Nina Dombrowska, President of Henkel in Ukraine, shared the secrets of successful work in special product categories — Beauty and Laundry & Home Care. According to an experienced manager, despite the difficult economic situation in which the whole world found itself due to the pandemic, business can not only be saved, but also developed through solidarity, team spirit, corporate culture and maximum care for employees.
LDaily: Please share the secrets of big business management.
N. Dombrowska: We need to communicate with the team, trust it, hear our colleagues. Delegation of authority, along with responsibility for the result are the basis of management of large organizations. The higher is the leader, the more functions and powers they must delegate, as in a large organization, the first person cannot control everything. This is ineffective. The manager is not interested in routine, it distracts from the company’s strategy. I am impressed by mature independent people: we are a close-knit team of like-minded people working together. Everyone accepts the challenge according to the competencies and react without waiting for my step by step instructions. Such strategy makes it more interesting for everyone to work — both for me as a manager and for my colleagues. Each of us understands their significance for the company’s activities.
LDaily: Please describe the impact of coronavirus on all categories presented in Henkel.
N. Dombrowska: In times of crisis, the most stable category has always been Beauty. The current coronavirus crisis has shaken this trend. For the first time in the company’s long history, we see that the Beauty category experienced a difficult period of a quarantine and had significant losses during the lockdown. In April-May (at the stage of the so-called strict quarantine), the Beauty segment in the market fell by about 30%. All companies and brands operating in Ukraine have faced this. Women who are at home may simply not have a reason to use these products. This trend is most evident in the categories of styling and deodorants. The category is currently being restored.
The crisis less affected the range of colors for hair and shower gels, they are more stable. Such an interesting dynamic… We only saw the return of pre-crisis indicators in July. It is still unclear whether it has been such a special month or the recovery has already begun. However, we can say that the category returned to the level of last year.
LDaily: This is a Beauty category, but what about other segments?
N. Dombrowska: We also have a very wide business segment related to home care — Laundry & Home Care. These are washing powders and various household goods. However, on the contrary, there was even some sales growth, especially in late March and April. People were constantly at home paying more attention to household chores, so they bought these goods.
We also have antibacterial lines. During this period they were characterized by increased demand.
For these reasons, these categories showed growth. This was probably the most successful segment for us. This is because the consumer`s behavior has not changed, but even intensified.
We can compare activities in Ukraine and other countries. An interesting observation: Ukrainians are much more resilient to the crisis than the population of other European countries. There was, without exaggeration, panicked packing and sweeping of products from the shelves — and so it was in almost all categories. In Ukraine, there was a temporary trend (this applied, for example, to basic foodstuffs), but it was far from clear, as confirmed by many companies. I repeat: Ukrainians are much more stress-resistant. For us, this is another crisis, so the situation is already familiar.
Even in the categories directly related to antiseptics and antibacterials, there was no high demand. Ukrainians are different from their neighbors in Western Europe in this prudence.
We have another construction segment. In this category, the results are average compared to cosmetics and home care products, which suffered during the crisis. During this period, some construction projects have been frozen due to the uncertainty of investors in the future, or the inability to deliver workers to the working place.
However, in the following periods (May — June) people have already started to be quite active in construction, so there is an ambiguous dynamic in the segment: some facilities have accelerated, some have stopped.
LDaily: When the strict quarantine was announced, how did you organize the work of the state, and how difficult was it?
N. Dombrowska: Still hard to believe it happened so suddenly. We left work on Friday a little embarrassed by what was happening. During the weekend it became clear: that the office had to be closed. We only went out for one day, on Monday. Since Tuesday, everyone has been working from home. I should note that: everything was organized in a very short time, so there was no certainty that it would be effective. I am very proud of our team and our processes because excellent work is established — all processes are well supported by IT technologies.
Employees started working from home, but we did not face any losses. Even the process of the document flow was adjusted electronically. Of course, we all felt some psychological discomfort because this format of work was unusual. But technically everything turned out fine, and if someone said that we could transfer all office workers to work from home in one day, I probably would not believe. However, it was possible and proved its worth.
I believe that such an organization always has two aspects.
The aspect of technology, certainly, requires appropriate technology training – head-office worked perfectly. The second aspect is team spirit and corporate culture. It is important that, in such a difficult situation, employees continue to interact productively and be effective in their activities. To form and cultivate these qualities, our company has worked diligently for many years. If, for example, we hired new people, even with a well-established technological process, it would be impossible to reproduce the whole range of activities at an appropriate level. However, our team worked smoothly and productively, although additional efforts were needed: the interaction required a greater frequency of online contacts. Usually, we held a board of directors once a month and moved to a weekly cycle. If I called the whole team once a month, I started doing it once a week: the interaction required a much higher frequency of contact between employees.
It is connected not only with remote work but also to the fact that we were going through a difficult period. And to support each other, we need time, effort, and communication.
LDaily: Were there any planned investments for this year that had to be suspended due to the coronavirus? Have investment plans been revised for the coming years?
N. Dombrowska: Our key investments are investments in marketing. We continue to invest in the promotion of our brands according to the initial plans.
At present time, all our plants are working, so there are no projects to increase their capacity or large-scale investment plans that would have to be postponed. Key investments are in people and marketing, and we carry them out.
LDaily: During the quarantine, public transport was canceled, many medical workers found it extremely difficult to get to work. Henkel donated 100,000 UAH to Elite Taxi for these trips. Who made this decision and how long did it take to implement it?
N. Dombrowska: All our projects aimed at combating coronavirus and fighting its consequences, along with infrastructure support, were implemented fairly quickly — a few days passed from idea to implementation. We had enough motivated partners with similar values. Both parties — our company and the partners of our initiatives — were in touch almost 24 hours a day, after all, the situation required immediate solutions. A joint project with Elite Taxi is just one of many. Henkel provided financial assistance, detergents, and disinfectants, as well as personal protective equipment for doctors — about two dozen hospitals in Kyiv and the regions received our targeted assistance. The amount of support was over 2 million UAH. Brand “Henkel” shared portion of their income to finance such support, for example, Fa transferred part of its sales by providing targeted assistance to hospitals; detergent brands spent a certain amount of sales on helping elderly people who found themselves in difficulty during the severe quarantine phase. The Fritz Henkel International Foundation also provided funding to Ukraine for purchasing personal protective equipment for physicians.
LDaily: In Ukraine today a lot of attention is paid to environmental issues. As we can often hear from customers that they want to buy products in environmentally friendly packaging — so they try to do less harm to the environment. Does this make any adjustments to the work of large chemical companies?
N. Dombrowska: Sustainable Development Strategy by Henkel is largely based on environmentalizing all processes: sales, production, packaging, processing, and recycling it. The company’s 20-year strategy adopted in 2010 envisages that the company will triple its efficiency while reducing its environmental impact through production processes, lower consumption of resources and energy. With regard to recyclable packaging and biodegradation, these solutions and new technologies are already being implemented by Henkel, which is manifested in the use of energy from renewable sources, optimization of transport and logistics chains to reduce CO2 emissions, in the economical and rational consumption of resources. More than 85% of packaging is recyclable, and by 2025 our goal is 100%. The company is already actively moving in this direction. Another important goal is to adhere to the long-term plan to become a climate-neutral company by 2040 and to take an active part in climate protection.
LDaily: Henkel has announced changes to the company’s organization — the group plans to sell some of its brands in the field of consumer goods and leave the sector of certain product categories by 2021. Please tell us, what brands are in question and what is the reason for such a decision?
N. Dombrowska: It is too early to name brands because the restructuring of the portfolio involves significant analytical work. The main task is to focus the company’s efforts on the production of flagship products that are leaders in their markets and in their categories. It’s not just about reviewing the brand portfolio, but about its active management, about betting on the most promising and valuable for consumers, where Henkel can offer a unique product and valuable options. During this year, the company has already stopped operations in certain areas and signed agreements for the sale of some assets, mainly in the Adhesives and Technologies business unit.
We are keeping committed to a diversified portfolio. It is the key to stable company operations. Additionally, Henkel will continue to conduct mergers and acquisitions, considering the product, technology, and solutions interests. The company has recently signed two deals worth about €500 million. In the Cosmetics unit, the company is expanding its business to digital D2C platforms that provide direct interaction with the consumer through the acquisition of a controlling stake in three fast-growing premium cosmetic brands in Europe. As for the Adhesives and Technologies unit, the company will strengthen its position in the adhesives and sealants segment for regular consumers and professional users in the North American market by acquiring an attractive portfolio of household sealants sold under the GE brand.
The acquired business includes a line of silicone sealants for various purposes.
LDaily: Is it easy for foreign companies to work in Ukraine?
N. Dombrowska: Recently, claims against businesses have become very active. Not so much about the international, but more about the domestic ones — medium and small. At the same time, there is a peak in the activity of regulatory authorities against the business. This is an extremely negative trend. Although it has no direct impact on international companies, we are all in the same economic environment. The current situation, I believe, is counterproductive for reforming the country and attracting investment.
I have a lot of friends — the owners of Ukrainian business, so I know cases of clearly illegal actions against them. Many business associations are concerned about this situation: it would seem that the pressure on entrepreneurship, which has lasted for decades, has finally subsided, but no, it’s coming back!
And here the problem is not in the inspection by government agencies: for example, we are not afraid of it because we are a transparent company, you can check whatever you want. The problem is in the questioned adequacy and true purpose of these inspections.
Business leaders are aware of this and understand that it is necessary to attract maximum attention to this negative phenomenon. We need to talk about this so that everyone knows: now no one will tolerate this situation.
I would like to call on the governing bodies of the state to do everything possible for us to continue our activities in the legal field. This will allow businesses to operate peacefully within the law.
Please read: Crisis: a guideline for publicly exposed companies
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