Immersing in a new set of values
Angie Ng, LIXIL’s Asia Pacific CHRO, details the crucial role HR played in bringing synergy to various business integrations.
Vital stats: As the Chief Human Resources Officer for Asia Pacific at LIXIL, Angie Ng leads a team of 122 HR staff to manage the people matters of the 10,000-strong workforce in 23 markets across Asia Pacific. Her mission is to value-add to the aggressive business growth by enabling a highly productive team and conducive work environment through business-centric, long-term sustainable scalable organisation capabilities, simple processes and systems.
Born in 2011 through a merger of five of Japan’s most successful building materials and housing companies, LIXIL is the parent company behind water and housing product brands such as GROHE, American Standard and Tostem. Soon after Angie Ng joined LIXIL in 2013, the company underwent several mergers to integrate its various business entities into one LIXIL Asia Pacific.
The first major integration she was engaged in was in August 2013 which combined more than 30 business entities in more than 10 countries in ASEAN to be under the LIXIL ASEAN organisation. This was followed by one in April 2015 to combine other APAC regions such as Greater China with the ASEAN unit while integrating the various brands under LIXIL Water Technology (LWT) – including GROHE, INAX, and American Standard – to become one LIXIL APAC. Then came the third round of integration which brought in brands under LIXIL Housing Technology (LHT) such as TOSTEM. Last, but not least, was the integration of its new green-fuel plant in Andhra Pradesh India.
With four major rounds of business integrations, in this exclusive, Angie Ng, Chief Human Resources Officer for Asia Pacific at LIXIL, reveals HR’s role in its success.
Q What were the key roles HR played in these integrations?
The HR team came together as a new team during the first integration. So, before anything, we had to make sure the 122 people in the team were on the same page.
After that was done, the first thing was to make sure we integrated the business needs together with the people needs. With everyone coming into a new entity, we had to make sure people were all treated fairly and equally.
For HR, this meant to quickly standardise HR policies, job titles, benefits and salary structures. We got into this very quickly – in the first year. I did this quickly and decisively to get a quick win for the team and to get the policies and the organisation’s chart out. This also helped establish the credibility of the function and get the business leaders to recognise HR, which they did. It helped us get more influence to engage the business leaders and get buy-in.
Then we had to ensure the communication to employees was fast. We had to address their basic concerns – “do I have a job?”, “who is my new boss?”
I remember during the most major integration – the LWT integration – even though the official announcement was made in April 2015, I was already finishing up the employee FAQs in November 2014 while on vacation in Las Vegas.
I knew I had to let the employees know what to expect and what not to expect. I had to tell them, “don’t worry, you have a job”. But I also had to let them know they shouldn’t expect a salary increase if they were given a new role as we would only be doing that after they had proven themselves in it.
We were very honest and transparent in letting employees know what we could offer and what we were not going to offer.
I think transparency and speed of communication in telling employees what to expect and what not to expect in advance helped build their trust.
For the integrations following the 2015 one, it was more about getting everyone together as a team – from the common ownership of KPIs to the way we behave.
To help us achieve a 10% growth every year, we needed to make sure people were integrated with the business and moving in the same direction the business wanted them to move. Hence, we implemented co-ownership of KPIs in 2017 where all the supply chain leaders had the same KPIs of safety, delivery, cost and quality.
In 2018, we evolved that to include common individual KPIs for commercial leaders as well. This ensures we are all in it together for a common purpose and will help each other sustain the 10% sales growth in the long-term. This was one of the key performance management initiatives HR was driving.
To keep track of progress, we make use of a platform which everyone enters their KPIs into. Then, every quarter, we will have follow-ups and status updates where finance and HR will separately facilitate the sessions with different functions to see what the various commercial and supply chain functions can do to ensure the common individual KPIs are met.
Because we have a philosophy of pay for performance, we link these KPIs to the year-end bonus.
In terms of behaving as a team, at the end of 2014, when we were setting the stage for the biggest integration to date, we launched the five LIXIL values. The values were to: work with respect; deliver on commitment; embrace quality; inspire passion; and pursue growth. When we launched it, we gave each employee a “LIXIL Values” card with details of the values. We had town halls and workshops, as well as awareness on what each value meant and what each level – from staff, to managers and executives – had to do in line with it.
HR drove awareness and the workshops, together with the business leaders. At that time, it was the regional CEOs from the Americas, Europe, Asia and Japan who put together the five values. They were the ones who decided these were the five values LIXIL would pursue together.
As HR, we didn’t own the values: the ownership belongs to the employees and leaders, while HR enables and facilitates.
We then evolved it from the five LIXIL values to the three LIXIL behaviours which we launched in August 2018 – experiment and learn, work with respect, and do the right thing.
Sustaining the 10% growth is challenging, so we need our employees to have an entrepreneurial mindset: to experiment and learn from it. With such a diverse workforce with different nationalities and cultures, we need to work with respect to work well together. At the same time, as many HR and business leaders would have heard – we have to do the right thing for the business, not the favourite thing.
We expect every employee to follow these behaviours. But, similar to the five values, HR doesn’t own them. HR is the enabler and facilitator, working with the business leaders. The employees are the ones with ownership to demonstrate them.
Q You mentioned the official announcement was in April 2015, but by November 2014 you were already working on the FAQs. When did the whole process start?
I was first approached by the CEO of LIXIL APAC, Bijoy Mohan, about the merger in September 2014. From there, things moved very fast. What I did as the HR leader for the new region was to first understand what kind of people the CEO needed to be in the top team.
Then, I provided him with the profile of leaders who would best fit into “the team”, including the last three years of performance evaluation results – and then arranged the interviews.
I also did this for the second layer and we jointly formed the top and second layer of leaders right after he completed his last interview. In early January 2015, the LWT APAC top leaders met for their first top team meeting.
After the draft organisational chart was done, we worked together with the leaders to fill in the names. We decided who might be the best fit based on their competencies, performance or potential to be in a new role or location.
Throughout the selection, we were gender-blind and colour-blind – gender, race or nationality wasn’t part of the consideration. To us, it was an opportunity to build a talent pipeline as it was a good chance for employees to move into another role or function. We want our people to be agile and able to take on new roles.
Q Were any employees laid off throughout the process?
We didn’t have to lay off anyone.
Our CEO of LIXIL APAC doesn’t believe in redundancy. It is the easiest way out, but it is not responsible or sustainable.
For us, the merger was more about the synergy. We were able to use the headcount for new factories, businesses, growing functions and sites. We move people around the region and do job swaps to prepare for the future. It’s a very fast-paced environment, so we have to move fast and make sure we have extra resources to capture the business opportunity when it arises.
Apart from having no casualties, the turnover rate also remained below the industry average. In our industry, the turnover is usually around 20% as factory associates tend to be more volatile in their term of stay. But, for us, in the fiscal year of 2015, the voluntary turnover was about 9%. In 2016 it was 11% and in 2017 it was 13%. It has remained below 15% and we want it to stay below 15%.
At the same time, we have a very stable management team. My CEO has been here for 11 years, I have been here for more than five years, and many of my peers have been here from seven to nine years. I think this is in part due to the business results – when the business results are good, people are more motivated because there is satisfaction from it. At the same time, it helps their personal career.
Q When it comes to intangible things such as values and behaviours, how do you inculcate and measure them?
HR has been an active change agent for the LIXIL values since rolling them out at the end of 2014. To reinforce, every year at the country level, the local HR organises awards to recognise exemplary role models of the LIXIL values.
These country level winners then vie for the regional level’s “Very Important Values Award”. The best-of-the-best role models for each LIXIL value are flown over to Shanghai to be recognised and celebrated in the presence of the top leadership team.
Notably, the LIXIL values are an integral part of the annual performance appraisal where the solid line and dotted line managers rate their subordinates on their demonstration of each of the five values.
Now, to keep abreast with the changed business needs for more entrepreneurship with our investments in new businesses, the LIXIL values have evolved into LIXIL behaviours.
To inculcate the behaviours, the leaders have to walk the talk. They have to be the role models to show the employees how to work with respect, experiment and learn, and do the right thing. We launched the behaviours in August 2018, but we plan to have reinforcement activities at least every quarter.
When it comes to measuring them, it is more of checking the intensity and frequency of the behaviours being displayed. It is more through demonstration and observation that we do so. HR gives a lot of feedback on this, and of course, the bosses also have to keep an eye on their employees’ behaviour.
In 2019, we will have a calibration to identify the stars and role models for the LIXIL behaviours and try to fit them in the 16-box grid. This will be an open deliberation among the top leaders – the CEO and his more than 25 direct reports.
This will make it more open and transparent and give everyone a fair chance to determine how much that person really demonstrated the behaviours in one year.
It’s something new we are going to try because we have had feedback and are open to input.
Q What was the key indicator of success?
I think the biggest indicator that we are now one team is when you ask the employees where they are from. Previously, they would say things such as “I’m from GROHE” or “I’m from American Standard”. Now they say “I am from LIXIL” because now our tag line is “We are LIXIL”. That is the most visible success factor. Now we hardly see them wearing the GROHE or American Standard T-shirt, it is all the LIXIL brand.
We also saw an increase in employee satisfaction and engagement. We conduct such a survey every two years called “Heartbeat”. In 2015 when we had the biggest integration, the satisfaction score was at 75%. That went up to 81% in 2017. Another thing is the engagement which also went up from 81% in 2015 to 84% in 2017.
Q What is one advice you have for HR leaders to ensure a merger is a success?
Move fast, with clarity of what to expect next and be transparent on what is going to happen and what is not going to change. This helps to manage the expectations upfront and at the same time assure the employees about where they are heading and what is in it for them.
It is natural for people to be concerned if something is going to affect their jobs and comfort zone. If HR moves fast and is honest about what to expect and what not to expect, that will help to minimise the productivity loss from distractions that come from mergers.
The second thing is to get the people on board with you. Influence and get your stakeholders together and engage them fast. Be proactive and reach out first. Set the scene because when the top leaders are with you, it is easier for your HR team to move things forward at ground level.
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