 Introduction

 Organization Culture
 Changes under Durk Jager
 Changes under Alan George Lafley
 Recommended Model
 Key Learnings
 Bob McDonald : President &CEO
 Fortune 500 American MNC
 6th most profitable corporation
 $79Billion enterprise
 1,40,000 employees
 Strengths: Global
◦ Scale Busines
◦ Innovation s Units
◦ Consumer understanding
◦ Go-to –market Capabilities
◦ Brand Building
History
 William Procter & James Gamble

 Porkopolis – Cincinnati

 1859 - $1million

 Market Research – 1924

 Customer Relations - 1941

People-centric
 Employee need –based
 Relocation Aid

 Task Forces

 Employee suggestion
 Saturday Afternoons off with pay - 1885
 Profit –Sharing Plans - 1887
 Insurance plan – 1915
 Comprehensive Recruitment Process
 W&DP
 OGSM
 Diversity
 “Doing the Right Thing”
 Code of Conduct
Organizational Culture
at P&G
Employees: Exuberant, Youthful,
“has
Motivated
trust in
us”
sa
“ha g
n “A
stro for “A gr
ing e
car ts
i
people place at
” compan to
e o ple work
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P&G’s Culture:- Traditional, Conservative,
Risk Averse, Methodical, Insular

1. 24 page manual- ‘You and Procter &

Gamble’- code of conduct
2. Not to disturb/ visit other departments
except on official business.
3. Promptness and Neatness were emphasized
4. ‘Doing the right thing’ & focus on doing
things ethically

 Is my action the right thing to do internally?

 Would my action withstand public scrutiny?
 Would my action protect P&G’s reputation as an ethical
company?
 No public statements/announcements

 Technical people not to join trade

organizations

 Strict about non-disclosure of company

related information

 Strict Dress Code

 New product development activities slowed down. New
versions of the same old products. The last innovation
being in 1982.
 Financial- Growth rate dropped from 5% in

1996 to 2.6% in 1999.

 Culture acquired a persistent, unquestioning
adherence to past precedents
 Innovation stifled, obstructing commercialization of
new ideas
 High turnover rate

Thus Change became inevitable…….

 Organization 2005 program introduced in
1999 under the then CEO Durk Jager

Change: Revamping of P&G’s structure,

work processes and culture
 ANSA
 Durk Jager George
Lafley
 Jager communicated in a very threatening way to the
employees and forced on them the need of change.
 Lafley communicated to the employees but he din’t create
sense of urgency.

What could have been done differently:

• A proper presentation could have been made and
presented to business heads.
• The current scenario of competition, stagnation, ageing
products etc. could be communicated and ‘WHY’ and ‘HOW’
of the change could have been explained.
 Durk Jager George
Lafley

 Jager selected 54 employees from IT department and

designated them as ‘Change Agents’ .
 Lafley made changes in P&G’s global leadership council to
create a competitive environment.

What could have been done differently:

• In each of the business divisions Opinion leaders can be

chosen and made ‘Change Agents’.
 Durk Jager George
Lafley
 Both Jager and Lafely did not communicate to the employees about
a possible outcome.
 Lafley communicated the context of change, but no concrete vision.

What could have been done differently:

An example from past:
• In 1985, Richard Nicolosi , Head of paper products division
of P&G , met with his managers and described the vision to
them. This event was videotaped and was sent to all
employees of that division.
• Well articulated vision gives a sense of purpose / direction
to the employees
 Durk Jager George
Lafley

 Jager asked the senior managers to download information

which was in the form of ppts from P&Gs intranet site to
inform employees about ‘Organisation 2005’.
 Lafley tried to convince the employees about the
applications and vision of ‘Organisation 2005’.

What could have been done differently:

• Previous example of Richard Nicolosi.
• Vision should reach each and every person in the
organization, so that each one knows in what way he/ she is
contributing to the organsational success.
 Durk Jager George
Lafley

 Jager offered financial help in cases of involuntary

separations, relocations, voluntary separations, also he
planned to cut down on hiring.
 Lafley tried the soft approach –He proposed that a part of

the job reduction will be through voluntary separations and

at the same time he decided to cut costs by devising new
strategies.
What could have been done differently:
• Recognition and reward system that inspire
• Constructive feedback
 Durk Jager George
Lafley
 Jager - reduced product development time by ½ using IT,
but tried to change a lot of things in a short time.
 Lafley was more employee oriented, he disclosed the
financial results to teams as he thought it would motivate
employees who are performance oriented.

What could have been done differently:

• Change should be conducted in a phased manner - yearly/

quarterly target settings.
• Proper evaluation at regular intervals.
• Wave after wave start implementing strategy.
 Durk Jager George
Lafley
 Jager – Decentralisation of IT department, 97 % of IT dept.
worked with P&G businesses, 3% were in the corporate
department.
 Lafley – employee oriented, supported employee – through
working on their mindset and enrolling them in change.

What could have been done differently:

• Keep the urgency up

• Give employees a reason to continue the change
• Continue with wave after wave of change - a phased
approach to change
Earning Your Trust

Growing a company the size of P&G is not easy, but our performance over the
past few years demonstrates that it is achievable – with clear strategies, core
strengths, a balanced approach to growth, and the benefits of leadership.

We know we must continue to see things as they are, to stay reality-based.

We must embrace change and proactively influence its course. We must play
to P&G’s strengths and stay with the business strategy that is working. Above
all, we must serve consumers as our boss. Only by improving consumers’ lives
in meaningful ways every day – with P&G brands of superior performance,
quality, and value – can we deliver the growth you expect every year.

I am confident P&G people are up to the challenge, and I thank you for your
continued trust and support.

Procter-Gamble-2005-Annual-Report
What could have been done:

• Continuously monitor

• New employees during orientation can be shown messages

from customers whose lives company has changed, rather
than dry giving them old speeches and boring handbook.