VDI Nachrichten interview with Martin Babilas
January 29, 2016
“Each Employee Has Intrinsic Motivation”
Leadership: Martin Babilas (44) has been Chief Executive Officer of the specialty chemicals group ALTANA since January 1. In an exclusive interview with VDI Nachrichten, he talks about why the chemistry is right between him and ALTANA.
VDI Nachrichten: Where did you grow up and what was your family like?
Babilas: I was born in Aachen and spent the first few years of my life there. Later we moved to Geilenkirchen, where I lived until I graduated from high school. Both of my parents were schoolteachers. I’m the oldest of three brothers. We had a great childhood. My brothers took different paths. One is a doctor in southern Germany, while the other works in the commercial sector and lives in the Ruhr Valley. We still have close family ties.
After finishing high school, I did an apprenticeship as a banker at Sparkasse Aachen. Then I studied business administration in Trier and the USA. Now I live in Düsseldorf. At heart, I feel like a Rhinelander.
VDI Nachrichten: Why do you have such a high affinity for business and chemistry? Does this run in your family, so to speak?
Babilas: My father taught chemistry, economics, and sports. Admittedly, that had an impact on me. He passed on the subject matter to the family to a certain extent. As a result, I was particularly interested in business at a young age, and in chemistry. So perhaps it is no coincidence that I hold a leading position in a chemical company.
VDI Nachrichten: Did you like your chemistry class at school?
Babilas: I liked it a lot at first, especially since we had a chemistry set at home and did a lot of experiments. My father was a great mentor. But my teacher presented the material in a very dry, uninteresting way. That didn’t kill my interest in the subject, but I no longer liked it as much as mathematics or physics, two of the main subjects of my final examinations.
VDI Nachrichten: Why did you initially do an apprenticeship?
Babilas: After 13 years of school, I wanted to work, to do something practical. And I wanted to pursue an educational path that afforded me as many insights as possible. At a bank, you have contact with many private and corporate customers, particularly during your apprenticeship years. That was a very exciting and, in retrospect, a very instructive time for me. And I think I approached my studies differently because of it. You gain a different perspective of what is essential based on your first professional experiences. That period was invaluable.
VDI Nachrichten: What was the subject of your degree thesis?
Babilas: I wrote about “value-based management.” In my thesis, I elucidated two concepts that stem from different schools of thought. The first is so-called economic value added, and the second cash flow return on investment. At the time, I had a clear preference for one of them: economic value added. We still use this parameter today at ALTANA as a value-based management concept. One of my first tasks at ALTANA was to introduce it.
VDI Nachrichten: What is value-based management?
Babilas: Value-based management means that you take account of the capital employed when evaluating periodic results. It doesn’t actually show up in the consolidated income statement. There you have interest, but that’s only expenses for borrowed capital. Many companies, and particularly ALTANA, are not primarily debt financed. And equity is initially not connected with direct costs in the form of a price. In principle, the owner gets what is left over. But that doesn’t mean that equity is free, for the owner has the possibility to put the money in a different company. So ultimately it is the cost of capital that the owner can get when he or she makes an investment with a similar chance-risk profile. To incorporate these costs in the current account is the approach of value-based management.
VDI Nachrichten: You also did an MBA. Did you always want to hold a leadership position?
Babilas: The MBA was the result of my time in the USA. Going to the USA was a tremendous opportunity for me at the time. I attended the partner university of my German alma mater, Clark University in Massachusetts. Initially, it was a one-year program, but then I had the opportunity to prolong my studies for another year and a half on my own, in order to have the prerequisites for an MBA. Originally I simply wanted to broaden my horizons, to become acquainted with the American Way of Life and the American style of management. But it is true that I wanted to pursue a management career at an early stage, dating back to when I started my bank training. Simply because I enjoy having an influence and like to face challenges. As a rule, you can only do this in concert with people.
VDI Nachrichten: ALTANA is the first and so far only company you have worked at since your studies. Didn’t you want to go out into the big wide world?
Babilas: ALTANA is at home in the big wide world. We are a globally active company. We generate more than 85% of our business abroad; 30% in the Americas, and 30% in Asia. We have sites around the world. It’s a great opportunity, and quite honestly, it’s exactly what I need. For me, it was decisive to face challenges that give me latitude, and to broaden my horizons now and then. Many of the tasks I took over were initially a tad too big. That was always extremely exciting. In conjunction with our corporate culture, which I hold in high esteem, with the very open, appreciative, apolitical kind of cooperation we engage in, this is an environment in which I feel very, very comfortable.
One task I have to perform is to pass on this freedom, this scope of action, to the people at ALTANA so that they can continue to grow with us and unfold their potential.
VDI Nachrichten: The area of corporate development is not alien to you. You were the head of Strategic Corporate Development/M&A for a few years. Can you leverage the experience you gained during that time?
Babilas: That was an important period. It was my first job in Wesel – during my first years of professional life I worked at ALTANA’s former holding company in Bad Homburg. I built up this area during that time because one of our goals was to advance our strategy and to make strategic development a regular process in the company, while at the same time pushing ahead our portfolio through M&A. That was something I was permitted to help shape and that I can still make use of today. We created structures. But we have no intention to stop there. Changes continue to be a constant element to bring the company forward. I’ve been in the Management Board since 2007, and although I was mainly in charge of finances, I always considered my task to be a very strategic one.
VDI Nachrichten: How did you prepare yourself for the top post in the Management Board?
Babilas: I know the company, its strategy, and its businesses well, so the lion’s share of my preparation consisted in pursuing closer contact with the people at ALTANA. I took trips to various sites to find out what issues move the people there, where they want to see continuity, where they see a need for change. In parallel, I launched an Intranet survey in order to reach people I couldn’t talk to in person. Each employee should have the possibility to share his or her perspective directly. That is an important basis for the Executive Management Team as we develop our strategic agenda.
VDI Nachrichten: Can you already say something about that agenda?
Babilas: I don’t want to go into detail right now. I have many ideas of my own, and I’ve gathered many ideas. In the next few months we will establish the strategic agenda. We will take our time so that it can be worked out in depth.
VDI Nachrichten: What is your attitude to hierarchies?
Babilas: Hierarchies are needed in a company to organize it effectively. There are certain areas of responsibility and there are certain decision-making powers. But the other issue is the issue of communication. And here I do not believe in hierarchies at all. In fact, I like it when I not only receive “filtered information” from a certain circle of people, but information from as many people at ALTANA as possible.
This isn’t always feasible in daily work life. But I want to convey to the people at ALTANA that I am “approachable,” that they can approach me directly. This is very important to me. For example, in the cafeteria I don’t always sit with the same colleagues from management, but I find a free seat and talk with the people around me.
VDI Nachrichten: How do you cope with the challenges?
Babilas: You can only prepare yourself mentally for such challenges to a certain extent. But since I’ve been in the company for a long time, I’ve learned to pace myself when facing challenges. Of course there’s a difference between being number two or number one. I can’t tell yet whether I’ve already entered this role with every fiber of my being. This will take time. But I feel very comfortable and well equipped to continue on our success path together with my colleagues.
VDI Nachrichten: How and when can you relax?
Babilas: For me personally it is important to have inner places I can retreat to. I have managed to do this so far and I’m certain
I’ll continue to be able to do so. An intact private sphere is very important. My family is essential. When I’m not flying around on business trips, I try to keep the weekends free so I can spend time with my wife and my four-and-a-half-year-old son.
I’m not someone who surfs around on his laptop during breakfast on Sundays. And I go running a few times a week and do weight training. I also give my employees the opportunity to take breaks.
VDI Nachrichten: How would you characterize yourself?
Babilas: I’m open to people, not only at ALTANA, but in life in general. I’m open to other cultures. And I’m very interested in things, I’d almost say curious. My wife would definitely say I’m curious. I’m very inquisitive and that spurs me on to a certain extent. I’m also achievement oriented. But I don’t believe in achievement at all costs; we always have to have a solid value system as a basis.
VDI Nachrichten: And what are the values in this system?
Babilas: In our Guiding Principles, four basic values are defined that determine cooperation at ALTANA, not only within the company but also with partners and customers. 1. Openness, for example to challenges and points of view. 2. Appreciation for contributions others can make 3. Empowerment to act and 4. Trust. The latter is perhaps the most important one. I personally am firmly convinced that each employee brings in his or her own intrinsic motivation.
There may be exceptions, and of course it’s important to be aware of this during the recruitment process. I believe it is very important for the employee to be given the opportunity to unfold his or her motivation. It is very demotivating for employees if excessive demands are placed on them, or conversely, if they are underchallenged.
VDI Nachrichten: This means that managers in the company have to find the right balance. How do you go about choosing managers?
Babilas: We spend a lot of time selecting them because they are vital for the company’s development. Their professional competence is important, but what is decisive are their leadership qualities. In recent years, we have developed instruments to gauge this. In addition to broad-based conversations with them, we also carry out leadership checks. This is a selection procedure where we put managers in leadership situations.
VDI Nachrichten: How important is innovation culture in your company?
Babilas: Innovation culture is inextricably entwined with corporate culture. Innovations need an environment in which they can develop, and our values are an essential basis. Innovation is an important aspect of our strategy. More than 1,000 people work in research and development at our company. We executives devote personal attention to the topic, and we invest significant amounts in this area. We invest a disproportionately high sum in the chemical industry field.
VDI Nachrichten: Do you have a shortage of skilled workers?
Babilas: We don’t have this problem today. And we’re making a concerted effort to ensure that it won’t be a problem in the future. We have a training rate of 5% in Germany. And in recent years we’ve expanded our university marketing. Also, we get children interested in chemistry in various ways, including action days and visits to schools.
VDI Nachrichten: Does your son have a chemistry set?
Babilas: Not yet. But I’ll buy him one at some point to arouse his enthusiasm for chemistry, as well. CLAUDIA BURGER
Altana develops and manufactures products in the specialty chemicals business. ALTANA is a globally active group of companies headquartered in Wesel on the Lower Rhine. Eighty-five percent of its sales are generated by international activities. The ALTANA Group has more than 49 production sites and over 50 service and research laboratory sites worldwide.
The company has more than 6,000 employees. The ratio of engineers is 5%. In 2014, ALTANA achieved sales of some € 2 billion. Around 6% of its sales are invested in research and development.
was born on September 23, 1971, in Aachen.
After doing a bank apprenticeship, he studied business administration, and subsequently completed an MBA in the USA.
Babilas has worked at ALTANA in various capacities for 17 years. In 2007, he was appointed to the Management Board of ALTANA AG as the CFO. On January 1, 2016, he became the company’s CEO.
Babilas is married with one son and lives in Düsseldorf.
He did not wish to disclose any information on business figures and strategies at this early stage of his tenure. Details, he said, would be provided at ALTANA’s Annual Press Conference on March 18.