The corporate culture and a positive work environment contribute significantly to employee motivation and therefore to the long-term success of the company. Important aspects are the continuous improvement of the corporate culture on the basis of systematic employee surveys, training and development, and the improvement of leadership quality. Our Code of Teamwork and Leadership, which has been revised in 2004, offers guidance for the conduct of our managerial staff and employees.

Managers with the personality to motivate a team of employees are a key factor in the success of our Company. Henkel uses a range of tools and methods to identify and foster the potential of future managers. The Code of Teamwork and Leadership defines the general framework within which managers should operate and gives them clear guidelines for decision-making. The “Management Competencies Assessment” (MCA) serves to promote professional development. In the “Leadership Dialogue,” managers with supervisory duties receive direct feedback regarding their leadership performance from the members of their teams. Through the “Triple Two” concept, junior managers are prepared for the demands of higher management by being given at least two different tasks in two business sectors and in two countries.

To improve leadership quality, we have developed a globally uniform, modular training concept for employees with managerial responsibility. The programs are tailored to the requirements of the different management levels and are offered locally, regionally or centrally, depending on the target group. The People Leadership seminar provides basic knowledge, while the Team Leadership seminar is aimed mainly at improving performance through self and team management. For the top managerial level, we have developed a special, globally oriented Strategic Leadership program in cooperation with the Thunderbird Business School in Glendale, Arizona, USA.

Our Social Standards include a commitment to support the freedom of association of our employees. The interests of 75 percent of our employees are represented by works councils, independent trade unions, or similar bodies. In countries in which no plant representation is provided for or has been established, a dialogue with our employees serves as a voluntary and informal instrument for ensuring an open exchange of views. Employee representative bodies, local works councils, and trade union representatives form a common platform for exchanges of views and consultation with management. We inform the employee representatives as promptly as possible, in as much detail as possible, and at regular intervals, about, for example, our corporate strategy and any planned acquisitions.

The information and consultation processes are most extensively established in Europe. In 1995, Henkel was one of the first German companies to voluntarily set up a European Works Council (EWC) to continue the successful cooperation between management and employee representatives at the European level.

Through the EWC, Henkel informs the representatives of its European companies about matters such as the economic situation, transnational initiatives of the Company such as restructuring or reorganization programs, safety, health and the environment, and training and development programs. Henkel informs and consults its employees´ representatives before decisions are made. This helps Henkel to identify possible problems at an early stage, so that solutions can be found, and it reinforces its employees´ sense of identification with the Company.

In the fall of 2006, we carried out our third global management survey since 2001 using the Denison organizational culture indicators. Through regular and systematic surveys of our corporate culture and action programs based on the results of these surveys, we aim to achieve long-term improvements in the foundations for growth, profitability, innovation, and employee satisfaction. The fact that the response rate went up again – by another 5 percentage points, to 85 percent – demonstrates how important our managers find the survey and the measures derived from it.

After the second survey in 2004, managerial staff launched about 600 targeted projects worldwide, aimed at solving specific problems. The 2006 results now showed that there have been clear improvements in all four areas – adaptability, vision and strategy, consistency of values, and employee involvement. Factors that have contributed to this include a better understanding of our corporate strategy at the lower management level and an extremely positive rating of cooperation, team-orientation and consistency.

In addition to the management survey, Henkel carries out surveys of non-managerial employees, which are implemented individually, depending on the needs and country.

Following the reorganization of the Henkel companies in the Mercosur region (Chile, Brazil and Argentina), Henkel conducted an extensive survey among the approximately 850 employees in the region during the 2003/2004 period. The aim was to obtain a detailed picture of the work climate and overall employee satisfaction on all levels in all three countries. The survey showed that there was still room for improvement, especially in the areas of management style and communication.

Based on the results, Henkel Mercosur launched a comprehensive action program in 2005. The initiated measures ranged from new training programs for top managers and an intensified dialogue with all employees to regular opinion polls and the implementation of a new trainee program.

Management did not have to wait long to see first rewards for its efforts: In 2006, Henkel Brazil was included for the first time in the nationwide ranking of the 150 best companies to work for. The ranking is based on an extensive employee survey conducted by an independent jury composed of journalists from Exame and Você S/A, two well-known and respected business magazines in Brazil. In 2007, based on the same survey, the company was also named as one of the best companies to work for in the eyes of managerial staff. This ranking will be published in March by the magazine Você S/A – Exame. The award helps Henkel to further position itself as an employer of choice in the country, supporting the goal of attracting and retaining highly qualified employees.

Systematic and regular feedback is a key prerequisite for assessing and nurturing individual and team performance and leadership skills. For many years now, we have employed different feedback instruments like our leadership dialogue, which allows employees to anonymously assess the leadership skills of their supervisors and subsequently engage in a constructive dialogue.

In 2007, we expanded our established feedback processes, focused them more strongly on the definition of improvement measures. In addition to the already existing Management Competencies Assessment and Leadership Dialogue that cover the interaction between managers and the staff reporting directly to them, it is now possible for colleagues and internal and external customers to be included in the feedback process.

The feedback is collected anonymously through an independent institute. With the help of questionnaires, aspects such as social competence, information handling, cooperation within the team, and readiness to give and take criticism are assessed and compared with the manager’s self assessment. The results are sent not only to the relevant supervisor but also to human resources management. This ensures that, when problem areas are identified, human resources management can intervene by initiating a compulsory coaching process. On this basis, strengths and weaknesses are then discussed in a dialogue. An action plan and specific measures to improve the work climate are defined and implemented.