controlling as a business partner at hansgrohe · controlling as a business partner ... • being...

Controlling as a Business Partner – at Hansgrohe

Siegfried Gaensslen Chairman International Controller AssociationFormer CEO Hansgrohe SE

International Controlling Conference CroatiaZagreb, November 5, 2015

International Controlling Conference Croatia, Zagreb, November 5, 2015 Siegfried Gaensslen – Controlling as a Business Partner 2


Personally: my way from controller to CEO

Introducing Hansgrohe

What the management expects from controllers

Changing role of controllers

Best practice

Conclusion


Important experiences and facts

Pursuing a degree in economics while working full-time in different sectors (HR, IT, accounting, purchasing, controlling) at different companies

Major positions and stepsPrice Waterhouse: Assistant Manager Auditing, Mergers & AcquisitionsThe Cooper Group (electronic devices): Controlling, International IT projects,

Reporting, BudgetingKarl Dungs (systems for climate & heating): Commercial Director.

Installing controlling functions, national and internationalAcquisition of companies (UK, Denmark, USA) and their successful integration

Hydraulik Ring (automotive supplier): Managing DirectorInstalling controlling functions, HR and IT (previously handled by headquarter). From loss to profit.




Major positions and stepsHansgrohe a global player in the sanitation industry, market leader in

showers, located in the Black Forest

• Managing Director, Controlling, Finance, Human Resources, and ITTransition of Hansgrohe into an incorporated, non stock-listed company (AG) • Chief Financial Officer (CFO) and Deputy Chairman of the Executive Board • Chief Executive Officer (CEO) Make Hansgrohe international and grow the company into a profitable global player with 34 subsidiaries ww and €874M revenueTransfer Hansgrohe AG into an SE (Societas Europaea) Executive Advisor to the: Supervisory Board, Hansgrohe SE; CEO Masco Corporation Today: Zentis, Liebich&Partner, WiHa, Controller Akademie




Role development

Growing from a control and reporting function - with a score keeping role - the controller today is faced with the expectation of a business partner role, acting much more like a consultant.

My personal development and evolution was from the role and responsibilities of a traditional controller into one of an active influencer and participant in the decision-making process:

Business Partner




What was important?

• Market and customer knowledge• Being able to translate the knowledge of the key challenges into the whole

company • Leading innovation• Communication with all levels and departments in the company• Sparring partner for management• Globalization drivers: simplify and standardize global processes, eliminate

duplications. This leads to lower complexity and reduced SG&A costs. • Keep production cost worldwide on China level • Sales growth combined with high profitability

This – and luck - opens the door for stepping up to the role of the CFO, and even CEO.






Hansgrohe – Driven by innovation, also in controlling

Hansgrohe SE is one of the few global players in the sanitary industry, representing with its brands high-quality, design-oriented products.

The recipe for success is tradition-based innovation coupled with sustainable business oriented thinking, and this can be found throughout the company.

All processes support innovation and creative design - and controlling is an effective and important part of this culture.




Hansgrohe – Who we are

• Founded in 1901 by Hans Grohe (1871-1955) in Schiltach, Black Forest, Germany

• European public company (Societas Europaea, SE), not listed on the stock exchange

• Two shareholders: • 32% Family of Klaus Grohe, Schiltach• 68% Masco Corporation,

Taylor, Michigan, USA


Net sales turnover of Hansgrohe Group in Mio. € from 2010 to 2014


Introducing Hansgrohe – Global Player

Hansgrohe – Who we are Global Player

2.13766%

2.13265%

2.17863%

2.19563%

2.23161%

1.08334%

1.13935%

1.26637%

1.30637%

1.41939%

3.220 3.2713.444 3.501

3.650

2010 2011 2012 2013 2014* Die Zahlen beziehen sich jeweils auf den

2.13766%

2.13265%

2.17863%

2.19563%

2.23161%

1.08334%

1.13935%

1.26637%

1.30637%

1.41939%

3.220 3.2713.444 3.501

3.650

2010 2011 2012 2013 2014* Die Zahlen beziehen sich jeweils auf den

Approximately 77% of sales outside Germany,More than 80% of products “Made in Germany”

Headcount




Hansgrohe – Who we are Global Player

Shanghai

Schiltach & Offenburg

Atlanta Wasselonne

Amsterdam

• 34 companies and 22 sales offices all over the world• Hansgrohe products are sold in 136 countries• 10 production sites




Hansgrohe – Global Player: From the Black Forest to the world

Cruise Liner AIDAbella

Burj Khalifa, DubaiDongxu Jinjiang Hotel, Chengdu



Introducing Hansgrohe - Brands

Hansgrohe – Who we are Brands

Design Collections

Pura Vida Comfort Zone

Select


What management really wants controllers to do



Implement strategy • Lead the process, taking an entrepreneurial view• Communicate actively

• Profitable, international, organic

• Make experiences in markets• Analyze main competitors, know their goals, and overtake them • Know challenges in the own market• Regard marketing and R&D costs as investments • Know the customer portfolio

• Concentrate on these profit drivers: • Innovation – sales – cost – price

• Analyze and control sales deductions

Drive growth

Know what makes the market and the customers tick

Execute return on sales targets





Manage costs intelligently

• Avoid underused capacities with high share of fixed costs• Control and keep structure costs slim• Balancing national and global production• Investments must reduce production costs

Globalization• Set standards• Fast reporting and intervention if things go wrong• Monitor targets, execute consequently and fast• Support talents• Think like an investor

”Be ready to play small”

”Controlling must add value”


The fairy tale of make or buy calculationsOr: Sunk cost trap



Look behind the surface!


The fairy tale of make or buy calculationsOr: Sunk cost trap



• Management on tour • Delayed deliveries • Costs to unseal and unpack• Production downtime • Cost to ensure quality • Cost for logistics and handling• Multiple Incoming goods inspection / delivery controls

Danger: You may build up your supplier to a competitor

Look behind the surface!





Manage risks in a globalized world

• See risk management as an opportunity• Fulfill compliance and corporate governance• Be aware of the mental state of the SEC (US Securities and

Exchange Commission) • Effect of class actions

Control controllers• High efficiency • Speed • Reduce administration costs, and don‘t forget the controlling

department



Controlling as a Business Partner – at Hansgrohe SE


Capabilities of controllers

• Decisive, with a strong will • Calm & fair • Advocating an opinion, showing courage• Objective, even against management


Development of controlling at Hansgrohe



Development of company Development of role of controller

1993 – 1997’Bean counter’

Focus on Germany as key market

Marketing as most important function within theenterprise

Global market leader in showers

Entering the segment of design faucets

Focus on Financial Closing, Cost Center, and Product Calculation

Standardize month-end and year-end closing

Consolidated financial statements

For the first time Business Plan & Budget (1995)

1998 – 2002’Reporter & programmer’

Transfer to non-stock corporation

Internal organization. Develop markets (USA, China) and build up production

Enter the volume business of fittings

Introduce SAP as integrated ERP system

Introduce Plus21 program

Implement financial reporting according to stock exchange rules

Consistent standardized reporting with SAP across the group

Controller as programmer of reports and supplier of data

Leading strategic projects, like setting up Sales Controlling






2003 – 2005’Navigator’

Internationalization with ‘Global Speed’ (USA)

Developing international production networks

Introducing a matrix organization

Business Plan is now one of the most important tools to manage the company

Set up corporate controlling; and develop controlling function in subsidiaries/regions

Integrating Finance & Controlling

Taking leadership of ‘Global Speed’

2006 - 2008’Innovator’

Systematically making full use of the potential of the mature markets

‘Logistics 2010’ program

‘Pretty Daughter’ program

Decentralizing the organization and creating regions

Managers become controllers for their own responsibilities

‘Global Speed’ continues with emerging markets (BRIC)

Reporting on web portal

Controllers take lead in business planning

Quarterly Operations Reviews

Leading the process for ‘Sales Up!’

‘Global Speed’

Modern Budgeting

Fast contingency planning (Revenue -9% / Result +5%)






2009 – today’Business Partner’

From international to global

Top ranking: Hansgrohe ranks as one of five global players in sanitary industry

IT-driven

Controllers in subsidiaries are developed to business partners

Development of reporting and planning tools, BI online-portal

Controlling more involved in strategic development of the company, and driver of strategic projects

Today, the controllers are business partners and co-managers at Hansgrohe as global company, taking benefit of automation*, standardization, volatility management, efficiency of costs and processes

* Standard reporting is automated and distributed on mobile devices


The controller as the business partner of management



Tasks of the controller Role of the controller

TodayBusiness Partner

Coordinating Business Planning, strategy development and strategy review

Coordinating budget and rolling forecast process

Coordinating month-end and year-end reporting

Controlling of sales and marketing; analyzing sales and profits

Moderating Operation Review Meetings

Ensure standardization of business processes

Control risk management and SOX

Supervising projects

Discuss and consult management in all business topics

Build and support IT structure

Service provider

Communicator

Moderator

Expert

Consultant

Innovator

Business Partner


The controller as the business partner of management



TodayBusiness Partner

This requires deep knowledge of the value chain, the market, and the customers

Do‘s• Analyze and propose solutions rather than only delivering figures or just

describing• Foster creativity rather than simple applying cost-budgeting• Have an entrepreneurial mindset rather than an ‘administrational’ one


The controller ... On eye-level with the management




Managers self-controlling

Managers become controllers for their own fields of responsibilities. An Hansgrohe internal portal provides management with information on the development of revenue, earnings, cost and working capital


Best practice

Hansgrohe China Cockpit


Controllers’ innovations at Hansgrohe

Projects invented and driven by controlling at Hansgrohe:

• Global Speed• Sales Up! • Plus 21 – a cost efficiency program • Logistics 2010• GSx – counter strategies against competition• Hansgrohe 2015 – from fixed to an agile strategy, now continued as Hansgrohe 2020

Many of the projects are major efforts and run over several years.


Best practice


Controllers’ innovations at Hansgrohe: Global Speed

Bridging between strategy, planning/forecasting and market development


Best practice

I. Market / competitive situationII. Review of monthly / quarterly results

1. Order entry / order backlog / delivery situation2. Gross sales by brands / channels / key accounts + sales deductions3. Cost / pricing situation / profit4. Working capital

III. Review of goals1. Budget / Business Plan / 10 Main Things

IV. Investments1. Human resources2. Marketing (actions and budget status)3. Capital investments

V. Strategic Projects(i.e. Sales Up!, CRM, Plus 21, digitalization, Validation Risk Management, Logistics)


Controllers’ innovations at Hansgrohe: Sales up!


Best practice

Sustainable growth of revenue and net income

Innovative products and organization with focus on customers

Execute project in pilot and roll-out phase

Concepts how to handle customers and plans for growth

Analyze and segment the potential customer base-

Developorganization

Analyze market andcompetition

Sales Up! is an integrated tool kitwhich consists of 5 modules in order to align sales in a sustainable and strategic way.


Controllers’ innovations at Hansgrohe: Plus 21

Efficiency at Hansgrohe has a name: “Hansgrohe Plus 21”.

This program has allowed the company to systematically optimize its results since 2001. In 2014, measures implemented as part of the program saved the company € 18.5 M.

In total since 2001, the numbers add up to savings of € 206 M.


Best practice


Controllers’ innovations at Hansgrohe: Plus 21 The profit improvement program ‘Plus 21’ is a rich source for potential profit:

... both the value chain

... as well as service departments


Best practice

Research & Development

Purchase & Disposition

Production & Assembly

Marketing & Sales Logistics After-Sales-

Service

IT HR Accounting & Controlling

Facility Management

Component management

Value analysis Centralize tool

shop

Supplier terms Make or buy E-procurement

Automation Relocation

Reduce advertising material

Pricing management

Inventory levels Reduce freight

expenses

Spare part logistics

Outsource customer service

IT licenses Modernize

hardware Digitalization

Travel management

Talent development

Electronic in-voice verification

Cash pooling

Maintenance Energy Removals



Conclusion

Credible Committed Consequent Convincing

Team worker Creative Simplifies complexity

Market knowledge Business partner for the managementCon

trol

ler

Leads strategy Knows competition Forward looking

Networker Key value driver

Challenges the organization Eyes and ears of the CEO

Execution of strategy Drives innovation Excellent communicator

Develops talent KPIs are not the only management tool

Good listener Understands customers and different cultures

CE

OC

FO


”Be close to your products,to your people,to your marketsand to your customers”


And now ...

... I am looking forward to your questions and discussion!


Learnings and Outlook


www.controllerverein.com

International Controller Association

controlling as a business partner at hansgrohe · controlling as a business partner ... • being...

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