Managing Cultural Change at P & G
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Case Details:
Case Code : HROB042
Case Length : 18 Pages
Period : 1990 - 2004
Pub Date : 2004
Teaching Note :Not Available
Organization : P & G Inc.
Industry : FMCG
Countries : USA
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Excerpts
P&Cultural Changes under Jager
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Under the Organization 2005 program, P&G's corporate structure was reorganized
from four geographic business units to five global business units (GBUs) based
on product categories (Refer Exhibit VIII). Using IT as catalyst for change, the
program worked towards speeding up decision making to enable the company
innovate and introduce new products, eliminate bureaucracy and reduce costs. It
also aimed at creating an informal work environment that facilitated knowledge
sharing among employees.
The program was also directed towards revamping the work culture of the company
so as to focus on its new Stretch, Innovation and Speed (SIS) philosophy.
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Jager said, "Organization 2005 is focused on one thing - leveraging P&G's
innovative capability. Because the single best way to accelerate our growth
- our sales, our volume, our earnings growth - is to innovate bigger and
move faster - consistently and across the entire company." Jager outlined
the cultural changes he wanted to achieve through the program (Refer Table
I).
Under the program, P&G changed the way it looked at individual appraisals
and moved from a conservative goal-setting plan to a stretch goal plan.
Earlier P&G would appraise employees on the basis of targets set and their
achievements. But the system seemed to have a loophole. By setting easy
targets, there was the possibility that an under-performing manager might
project himself as an achiever...
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Cultural Changes under Lafley
Soon after becoming CEO, Lafley rebuilt the top management team and
made efforts to improve P&G's operations and profitability. Lafley
transferred 15 senior most officers, an unprecedented move in P&G's
history. He assigned senior positions and higher roles to women. In
one instance, he appointed a 42-year old woman, Deborah A. Henretta,
as the head of P&G's global baby care division, in preference to 78
more senior general managers in the company. |
After the changes in the management structure, the heads of P&G's operating
businesses and corporate functions represented 13 different countries. Overall,
the average age of P&G's Global Leadership Council (GLC - Refer Exhibit IX) came
down to 49, compared to 54 in 1999.
Lafley made efforts to promote competition among its top management team. In the
meeting of GLC held every quarter, Lafley disclosed financial results of each
business unit to the entire team. He said, "It motivates people who are
performance-oriented. For the few people that it doesn't motivate, we are
probably not the right place for them."...
Exhibits
Exhibit I: P&G's Financial Performance (1995-2000)
Exhibit II: P&G's People Centric Policies
Exhibit III: P&G & its Subsidiaries - Consolidated Earnings
Exhibit IV: P&G's Core Values
Exhibit V: P&G's Purpose and Principles
Exhibit VI: P&G's Vision
Exhibit VII: P&G's HR Practices - Focus on Diversity
Exhibit VIII: Overview of the New Structure Under 'Organization 2005'
Exhibit IX: P&G's Global Leadership Council
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