Building a Company Without Borders

HBR. ORG Bart Becht is the CEO of Reckitt Benckiser, headquartered in Slough, England. Building a Comp every Without BordersAn Italian Is Running The Uk Business A Dutchman Is Running The U. S. Business An American Is Running The German Business By Bart Becht A Frenchman Is Running The Russian Business An Indian Is Running The Chinese Business A Belgian Is Running The Brazilian Business T The IdeaYou may neer hurl heard of Reckitt Benckiser, barely in the bygone few years the company has outperformed its rivals P&G, Unilever, and Colgate in suppurationeven during the downturn. Heres how. ey say you cant go home again. If you give way for Reckitt Benckiser, you can go homebut you may not want to, and you certainly wont have to. Many companies, when they describe themselves as spherical, blotto they have operations around the world, they work virtu on the wholey and in all time zones, and their key community are developed through stints in otherwise grocerys. Our version is much comprehensive. Most of our top managers havent held jobs in their countries of origin for years and view themselves as global citizens quite than as citizens of any given nation. We have operations in more than 60 countries.Our top 400 managers represent 53 di erent nationalities. Weve spent the past 10 years expression this culture of global April 2010 Harvard Business Review 103 This name is provided compliments of Reckitt Benckiser Group. HOW I DID IT mobility because we think its one of the best ways to generate new minds and constitute global entrepreneurs. And it has paid o . Products launched in the past three yearsall the result of global cross-fertilizationaccount for 35% to 40% of our sack revenue. For example, Finish, an all-in-one dishwasher tablet you drop into your machine, is now the leader in its market category.Recently we successfully introduced QuantuMatican automatic dispenser of dishwasher detergent that doesnt need to be re lled for up to a month. W ith constant innovation like this weve enjoyed steady, pro table growth, even during the downturn. Since 2005 weve outpaced all our big competitors. During the recession weve invested more than ever in marketing, and we grew at a rate of 8% (at constant exchange rates) in 2009. A Company Without a Country The RB Powerbrands Though the companys corporate brand recognition is very low, its products are well-known. RB focuses on 17 powerbrandsAir Wick Calgon (water softener) Cillit Bang Clearasil Dettol Finish Frenchs previously ELECTRASOL Gaviscon AMERICA IN NORTH Harpic Lysol Mortein Mucinex Nurofen Strepsils Vanish Veet Woolite 104 Harvard Business Review April 2010 Reckitt Benckiser resulted from a amalgamation in 1999 of Reckitt & Colmana British purveyor of household cleaning products with a salient stable of brandsand the Dutchlisted Benckiser, a much smaller but betterperforming consumer goods company. precisely we dont want to be known as an AngloDutch enterprise, or by any other label based on our operations or history.Were not any countrys companywere a unfeignedly multicountry company. That is by design. Postmerger we mixed the national cultures quickly in every corner of our operations. Premerger many of the local businesses had been running themselves more or less independent of the suspire of the world and without regard to overall corporate precedentities. We transferred people who embodied RBs values into key positions in new markets. Managers from one side of the merger were purposely moved to another territory, and then moved again. Now in every country we have people of many nationalities as well as local citizens.Today an Italian is running the UK business, and an American is running the German business. A Dutchman is running the U. S. business, an Indian the Chinese business, a Belgian the Brazilian business, and a Frenchman the Russian business. Its not that you cant advance at RB in your local company. You can. But we also offer uniq ue global mobility and experience to people who want to grow their careers on a world stage. To facilitate this mobility, we established compensation rules that apply equally to our top 400 managers in all markets, making international transfers easy.We have just one employment contract, and our salary ranges were developed with global benchmarking. Our annual cash bonus structure and long-term incentive plans are the same for everyone, as are our pensions, medical plans, and other benefits. We have no expatriates in the traditional sense, no tax equalization or guarantee of a job back in ones home country. When employees take up jobs in other countries, theyre transferred as local hires. Weve strengthened in standard protocols to light upon it easier for people with families to move.For example, we fund whatever school the employee chooses for his or her children because we understand how important that is to a familys adjustment. That way, we can instantly implement a transf erwe dont have to negotiate a lot of convoluted contractual nonsense. We have moved people to new countries in as little as two days. We also do something pretty rare with graduates. In some markets we help foreign students to get work permits in the countries where theyve been studying. The very fact that they have traveled to study means they are internationally minded and thus likely to be keen to work in other countries as well.At a lot of companies its assumed that employees, having seen the world, will sooner or later return to their home countries to continue their careers. Our idea is that you focus primarily on the best job possible for you, regardless of country. That kind of life isnt for everyone, and not everyone has to follow that path. But those who love it sincerely love it. Its exciting, and it gives pace, challenge, learning, and a buzz to peoples careersalong with the satisfaction of being able to be entrepreneurial and innovative. We try to put our richly poten tials in stretching situations around the globe.For example, we had one excellent employee who wanted to be moved to an international marketing job. We had an opening in India, but that would have been a poor choice for himhes Indian. Our previous three marketing people in India were German, French, and British. If this employee wanted to grow, he needed to acquire different experiences and learning, so a better development opportunity would be for him to work in Brazil or Mexico. Our high potentials have to find their footing very quickly, and most(prenominal) of them grow tremendously when we take them out of their familiar zone.This article is provided compliments of Reckitt Benckiser Group. HBR. ORG Reckitt Benckiser at a Glance A DECADE OF GROWTH , MILLIONS , ?, ? Total , crystallize Revenue (? M) , , , , , , , OPERATING PROFIT , Operating Pro? t (? M) NET REVENUE , Employees ?, ? , Total , Net Revenue (? M) Operating Pro? t (? M) Employees start RECKITT BENCKISER Even their failures in new markets are important learning experiences for our high potentials. One of our top managers, who is Dutch, still talks about the hard lesson he in condition(p) when we transferred him to Turkey.In The Netherlands, where he had worked before, billing and receivables were predictable and orderly. In Turkey the currency suddenly collapsed by 70%while he was focusing on market share rather than on delinquent receivables. As he puts it, theres nothing like a currency failure to change your views on tight financial management. If you dont express your opinion, you dont have an opinion, and thats a fatal weakness for people who want to do well at Reckitt Benckiser. That means our meetings are a bit chaotic. Everybody wants to be heard, so its more like an Italian family dinner than a nicely organized board meeting.What takes over in our meetings is an intensity and a feeling that we have to ght for better ideas. Con ict is good. We dont care about consensus. non having i t doesnt slow us down and doesnt mean that people arent aligned. We make purposes fast and then all stand behind them. What isnt tolerated is conflict that simply slows down decision making or is for political or personal gain. Almost every key decision is made in the meeting at which its rst discussed. We expect people to come armed with facts, be prepared to argue their point of view, and be willing to live with the decision we ultimately make.Get 80% alignment and 100% agreement to implement. And move quickly. But I also dont believe in devastating minority views. If we have 10 people in a room, eight of them agreeing on one thing and two passionately believing something else, we dont try to resolve it to everyones satisfaction. We allow those two to experiment with their ideaseven if everyone else thinks theyre wrong. At the end of the day, what counts is not what the 10 people in that room think, its what the consumer thinks. So we let them run maverick smallscale experiment s to get consumer feedback. Sometimes our biggest ideas come that way.About six years ago we had a huge internecine debate about a product called Air Wick Freshmatic, which automatically releases freshener into the air on a schedule. It originated when one of our brand managers in Korea observed a new kind of automatic scent dispenser in stores there. In his opinion it was not a well-designed product, but he thought the idea was intriguing, so he brought it to a group meeting at our headquarters. Vigorous debate ensued. April 2010 Harvard Business Review 105 With so many different native languages in our company, it was necessity to make English the official language for all meetings.Im Dutch, but I dont speak Dutch with any of my Dutch colleagues, because if others are around, it excludes them. We are one team with one language. English isnt most peoples native language, and often our English isnt pretty. But the way we see it, it doesnt matter as long as you give a view. If you dont express your opinion, you dont have an opinion, and thats a fatal weakness for people who want to do well at Reckitt Benckiser. You have to stand for something, no matter how bluntly you transmit it. Con? ict Is Good This article is provided compliments of Reckitt Benckiser Group.HOW I DID IT HBR. ORG RBs Performance-Based Remuneration Reckitt Benckiser believes it has designed a compensation plan to foster its innovative and entrepreneurial culture. The company has touted performance-oriented pay in its annual report as key to RBs strong growth. According to a 2006 Harvard Business School consequence study, the plan, which applies to the companys top managers (including the CEO), consists of three parts base salary, short-term incentives, and long-term incentives. Base salaries are set near the median for competitors pay. The real bene? comes in the form of bonuses. A manager who meets all targets will typically receive 40% of his or her base salary as a bonus that year. A m anager who blows the targets out of the water A manager who blows the targets out of the water can earn a bonus of up to 144%. (usually that means stunt man the target numbers) can earn a bonus of up to 144%. Long-term compensation, in the form of options and performance-related restricted stock, depends on meeting three-year corporate growth targets for earnings per share. New long-term goals are put into place each year. Karen Dillon A couple of our managers believed it should be a consumer product in Europe, but a lot more thought that made no sense it might work in Korea on a very small scale, but it would never work in Western markets. For one thing, it would have to be priced well above the standard air freshener, and it wasnt clear that the market would support that. Also, this would be our rst foray into something electronic, with wires, batteries, interval switchesa complex technology combination. The product would require new manufacturing facilities if it went to any sca le.But two people meant we had to source materials we had no prior experience with. Today Air Wick Freshmatic is sold in 85 countries, with a wide range of options for consumers. It generates well in excess of ? 200 one million million annually. That product had the most successful launch in our history. Of course, things dont always work out that well. Weve launched some beautifully thought-out products that we were passionate aboutbut consumers werent. A few years ago we introduced a wonderful product to clean your microwave You put a little sachet into the oven and start it. WhileIf soul wants to stand up under stress and say, No, I passionately believe in this, then Im willing to take a chance. maxim the potential and were willing to ght for the chance to prove it. If somebody wants to stand up under stress and say, No, I passionately believe in this. You kats are all wrong Weve got to do this, then Im willing to take a chance. So in this case I said ne, heres the money go g ure it out, but do it on a small scale. And thats what they did. In January 2004, initial testing of the idea with consumers in the UK produced extraordinary results.By the end of the year the product was in more than 30 other countries, and wed overseen the building of a new factory in China to make itwhich 106 Harvard Business Review April 2010 the oven is heating, the sachet pops and spreads cleaner around. When its nished, the sachet has become a cloth to wipe your cleaner away. It was a beautifully designed product. But it turns out that people dont actually want to clean their microwaves all that often, so we pulled it from the market. If we are going to fail, we want to fail small and quickly.Failure is actually a huge incentive for the kind of people who fit well with our company, because theyre so personally competitive that theyll work even faster for the next success. Everyone wants to do something to get on the map. I just moved one manager from Chile to Turkey. He earne d that move because he had done something very intriguing in his markethed launched one of our powerbrands, the sanitizer Dettol, in Latin America. It wasnt the biggest success weve ever had, but the point is that he did it. He was the guy who brought Dettol to Chile and created a platform for its growth.Thats his mark on the business. That kind of thing earns you a promotion in this company, and the promotion will probably take you to another part of the world. Some people look at us and think theyd have to be nuts to work here. Were expression for people with a certain level of maturity, intensity, and competitiveness. If you bring all of that to Reckitt Benckiser, it will be rewarded. (See the sidebar RBs Performance-Based Remuneration. ) As the CEO who has guided the company for more than a decade, Id like to take credit for having a brilliant strategy or unique insights into the global marketplace.But in humans the vision slide we use today is the exact same one weve used si nce the merger. We have a very simple approach to the business focus on 17 powerbrands in fast-growing categories, innovate and invest behind themand do so in every market. At the end of the day, what is most hard-hitting about Reckitt Benckiser is its people and culture. I can tell in three minutes if someone would be a good t for our company. Wed rather have a position open for a long time, if necessary, than put the wrong person in place. Its that important. HBR Reprint R K This article is provided compliments of Reckitt Benckiser Group.