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&G's HR Practices and Culture

Procter & Gamble was established in 1837 by William Procter, a candle maker, and his brother-in-law, James Gamble, a soap maker, when they merged their small businesses. They set up a shop in Cincinnati and nicknamed it "Porkopolis" because of its dependence on swine slaughterhouses. The shop made candles and soaps from the leftover fat of the swine. By 1859, P&G had become one of the largest companies in Cincinnati, with sales of $1 million.

From the very beginning, P&G's management treated its employees like family members.

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

The company's core values, purpose, principles and vision focused on the development of its people (Refer Exhibit IV, V and VI). In 1885, P&G decided to give its employees Saturday afternoons off with pay. By 1887, P&G had started a profit-sharing plan.

In 1915, the company began to offer a sickness, disability and life insurance plan. Eight years later, P&G guaranteed employees forty-eight weeks of employment in a year.

While the Great Depression of the 1930s forced other manufacturers to shut down, P&G's soap plants continued to function. P&G has traditionally encouraged lifetime employment by offering stock options and other benefits to those who stayed with the company.

P&G followed a comprehensive recruitment process. The company's cultural legacy was the rule to conduct almost all its recruitments on campuses. Resumes were scanned for promising candidates, including those students who had not signed up for interviews. Top officials of the company went for pre-placement talks at colleges. Strong relationships were developed with college placement offices and faculty. The company hired students for various functions such as finance, manufacturing, marketing, research and sales. It hired from all the major universities in general, and from the big business schools such as Harvard, Wharton, Stanford and Northwestern in particular.

P&G conducted written tests to evaluate the applicants' aptitude for leadership and problem solving. The company conducted an in-house test (known as the M Test) that measured the candidate's interpretative and reasoning skills. Studies made by P&G showed a strong positive correlation between high scores on the M Test and success on the job.

P&G's interviewing process was purposeful and behavior-based. The candidate's past experience and accomplishments were examined for leadership, problem solving capabilities, initiative and ability to work with others.

P&G's manpower policies emphasized giving new recruits early responsibility and charted out a rapid career path. New recruits were encouraged to build long-term careers with the company.

The company took several measures to develop its employees. Superiors were encouraged to train and help in the development of their subordinates. The vehicle for this process, used around the world, was the Work and Development Planning System (W&DP).

The W&DP had four components - the previous year's plan versus the results; areas for further growth and development; near-term and long-term career interests; and a development and training plan for the year ahead. The W&DPs were reviewed annually and updated regularly. In addition to the formal review and updates of the W&DPs, superiors were encouraged to supplement the program with informal, ongoing coaching...

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