HR in practice: How household detergent manufacturer Henkel handled its acquisition of Sellotape

The business

Founded in 1876 by businessman Fritz Henkel and two partners, global business Henkel developed and sold household detergents. Over the next 130 years, the family-owned operation expanded its product lines and its global presence, and now has 51,000 employees in 125 countries worldwide.

Henkel operates four core businesses: laundry and home care cosmetics/toiletries consumer and craftsmen adhesives and technologies, including research and development.

The challenge

Henkel launched its UK operations in 1970 and has since maintained an aggressive growth strategy, buying 14 companies in 11 years, including UniBond, Schwarzkopf, Loctite, and Sellotape .

That policy has kept HR on its toes, tackling the almost continual process of integrating thousands of individuals into the Henkel culture. From large-scale international acquisitions initiated by the Henkel Group, to smaller UK businesses, or brand-only buys, HR has had to think on its feet and adapt its approach to each particular situation.

The solution

In late 2003, Henkel UK bought the Sellotape brand to expand its tapes business. Sellotape was based in the UK with some operations in Europe and New Zealand. The deal included its manufacturing facility in Dunstable – which was deemed as a key element of the acquisition because of the technical nature of the product.

The project was charged with a quick turnaround. From the official notice of the acquisition in September 2002, due diligence procedures had to be carried out, and business and structural changes completed by the final deadline of July 2003.

Due diligence performed by the HR team quickly showed that Sellotape lent itself to a more streamlined operation. The decision was made to strip the Dunstable site down to pure manufacturing, and to amalgamate logistics with Henkel’s existing adhesives facility in Winsford, Cheshire. Sellotape’s sales, marketing and support functions were integrated into its shared-services centre in Hatfield.

With these decisions taken, HR went into overdrive. By November 2002, it had communicated all major reorganisation plans to managers and employees, and from there went into group consultations and one-to-one employee meetings. Then, those people who were to be made redundant had their first meetings with HDA – an outplacement company, used by Henkel since 1995.

Available to all employees, the outplacement service provides help with creating a CV, job searches, and interview skills. It is used as part of the Henkel retention strategy, says Alan Thomas, staff resourcing and development manager, who worked on the Sellotape acquisition. It is also used as a goodwill gesture to departing colleagues, which Thomas says helps to speed up the transition from leaving the company and getting a new job. It also helps those that are staying. “The survivors feel their previous colleagues are being looked after,” he says.

Inevitably there were some Sellotape job losses. From an initial headcount of 87 acquired employees, 67 were retained and 20 lost, mainly from the services side, including staff in customer services, purchasing, and logistics.

Overall, Henkel worked hard to overcome any uncertainty. “In terms of winning the hearts and minds of people you are acquiring, the key is to give them a clear message of what your plans are and where they will fit in to the new company,” says Thomas.

“You also need to tell them about the acquiring company, including its capabilities, presence, and career opportunities. You need to sell the benefits of being part of a larger group.”

Henkel followed the guidance set out in the Transfer of Undertakings (Protection of Employment) Regulations, setting up a consultation mechanism with employees and their elected representatives. And all communication was face-to-face, with no e-mails, to avoid fuelling the rumour mill.

The outcome

The Sellotape acquisition is held up as a best practice case in the Henkel Group for its speed of execution and lack of crises, says UK and Ireland HR director Bob Ferneyhough. “Sellotape is a good example of where we had a reorganisation plan prepared early, which was executed quickly,” he says.

A recent internal audit of the acquisition by the global head of audit found:

  • Strong leadership by head of division
  • Early and detailed due diligence of all functions
  • Personal, individual HR contact with each employee
  • Detailed plan for system transfers.

At each step along the way, deadlines were met, including the six-month integration deadline of March 2004.

If I could do it again…

While the Sellotape acquisition was handled well, things have not always gone so smoothly.

In the past, a number of purchases – particularly of technical businesses – have come unstuck when new employees failed to gel with the Henkel culture.

“If an acquired business is technologically complicated it tends to get run in parallel [with the parent company] until people get their heads around it,” says Henkel’s UK and Ireland HR director Bob Ferneyhough. “The danger is a lack of cultural integration, as people tend to maintain the identity of the former ownership.

“We learned from this that you need to bring an acquired business in-house as quickly as possible. People need to identify with the company they work for.”

Employee perspective

Shaun Long thinks he might be jinxed. In a career spanning more than 25 years in the tapes industry, the majority of the companies he has worked for have been bought. A Sellotape employee and now marketing accountant at Henkel, Long has developed a certain fatalistic attitude. “There is not a lot you can do you have to go with the changes,” he says.

However, he admits that it does not get any easier, especially when it comes to redundancies.

“With any takeover there are concerns about job losses it would be a lie to say there isn’t,” he says. Understandably so: from a team of six at Sellotape, Long was the only staff member to survive. “It was a difficult time for me,” he says. “My superiors and staff were all going and I was left in the middle.”

As a result, Long felt guilty. “Knowing the personal circumstances of your colleagues, you wonder how you are going to handle it and how they are going to cope. You hope that they find another job immediately.”

There was also a sense of loneliness, with just three people left in the Dunstable office, which had only recently housed many more.

Long says the ability to use the HDA outplacement service smoothed this process. He believes most Sellotape employees took this option. While undoubtedly an emotional time, Long maintains that the Henkel takeover was one of the least frightening he has experienced. He compares it with a previous acquisition by an investment company. “Its sole interest was to sell you on and make a profit,” explains Long.

Long was similarly soothed by Henkel’s approach to communication, although he is a little reluctant to admit it.

“There was no panic,” he says of the immediate notice of takeover. “People were informed as well as they could be, but you can only be told so much. Inevitably you get the normal whispers.”

Three years on, Long is happily ensconced in the Henkel culture. “I very quickly became part of the Henkel team,” he says. Perhaps luck is finally on his side.

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