
al dr
ivers and their impor-
tance for high performance. Henkel also saw
t
hat wit
hin an organization made up of dif
f
er
ent
w
or
king units, the culture survey helped in
understanding the diverse cultural elements
that influence overall success. Henkel also saw
t
he cr
itical value of peer-level benchmarks,
Survey Implementation | Results from 2003 and 2004
|
2
2
7
7
2
2
6
6
|
5. Survey Implementation:
Results from 2003 and 2004
In addition to the overall results, each manager
also received the results relevant to their areas
of responsibility so that they could discuss them
wit
h t
heir em
ploy
ees within their organisational
units. This allowed them to closely analyze the
results relating to their domain, defining pot-
ential ar
eas for fur
t
her de
velopment and impro-
vement with their team and developing action
plans. Henkel recommended that feedback and
discussion — "working through" the survey re-
sults — should begin b
y f
ocusing on t
he f
ollo
-
wing questions:
- What are the predominant patterns in the
survey results?
- How do these results fit with your own
per
cep
tion of t
he organization?
- What conclusions might be drawn from the
data with respect to our strategic objectives?
-
What are t
he specif
ic def
iciencies that need to
be addressed so that we may achieve our
goals and targets?
Orga
nizational
Lea
rning
Str
ate
gic
Dir
ect
ion
& In
ten
t
Goal
s &
Obj
ect
ive
s
Vis
i
o
n
Core
Valu
es
Agreement
Co
o
rd
inat
i
o
n &
Int
eg
r
at
io
n
Cap
abili
ty
Dev
elopm
ent
Tea
m
Orientation
Empo
wer
men
t
Customer
Focus
Creating
Chan
ge
Adaptability
Mis
s
i
o
n
Inv
olvem
ent
Consistency
External Focus
Internal Focus
Stable
Flexible
Beliefs and
Assumptions
82
44
57
44
57
50
72
63
67
54
63
39
Customer
Adaptability
Survey Implementation | Results from 2003 and 2004
It was clear to all involved that the new method
would require a high level of commitment from
Henkel's executives and HR officers around the
world. Following the positive decision by the
Management Board of the Henkel Group and
prior to roll-out of the survey, the groundwork
had to be laid within the global HR organization.
As the strategic partner of the business units
and regional managers, the HR group was ex-
pected to introduce, implement and evaluate
the instrument.
T
T
h
h
e
e
2
2
0
0
0
0
3
3
S
S
u
u
r
r
v
v
e
e
y
y
All management levels in Henkel were partici-
pants in the 2003 survey, a population of
around 7,500 worldwide. When Henkel decided
to relaunch the employee survey, they also de-
cided t
o keep t
he patt
er
n of the sur
v
ey for ma-
nagement, executive staff and non-executive
staff at different times. Thus the reason for
concentrating on the management levels only
at this stage was to avoid focusing the whole
organization at the same time on the survey
including the discussion of results and indicated
actions, whic
h might hav
e meant t
o keep 50,000
employees busy and distracted from doing their
original business.
Secondly, when the survey relaunch took place
and t
he Denison Organizational Cultur
e Sur
v
ey
was applied, Henkel wished to doublecheck first
how t
his ne
w sur
v
e
y was accep
t
ed and w
orked.
In
v
olvement of non-executives will be a point of
discussion in the future, yet the challenge is, of
course, how to tackle such a large and diverse
g
r
oup of people.
The response rate for the first survey was 61%.
This is an average response rate, and thus was
satisfactory, but the objective for the second
survey was set at 75%.
The survey results presented in Figure 9 show
the percentile scores for each of the twelve inde-
xes in the Denison survey. The results also in-
cluded an analysis of the 60 questions making
up these twelve index scores. These scores
compare the results from Henkel to the bench-
mark database and show Henkel's strengths and
challenges relative to the benchmark. There are
several clear messages from these results. First,
they show a perceived lack of knowledge of the
Henkel strategy. In addition, Henkel managers
were apparently not sufficiently aware of the
Vision and Values of the Henkel Group. The
r
esults also indicated t
hat a larg
e pr
oportion of
the respondents would welcome closer cooper-
ation across departmental boundaries.
Figure 9. Henkel survey results
Survey Implementation | Results from 2003 and 2004 Survey Implementation | Results from 2003 and 2004
|
2
2
9
9
2
2
8
8
|
ments in Mission are clearly linked to the inten-
sive discussions held after the first survey and
the intense communication of the Henkel Vision
in the business sectors. Significant improvements
also occurred in Coordination & Integration, but
still left room for improvement, particularly with
respect to cooperation across departmental
boundaries.
Organi
zational
Lea
rnin
g
Str
ate
gic
Direc
tio
n
& Inte
nt
Goals &
Obje
ctive
s
Vis
ion
Core
Values
Agreement
Coord
ination
&
Integration
Capa
bil
ity
Devel
opment
Team
Ori
entat
ion
Empower
ment
Customer
Focus
Creat
ing
Chang
e
Adaptability
Miss
ion
Inv
olvemen
t
Consistency
External Focus
Internal Focus
Stable
Flexible
Beliefs and
Assumptions
67
64
73
54
63
39
44
57
44
82
57
50
2003 2004
80%61%
Organi
zati
onal
Learnin
g
Str
ategic
Direc
tio
n
& Inte
nt
Goal
s &
Ob
je
cti
v
e
s
V
is
ion
Core
Values
Ag
re
e
me
nt
Co
o
r
d
ina
t
i
o
n
&
I
n
t
eg
r
at
io
n
Cap
abi
lity
Devel
opme
nt
Team
Ori
entation
Empower
ment
Customer
Focus
Creat
ing
Change
Adaptability
Mi
ss
i
o
n
Inv
olvement
C
onsistency
External Focus
Internal Focus
Stable
Flexible
Beliefs and
Assumptions
83
54
66
59
61
63
75
63
70
59
72
91
+ 4
+ 1
+ 10
+ 9
+ 15
+ 8
+ 9
+ 5
+ 3
- 1
+ 2
+ 13
Around 470 feedback workshops and numerous
projects — in total around 470 — were organized
in order to discuss and implement the activities,
and plan the changes and improvements suggest-
ed by the survey. Of these 470 projects
- 47% dealt with Henkel's Strategy, Vision and
Values;
- 25% dealt with Cross-divisional and Cross-
functional Cooperation;
- 19% dealt with Customer Focus;
- 9% dealt with Teamwork and Cooperation.
Specifically, the groups discussed reasons for
the low scores in the various areas, drew their
conclusions and, where appropriate, recommend-
ed action steps to address these issues.
Out of t
he enourmous number of initiativ
es t
he
key areas for leadership to address was the area
of Mission, especially addressing the Strategic
Direction and Intent. Of course, strategies had
been in place of any business and function, yet
obviously at least penetration had not been good
enough. Partly, strategies had not been commu-
nicat
ed in det
ail (in or
der also to a
v
oid easy
transfer outside Henkel's). On the other hand,
the top-down approach in communicating strate-
gies was not seamless. Lower ranks, in particu-
lar, did not have full information. Moreover,
occasionall
y s
tr
ategies were so complex that it
was not easy to communicate or recall them.
Ha
ving under
stood the deficit and being clearly
willing to improve the situation from CEO level
to all businesses and functions on corporate,
r
egional and/or countr
y level, all strategies then
underwent reworking, not necessarily content-
wise but at least communication-wise. This was
a Henkel-wide initiative. After this exercise it
had become clear that intensive dissemination
and penetration was the "name of the game" for
all employees to achieve a clearer picture and
understand where Henkel is heading.
Results, by the way, improved clearly in the
next survey and encouraged management to
move further to achieve a higher penetration
rate and gain broad involvement and commit-
ment.
Another outcome of the survey was that there
was a desire for more cross-divisional coo-
peration. This led to the formation of numerous
interdisciplinary teams, stronger involvement
and utilization of t
he Henkel Global A
cadem
y
,
and helped generate a more intensive commit-
ment to knowledge sharing and knowledge
management. A cross-divisional job rotation pro-
gram was set up with defined targets of rotation
driven by corporate HR.
T
T
h
h
e
e
2
2
0
0
0
0
4
4
S
S
u
u
r
r
v
v
e
e
y
y
The second survey, conducted in November
2004, showed many improvements. Once again,
all management-level employees were partici-
pants in t
he sur
v
e
y. This time the response rate
for this survey rose to 80%, reflecting improve-
ments in the sur
v
e
y pr
ocess and a broader
accep
t
ance of the survey as a useful tool for
change. Comparing results from 2003 and 2004
shows that improvements occurred in all areas
e
x
cept Team Orientation. The significant improve-
Figure 10. 2004 Survey results
Survey Implementation | Results from 2003 and 2004 Survey Implementation | Results from 2003 and 2004
|
3
3
1
1
3
3
0
0
|
Henkel also observed lots of specific improve-
ments in different parts of the organization that
r
einfor
ced t
he idea t
hat they were making pro-
gress. The business unit that spent the most
time clarifying and communicating their strate-
gy showed the strongest results. Different coun-
tr
y organizations t
hat w
er
e high per
f
or
ming,
well-managed business units showed stronger
results than those that were not. All of these
findings helped substantiate that the survey
process brought about tangible, positive change.
10
30
43
40
24
11
Creating Change
Customer Focus
Organizational Learning
Adaptability
1
6
3
73
64
67
70
63
75
Empowerment
Team Orientation
Capability Development
Involvement
2
1
3
56
91
52
77
98
70
Core Values
Agreement
Coordination & Integration
Consistency
14
7
25
50
64
48
79
73
75
Strategic Direction & Intent
Goals & Objectives
Vision
Mission
25
9
31
100 75 50 25 0 25 50 75 100
ÆÆ
ÆÆ
2003 deterioration improvement 2004
ü
Analysis of the results by management level
also show that the biggest impacts in the under-
s
t
anding of t
he mission occur
r
ed at the middle
management level. The top level of manage-
ment already had a clear understanding of
Mission in 2003, but the results showed that
t
his under
s
t
anding w
as no
t shar
ed at t
he middle
level. Between 2003 and 2004, these level
managers were clearly brought "on board" with
the mission and the core values. If this process
had been extended to lower level of manage-
ment dur
ing the 2003-200
4 time per
iod, t
hen
we would expect that the overall results would
have been even stronger. Thus, applying the
process at the lower management levels became
a k
e
y objectiv
e of t
he planning pr
ocess in 2005.
Organi
zati
onal
Learnin
g
Str
ate
gic
Direc
tio
n
& Inte
nt
Goals &
Obje
ctives
Vis
ion
Core
Values
Agreement
Coord
ination
&
Integration
Capa
bility
Devel
opme
nt
Team
Ori
entat
ion
Empowerment
Customer
Focus
Creat
ing
Chang
e
Adaptability
Miss
ion
Inv
olvemen
t
Consistency
External Focus
Internal Focus
Stable
Flexible
Beliefs and
Assumptions
83
54
66
59
61
63
75
63
70
59
72
91
2004
80%
44
57
44
59
66
54
Mission
10
9
15
Strategic Direction & Intent
Goals & Objectives
Vision
50
57
82
83
61
63
Adaptability
13
4
1
Creating Change
Customer Focus
Organizational Learning
54
63
39
47
72
59
Consistency
5
9
8
Core Values
A
greement
C
oordination & Integration
73
64
67
70
63
75
Involvement
2
1
3
Empowerment
Team Orientation
Capability Development
ÆÆ
ÆÆ
Bar on left indicates this group
has a lower percentile score
Bar on right indicates this group
has a higher percentile score
ÆÆ
ÆÆ
percentile score
to group on left
percentile score
to group on right
2003
2004
100 75 50 25 0 25 50 75 100
Figure 11. Henkel Overall Figure 12. Comparison
7. The 2006 Survey
The next survey took place in November 2006.
Henkel hoped to increase participation to over 80%
of managerial staff even though the company was
well aware that the industry standard was lower.
In order to achieve this higher response rate and
overall greater impact of the survey, Henkel took
several important steps. They developed a better
communication plan, introduced a new person-
alized internet-link approach for completing the
survey and accessing the reports, and provided
an additional guarantee of confidentiality and
anonymity based on an externally audited data
protection system.
The communication planning began in March
2006. A worldwide HR e-mail was sent to all
managerial staff informing them of the planned
t
hird sur
v
e
y cycle. All Cor
por
ate Communica-
tions and Human Resources employees around
the world were also concurrently requested per-
sonally to ensure that the survey received con-
stant mention in all appropriate general commu-
nications. In April 2006, Professor Denison ex-
plained the structure, purpose and objectives of
the survey process in a detailed interview pu-
blished in the German and international hardco-
py and intranet editions of
Henkel-Life. A report
on the "Denison Case Study" then appeared in
the fall 2006 edition of
Henkel-Life. In September,
Henkel-Life also reported on the survey to be
conducted amongst managerial staff (to be
launched in November).
In October 2006, prospective participants were
each sent an e-mail requesting their active in-
volvement, and on November 1 the actual survey
invitations were sent out. The participation rate
f
or the 2006 sur
v
e
y reac
hed 85%, whic
h was an
excellent result and showed that internal com-
Lessons Learned The 2006 Survey
|
3
3
3
3
3
3
2
2
|
6. Lessons Learned
In May 2005, to focus their preparations for the
third survey cycle in 2006, Henkel Corporate
HR surveyed 2,000 managers that had been
involved in the survey to determine their views,
desires, and expectations about the survey as
such:
- 53.5% responded to the survey.
- 90% of respondents were pleased with the
convenience of the electronic survey.
- 80% regarded the time required to complete
the survey as acceptable.
- 35% believed that the survey would change
nothing.
Lesson: More intensive follow-up work is
required in order to make a clearer
linkage between the purpose, the results,
the action planning efforts, and the
implementation process.
-
22% expr
essed doubts as t
o t
he anonymity of
the survey.
Lesson: Data security and preservation of
anonymity is crucial to survey participants.
Even after three years when their respon-
ses have been totally anonymous and no
reports have been provided to Henkel un-
less t
here w
er
e fiv
e or more r
esponses,
they still have concerns. They have to be
constantly addressed to ensure the credi-
bility of the process. As a part of this pro-
cess, Henkel provided an audit of the en-
tir
e pr
ocess, suppor
t
ed by an external pro-
vider.
-
Ar
ound 50% did no
t wish t
o see t
he surv
e
y
r
epeat
ed on an annual basis.
Lesson: Henkel will conduct the survey
every two years, i.e. following 2004 the
ne
xt one w
ould be in 2006.
- 90% would be willing to take part in the next
survey.
Lesson: This indicated that we should be
able to achieve the objective for 2006.
Nonetheless, 100% participation were the
goal since only those expressing an opi-
nion can expect it to be heard and acted
upon.
- Common to all respondents was a desire for
more - and more coherent - communication in
advance of the survey and also following
the results.
Lesson: A more focused communication
plan was required for 2006.
100,00
90,00
80,00
70,00
60,00
50,00
40,00
30,00
20,00
10,00
0,00
Day 1
Day 2
Day 3
Day 4
Day 5
Day 6
Day 7
Day 8
Day 9
Day 10
Day 11
Day 12
Day 13
Day 14
Day 15
Day 16
Day 17
Day 18
Day 19
Day 20
Day 21
Day 22
Day 23
Day 24
Day 25
Day 26
Day
Participation in %
2006
2004
2003
Figure 13. Participation rate Denison
munication efforts had been successful.
In Figure 13 it can be easily observed
that over the three cycles the rate has
constantly improved. Now it is the
main target to secure at least the same
results in upcoming cycles.
After collecting the data and preparing
the summary reports, the results of
the survey will be presented to the
Management Board in January 2007,
which will be followed by extensive
feedback throughout the organization.
Discussion
|
3
3
5
5
Discussion
3
3
4
4
|
Over the five year time frame covered by this
case study, Henkel was on a continuous lear-
ning curve. This effort began as an attempt to
create an alternative to a traditional employee
attitude survey, but has grown to become a
strategic tracking tool that closely monitors the
human capability of the organization. One part
of this story is the technical evolution of the
survey from a custom-made, individually focu-
sed, paper and pencil survey that was not
benchmarked, and reported only raw scores,
to a survey rooted in a research-based model,
benchmarked and delivered online, with gra-
phic reports that are immediately delivered to
individual managers through an on-demand
system. Henkel formed a close partnership
with their provider to co-create a system to
serve their growing needs.
But the second part of the story is the part that
will have a far more lasting impact on Henkel.
This part focuses on how Henkel learned to use
the survey results and the survey process to
continuously improve the capability of the orga-
nization. The first year, this part began with the
sim
ple objective of r
epor
ting the sur
v
e
y r
esults
back to the Management Board. From there,
Henkel began an extensive feedback and action
planning process that involved over 400 wor-
king groups. The groups focused on both their
o
wn r
esults and t
he results for the company as a
whole. Research on this process shows that the
eff
or
t put int
o t
he feedback and planning pr
o
-
cess is r
ef
lected in the year-to-year improvement
in the organization.
By the second round of the survey, the process
was a more familiar one. Internal Henkel facilit-
ators, trained during the first round, were very
familiar with the survey and the process.
Leaders were better able to integrate the survey
feedback and action planning process with other
planning activities. Thus, they were able to use
the tool as a means to better manage their orga-
nizations rather than as a separate activity in
itself. They began to see the survey as a recur-
ring process that created a sense of accountabi-
lity for the capability of the organizations that
they managed. On-going research into the
change process also began to give answers to
crucial questions about managing change.
One important observation made over the pro-
cess that proved that respondents clearly real-
ized t
he pot
ential of t
he sur
v
e
y and its f
indings
to help improve leadership capacities and per-
formance of the respective units was the ap-
proach to answering the questions of the survey:
one might assume that in a second round
respondents tend to give answers in a way that
they might feel "conforming" to expectations (of
t
op management or q
ues
tioner). This did indeed
not happen at Henkel: answers tended to be-
come even more honest, pinpointing deficits
honestly and thus showing that a real interest
in improvement was desired by the respondents.
Which parts of the organization changed most
q
uic
kl
y in r
esponse t
o the problems t
hat w
er
e
identif
ied? In r
etrospect, those parts of the com-
pany changed most quickly whose leaders took
the results as a personal challenge to improve
leader
ship.
8. Discussion
How can these changes best be sustained? It is
obvious that changes do not come by finger-
snapping. However, they can be sustained by
constantly addressing the issue or area of im-
provement, in the first place. Secondly, diversity
in terms of the progress helps to sustain changes
targeted.
What approach to feedback and planning is
most likely to make a lasting improvement in
the business? Improvements, and lasting ones at
that, have to do with measuring and showing
the gap versus the plan. This means that the
survey has to measure the status on a regular
basis and then follow through a process of inten-
sive discussion of the areas of improvement.
What type of support do managers need to guide
t
hem thr
ough t
his pr
ocess? Management needs
to understand the cultural driver. This is the
most important lever for making the survey a
success and guiding managers through the pro-
cess. HR as partner of management still gives
valuable support by delivering insights and so-
lutions.
The third round of the survey included an exten-
sive communication process prior to the survey,
reinforcing the purpose of the project and great-
ly raising awareness of the importance of the
cultur
e of t
he organization t
o the business
results. This awareness has also underscored
t
he obligation of individual leader
s t
o mak
e t
heir
contr
ibution b
y building the future Henkel cul-
ture in their own areas of responsibility. All of
these lessons have helped Henkel position this
as a s
tr
ategic tool to increase their competitive-
ness f
or t
he futur
e.
The authors
|
3
3
7
7
References
3
3
6
6
|
Denison, D. (1984). "Bringing corporate culture
to the bottom line." Organizational Dynamics
13(2): 4-22.
Denison, D. (1990). Corporate culture and orga-
nizational effectiveness.
New York: John Wiley & Sons.
Denison, D: (2000). "Organizational culture:
Can it be a key lever for driving organizational
change?" in S. Cartwright and C. Cooper. (Eds.)
The Handbook of Organizational Culture.
London: John Wiley & Sons.
Denison, D., Haaland, S, and Goelzer, P. (2004).
"Corporate culture and organizational effective-
ness: Is Asia different from the rest of the
world?" Organizational Dynamics, 33(1),
98-1
09.
Denison, D., Lief, C., and Ward, J. (2004).
"Culture in family-owned enterprises:
Recognizing and leveraging unique strengths."
Family Business Review, 17(1), 61-70.
Denison, D. and Mishr
a, A. (1
995). "T
o
w
ard a
theory of organizational culture and effective-
ness." Organizational Science
6(2): 204-223.
Denison, D. and Neale, W. (1996). Denison orga-
nizational cultur
e sur
v
e
y. Ann Arbor, MI: Aviat.
Fey, C. and Denison, D.R. (2003).
"Organizational cultur
e and ef
fectiveness:
Can an American theory be applied in Russia?"
Organization Science
14(6): 686-706.
This set of references gives an overview of the
main research papers and books that support
the model used by Henkel. For more informa-
tion, please visit www.denisonculture.com.
References
Dr. Daniel Denison is Professor of Management
and Organization at the International Institute
for Management Development (IMD) in
Lausanne, Switzerland. Previously, he was an
Associate Professor of Organizational Behavior
and Human Resource Management at the Uni-
versity of Michigan Business School. He has
taught and lived in Asia, Europe, Latin America
and the Middle East.
Professor Demison has written several books.
He is also the author of the Denison Organi-
zational Culture Survey and the Denison Leader-
ship Development Surveys. These surveys and
the underlying models have been used by over
3000 organizations and are the basis of several
on-going research projects. His writings have
appeared in a number of leading journals inclu-
ding The A
cademy of Manag
ement Jour
nal, The
Academy of Management Review, Organization
Science, Organizational Dynamics, The Journal
of Organizational Behavior, Human Resource
Management, and Policy Studies Review.
Professor Denison's research, teaching and con-
sulting focuses on organizational culture and the
impact that it has on the performance and effec-
tiveness of organizations. He has consulted with
many leading corporations regarding organi-
zational change, leadership development, and
the cultural issues associated with mergers &
acquisitions, turnarounds, and globalization.
At IMD, Prof. Denison is primarily involved in
"Catalyst" programs with companies that are
members of IMD's Learning Network. These
custom-designed programs are targeted to trans-
form the organizations and the individuals who
lead t
hem, and are designed t
o mee
t t
he
challenges the companies face.
Rolf Schlue graduated from the University of
K
ar
lsr
uhe, Ger
many
, and has been emplo
y
ed by
Henkel since 1978. Through the years he has
been responsible for several functions in the
FMCG, Research and Human Resources areas.
Currently he holds the responsiblity as Corpo-
r
at
e V
ice President for Global Human Resource
Management of the Purchasing, Infrastructure
and Human Resour
ce organization along wit
h
Cor
por
ate HR responsibility in the MENA
region. As his main areas of competence have
been in marketing, sales, customer focus and
result orientation (market shares, net sales and
pr
ofit contr
ibution) his appr
oach in dealing wit
h
HR is different. His past experiences in these
other areas of the business helped to lead the
changes that he initiated starting in 2003. One
example is the move from satisfaction surveys
of t
he pas
t t
o the more performance oriented
cultural surveys, which establish a link between
business perf
or
mance and cultur
al tr
aits, bot
h of
whic
h ar
e more meaningful to the company's
overall performance.
The authors
N
N
o
o
c
c
h
h
k
k
e
e
i
i
n
n
n
n
e
e
u
u
e
e
s
s
F
F
o
o
t
t
o
o
e
e
r
r
h
h
a
a
l
l
t
t
e
e
n
n
.
.
Publications
|
3
3
9
9
3
3
8
8
|
Corporate Culture
Bertelsmann Stiftung (ed.), Assessment,
Evaluation, Improvement: Success through
Corporate Culture, Gütersloh 2006.
Bertelsmann Stiftung, Messen, werten, optimie-
ren. Erfolg durch Unternehmenskultur. Ein
Leitfaden für die Praxis, Gütersloh 2006 (bro-
chure)
Bertelsmann Stiftung, Assessment, Evaluation,
Improvement: Success through Corporate
Culture. Recommendations for the Practice.
Gütersloh 2006 (brochure)
Sackmann, Sonja A., Bertelsmann Stiftung,
Success Factor: Corporate Culture, Developing a
Cor
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or High Per
f
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Long-term Competitiveness, Gütersloh 2006.
Bertelsmann Stiftung (ed.). Promoting Cultural
Identity in the Age of Globalization - A German-
Egyptian Experience. Liz Mohn - A Cultural
F
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Bertelsmann Stiftung (ed.). The Impact of
Globalization on Cultural Identity in Business.
Liz Mohn - A Cultural Forum Volume II.
Güt
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Bert
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Bertelsmann Stiftung (ed.). Corporate Cultures
in Global Interaction - Experiences in Business.
Liz Mohn - A Cultural Forum Volume IV.
Gütersloh 2004.
Blazejewski, Susanne, Dorow,. Wolfgang.
Unternehmenskulturen in globaler Interaktion -
Ein Leitfaden für die Praxis, herausgegeben von
der Bertelsmann Stiftung, Gütersloh 2006
Blazejewski, Susanne, Dorow, Wolfgang.
Corporate Cultures in Global Interaction - A
Management Guide, ed. Bertelsmann Stiftung,
Gütersloh 2007
Sackmann, Sonja A. Toyota Motor Corporation -
Eine Fallstudie aus unternehmenskultureller
Perspektive, ed. Bertelsmann Stiftung, Gütersloh
2005.
Corporate Social Responsibility
Bertelsmann Stiftung, Die gesellschaftliche
Verantwortung von Unternehmen.
Dokumentation der Ergebnisse einer
U
nter
nehmensbefr
agung der Bert
elsmann
Stiftung, Gütersloh 2006 (brochure)
Bertelsmann Stiftung, Partner Staat? CSR-Politik
in Europa, Gütersloh 2006 (brochure)
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k
en - U
nt
er
nehmen im Dialog, Güt
ersloh 2006
(br
oc
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Publications
Riess, Birgit (ed.), Verantwortung für die
Gesellschaft - verantwortlich für das Geschäft.
Ein Management-Handbuch. Gütersloh, 2006
Corporate Health Policy
Badura, Bernhard, Münch, Eckhard, Ritter,
Wolfgang. Partnerschaftliche
Unternehmenskultur und betriebliche
Gesundheitspolitik. Fehlzeiten durch
Motivationsverlust. Gütersloh 1997.
Badura, Bernhard, Hehlmann, Thomas.
Betriebliche Gesundheitspolitik. Der Weg zur
gesunden Organisation. Berlin 2004.
Bertelsmann Stiftung, BKK Bundesverband
(eds.). Guide to Best Practice. Driving Business
Ex
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por
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Health. Gütersloh 2005.
Bertelsmann Stiftung, Hans-Böckler-Stiftung
(eds.). Erfolgreich durch
Gesundheitsmanagement, Beispiele aus der
Arbeitswelt. Gütersloh 2001.
Bertelsmann Stiftung, Hans-Böckler-Stiftung
(eds.). Zukunftsfähige betriebliche
Gesundheitspolitik. Vorschläge der
Expertenkommission. Gütersloh 2004.
Hollmann, Detlef, Lühmann, Dagmar. Die per-
sönliche Gesundheitsbilanz. Chec
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äfte. Gütersloh 2006.
I
I
m
m
p
p
r
r
i
i
n
n
t
t
Published by:
Bertelsmann Stiftung
Carl-Bertelsmann-Straße 256
333
1
1 Güt
er
sloh
Responsible:
Gabriele Schöler
Design:
Nicole Reinisch
© 200
7
Thema | Lorem Ipsum ut wisi
C
C
o
o
n
n
t
t
a
a
c
c
t
t
:
:
Bertelsmann Stiftung
Gabriele Schöler
Carl-Bertelsmann-Straße 256
33311 Gütersloh
Phone: 0 524 81-81190
www.unternehmenskultur.org
