Haniel

How Haniel became "enkelfähig"

03/27/2013

March, 2013. Christoph Böninger and Stephan Gemkow discussed the topic of “corporate responsibility in family companies” with the scholarship holders of the Haniel Foundation. Our reporter, Friederike Andrae, was there.

Christoph Böninger and Stephan Gemkow were on good form last Thursday evening. They wanted to contribute something to the scholarship holders of the Haniel Foundation. Something about values in corporate activities. Something about the difference between a family company and a stock corporation and what it means to be “enkelfähig”. The Haniel Foundation supports particularly successful students as the “managers of tomorrow”. As part of this year’s scholarship holders’ meeting, they learned about what corporate responsibility means in practice.

Family ties vs. corporate identity

Christoph Böninger is the Deputy Chairman of the Board of Trustees of the Haniel Foundation and Chairman of the Advisory Board of Franz Haniel Cie. GmbH. Right at the beginning of the discussion, he made one thing clear: he does not like the term “corporate responsibility” (CR). He considers it a buzzword – which always gives the impression that it describes something completely new. However, in his eyes, CR stands for what Haniel has been practising since it was established: responsibility is in the company’s DNA. After all, Germany’s first company health insurance fund was founded at Haniel. According to Böninger, Haniel has two opposing value systems. On the one hand is the company with a hierarchical structure and expectations for employee performance. On the other is the family whose members treat each other as equals and are loyal to one another. This results in a tense overlap of values.

In response to a question from a scholarship holder on how the growth of the family is balanced with the growth of the company, Böninger explained that this is not at all what the company aims to do: “Family members do not have a fundamental entitlement to benefits from the company.” For example, a dividend will not be paid out to the family this year. However, Böninger explained that this has not resulted in any major discussions as the family has agreed that the long-term success of the company takes priority. Later, Böninger talked about how the younger members of the family are being introduced to the company purposefully. They learn about “what makes Haniel tick” through Youth Meetings.

One scholarship holder from Austria dug deeper, wanting to know about the disadvantages of a family company – surely it is difficult to make decisions with so many shareholders? Böninger explained the function of the Advisory Board and the Small Circle to him. He emphasised how important it is for everyone at the regular family meetings to be able to express their opinions and for them to be discussed seriously as well – “Yes, we let off some steam too.” He values the familiar atmosphere and feeling of unity at the meetings. This is partly due to the fact that all shareholders have a common role model – that of the “respectable salesman”. When asked exactly what this means, Böninger referred to the company magazine “Enkelfähig”: This term ideally illustrates the company’s aim to always act in a way that will benefit future generations as well. It is important to Böninger to achieve a balance between the interests of the family and the company. The company should draw strength from the family, not the other way round.

Advice from the expert

The family members are also unanimous on the fact that Gemkow is the “right man” for Haniel. But what made the former Lufthansa employee change companies? “I wanted a bit of peace and quiet,” replied Gemkow, laughing. “No, I still don’t have that now.” He thought more about the question and explained that he began working at Lufthansa during a time in which the company was considered prestigious and glamorous. However, there is now destructive competition with state-owned airlines from the Middle East, discriminatory air traffic taxes and problems with small yet powerful craft unions: “There is always someone in the value chain on strike.” Furthermore, Gemkow explained that citizens are increasingly turning against airports and train stations as they do not recognise the importance of infrastructure and mobility for our country. Gemkow calls this “weariness with civilization”. These challenges would pose a huge danger for air traffic in Germany. Gemkow believes that new strategic concepts are required for this reason. However, he admits: “I was no longer able to enjoy success with my ideas and took appropriate action.” A piece of advice that he bestowed upon the scholarship holders as well.

Unlike Lufthansa, Haniel has a portfolio that consciously avoids synergies: “You do not want to have all of your eggs in one basket.” At the same time, Gemkow illustrated how important change has always been for the company: Current profits come almost exclusively from divisions that were not set up until after 1982. That evening will not be the last time Gemkow emphasizes that quarterly results are nowhere near as important to Haniel as long-term, sustainable success. In this context, even the founders persistently stood up for their ideas, which they thoroughly believed in. In his view, success still depends on the people’s commitment today: “We have small, highly professional teams. It is fun working with these teams.”

An alumna of the Metro Haniel China Programme came forward and thanked Haniel for the sponsorship, which Haniel had provided completely by itself after Metro’s financial exit. However, the student was interested in the long-term financial security of activities, which ultimately depends on the success of the company. As the third CEO in four years, what is Gemkow going to do differently from his predecessors? “Due to various developments in recent years, we really have gotten ourselves into a difficult situation,” summed up Gemkow. “We are compensating for this by selling part of our assets in order to reduce our debt – and enable us to invest in growth business again in the future.”

Supervisory Boards and owners

The benefits of being a family company were also mentioned again and again. Gemkow lamented that it is quite common in stock corporations for employer representatives on the Supervisory Board not to hold any shares in the company. In his eyes, this means that they are not really affected by company issues, which is to the detriment of discussions in the Supervisory Board committees. “I wonder whether employee representatives wouldn’t be more relevant dialogue partners in this respect,” he postulated. After all, they are often better informed about the issues affecting “their” company. He sees Haniel as the exact opposite of this. At Haniel, given that Supervisory Board members are also company owners, this means that they are directly invested in all decisions and have a genuine interest in sustainability. The approach taken in the face of a dry spell for the business is completely different; discussions are more geared towards business models and risks: “I consider this to be a much more exacting and honest way of doing things.”

Acting locally

One scholarship holder was interested in how Haniel Holding is implementing the CR strategy across the divisions, to which Gemkow responded: “All divisions have acknowledged the importance of this issue. With respect to reporting, some divisions have even gone one step further than the Group Holding Company, which is nonetheless providing the general framework.” Another scholarship holder asked about the ambitions of the CR actions beyond Ruhrort. Böninger and Gemkow agreed that the company wants to focus on projects “on its doorstep”. This is where the outcome and effectiveness of the measures taken are most visible. It fills the family with pride and brings emotional added value. Action is taken in areas where the need is the greatest and not where the most media coverage will be generated. Bearing this in mind, during the 2013 budget meeting, cuts were only made in areas that were likely to find other sponsors quickly, such as sponsorship for sporting events. Hafenkids and schools are not affected by budget cuts.

To wrap up the discussion, Gemkow was asked how he would get a successor enthusiastic about Haniel. He responded: “I would explain to them the difference between a family company and a stock corporation.” This brought a smile to the scholarship holders’ faces. This is precisely what Böninger and Gemkow had been doing for over an hour.