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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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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P&Cultural Changes under Jager

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.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

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...

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."...


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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