Cultural Change at P&G

Managing Cultural Change at P&G Summary of the Case Introduction 

P&G, established in 1837, by William Procter and James Gamble



Was famed for its people-centric policies.



First company to introduce: 

A shorter workweek 



Profit-sharing plan



Employee stock options



P&G had a strong, tradition-bound and conservative corporate culture – Change resistant



Culture was deeply rooted

M id 1990:  1990: Faced stagnant revenues and profitability. Jul y 1999  1999  ager   – Or gani zation 2005   – Du rk J ager  

To accelerate growth, P&G's President and CEO at the time, Durk Jager (Jager) launched the Organization 2005 program



Six-year long organizational restructuring exercise and radical revamping of P&G's organizational culture, reduction in hierarchies, and retrenchment of employees



Aimed to increase its global revenues from $38 billion in 1999 to $70 billion by 2005



Well-conceived, it was not executed properly



Jager tried to change the culture too drastically in a very short time.



Resulted in a rise in costs and a decline in the company's profitability.

: 18% decline in its net profit for the January-March 2000 quarter. Apri l 2000  2000  : Ju ne 2000  2000  

Alan George Lafley (Lafley) took over as the new President and CEO of P&G.



Reverted back to the old culture and did not make attempts to change it radically.



Financial performance improved significantly and share price shot up by 58% to $92 by July 2003, as against a fall of 32% in S&P's 500 stock index.

HR Practises and Culture 

The original culture of P&G was a clan culture where P&G’s management treated its employee’s like family members.



The company's core values i.e. leadership, integrity, ownership, passion for winning, and trust and with their purpose and principles and vision to strive for people and organizational excellence and business productivity were focused on the development of  its people.

Compensa Compensati ti on and Benefi Benefi ts:  ts:  

P&G in accordance with their vision to value their employees by providing benefits and compensation, granted Saturday afternoons off with pay, started a profit-sharing plan, and offered sickness, disability, and life insurance plans.



Even during the Great depression, P&G's soap plants continued to function as P&G encouraged lifetime employment by offering stock options and other benefits to those who stayed with the company.



P&G was also one of the first companies to grant employees forty-eight weeks of  employment in a year.



Retirement benefits were provided via the Procter and Gamble Profit Sharing Trust  –  defined contribution profit sharing plan and postretirement health care benefits.

P& G cul cul tur al legac legacy:  y:  

P&G conducted almost all its recruitments from campuses. Resumes of promising candidates were scanned, including those students who had not signed up for interviews for functions, such as finance, manufacturing, marketing, research and sales.



Therefore, strong relationships were developed with college placement offices and faculty.



Conducted written tests known as the M Test) that measured the candidate's interpretative and reasoning skills to evaluate the applicants' aptitude for leadership and problem solving.



Studies showed a strong positive correlation between high scores on the M Test and success on the job.



Interviewing process was purposeful and behavior-based, past experience and accomplishments for leadership, problem solving capabilities, initiative and ability to work with others.

Empl oyee Poli cies, Practi ses, and Tr ain in g and Devel opment (N ur tur in g Cul tur e): 



Policies for new recruits emphasized on early responsibility impartment and charted out a rapid career path to build long-term careers with the company.



Training was imparted through a Work and Development Planning System (W&DP), which was reviewed annually and updated regularly, where superiors were encouraged to train and develop their subordinates and supplement the programme with informal, ongoing coaching.



Components used for training were 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.



P&G College: Senior Managers shared experiences and insights with subordinates and new recruits spent several days here during their first year of employment.

Diversity 



Policies focused on a diverse culture, practised through the employment of nonmanagement graduates.



Employees were given opportunities to pursue careers outside geographical limits, which helped spread P&G culture worldwide.

Code of Conduct 



Employees were given a 24-page manual, which prescribed a code of conduct to employees stating with strong emphasis on “doing the right thing” and avoiding risks



Good-housekeeping was emphasized upon.



Ethical behaviour was expected from all employees.

Dr ess Code, Publ ic Relati ons, and N on-di sclosur e 



Strict formal dress code was expected.



Staff was discouraged from making public announcements on behalf of the company.



Technical people could not join trade organizations



 No revelation of identity when travelling by way of ID tags



 Non-disclosure documents had to be signed by Senior Management



Culture was persistent with unquestioning adherence to the past.



Risk averse and tradition bound which was stifling innovation and obstructing commercialization of new ideas



High turnover rate with middle level employees leaving to take up senior positions in competing firms

Cultural Changes under Jager 

In 1999, P&G‟s CEO Durk Jager had initiated a major reorganization and restructuring  process termed as “Organization 2005”



The program aimed at radically changing P&Gs methodical, bureaucratic, conservative and slow moving culture to a fast moving, IT savvy one. He attempted to create a more adaptable organization.



Intended to accelerate innovation and create an informal environment fostering knowledge sharing.



The mission of “Organization 2005” was to take P&G’s global turnover from $38 billion

to70 billion 

The objective was to raise profitability by changing the work culture



The change drivers identified were the attributes of Stretch, Innovation, Speed(SIS)



Under this programme the following drastic and rapid changes were implemented: 

The working culture was revamped to focus on a new stretch, innovation, and speed  policy, which focused on acceleration of growth and faster go-to-market.



The performance appraisal system was moved to a stretch goal plan for appraisal to see how far employees could stretch themselves. Many a times this led to unrealistic and unachievable goals which could lead to employee frustration and turnover.



Geographical business units (GBUs) were replaced with global business units based on  product lines, which increased the responsibilities of the GBU manager of product development and customer service.



Structural changes made included: o

Global business service centre



o

Eight market development organization based on region

o

Four global business units based on product lines

P&G discarded old dress code, introduced measures to play down hierarchy, indiscrimination among senior and junior employees.



P&G decentralized its 3,600 strong IT department and selected 54 employees to act as change agents across 7 GBUs and facilitating teams to work together.





The intent was to create a multidiscipline organization and information dispersion.  New technology for managers and more employee empowerment by increased collaboration and generation and sharing of ideas via intranet and videoconferencing.



Changed its culture into a more, aggressive, outspoken and risk taking culture.



Reduced product development time by half by decentralizing the decision-making  process, reducing formalization and employee empowerment.



Attempted to minimize employee turnover by open job postings to enable employees to find more suitable job opportunities within the organization. This was an attempt to retain talent.



However, the downside was the program involved significant job cuts with retrenchment of over 15,000 employees.



Jager’s plan was aggressive and confrontational and tried to implement too many changes

in a short period of time. 

Therefore the Cultural changes affected by Jager were: 

Alignment of the company on common goals with trust as the foundation



Risk taking and team collaboration stemming from coaching and teaching



Leaders are challenged



Organization driven by innovation, stretch, and speed towards breakthrough goals.

Cultural Changes under Lafley 

Lafley rebuilt the top management team and made efforts to improve P&G's operations and profitability.



Transferred 15 senior most officers and assigned senior positions and higher roles to women.



Average age of P&G's Global Leadership Council came down to 49, compared to 54 in 1999



Promote competition among its top management team to motivate people who are  performance-oriented.



Avoided making forecasts of the future



Communicated to employees why and how he wanted P&G to change



Tied to change employees mentality of developing products in-house.



Softer approach than Jager 



Felt that “stretch forecasting” led to over optimistic expectations leading to increase in

cost 

Hired an outside consultant “Kinetic Workplace” to help com pany train employees to

cange their work habits 

Introduced flexible work programs like work from out and book a table in the office once a week. This was aimed to make the employees feel comfortable and ensure job security.



However, due to increasing competitive business environment, Lafley felt that he would have to ask employees to change faster than their understanding, capability, and commitment.

Case Analysis Procter & Gamble is one of the world’s largest and most innov ative international companies,

operating in the extremely competitive fast-moving consumer goods market. The corporate culture of P&G is widely accepted as unique! Its emphasis on ethical guidelines and compliance with P&G laws and business conduct policies, are some of the culture concepts transmitting to new employees through special recruitment procedures and socialization  practices that combine intense internal competition and impartial promotion. P&G as a company was, undoubtedly, committed to the company employees, had extremely strong core values, a traditional, distinctive, and ethical method of doing business, and a clear  set of internal, informal, widely accepted rules regarding “do’s and don’ts” for organizational  behavior. These characteristics contribute to the foundation of a “strong culture” that endures over time and is consciously believed by all the organizational members. The cultural system is founded on a set of “shared” values, beliefs and principles, very well perceived by all the

members of the organization. Furthermore, culture gives birth to special designed recruitment  procedures, and socialization practices that combine intense internal competition and impartial promotion, so as to transfer this “shared” set of values, beliefs and  principles to new employees However, P&G’s culture was also rigid, non-flexible with unquestioning adherence to past  precedents, deeply rooted. The culture was averse to risk and tradition bound, not moving along with the times thereby stifling innovating and quick commercialization due to the methodical, conservative, and insular outlook. The culture at P&G was bureaucratic as well as a clan culture. Changing the Cultur e 

As described, P&’s culture was rigid and unbending. Jager tried to change the culture rapidly

and drastically leading to a failure and decrease in profit. He did not take into consultation the  people who are the core of the organization. He tried to change values and principles of those who were already deeply rooted in the culture. Lafley on the other hand, spoke to the employees and enrolled them in change. He did not tell them to change but, in his words, dragged them where he wanted to go. Since the culture was deeply rooted he preserved the original culture. This way he increased organizational effectiveness and profitability Because stories help define an organization’s culture, it’s easy to use them to change that

culture. Simply get people to tell stories that amplify the best aspects of the organization. More important, tell positive stories often to drown out the sound of competing stories. Typically, organizations try to exemplify their stories by using a common vision and mission statement. 

Vision provides the aspirations.



Mission provides the direction.

Changing the organization’s culture does depend on having a common framework. The framework can be used in various ways to get people to share stories about how people across the organization deliver exceptional performance. By talking to people, positive change can  be brought about.

Pitf all s of Or ganization 2005 

Jager imposed change rapidly without advance assessment of HR issues, questions, concerns, and ideas of the stakeholders and employees, who are the most involved in the change outcomes. He did not anticipate the distraction and distress of the employees due to changes  brought about. This carried a high potential cost. Even if change efforts are well planned and executed, those involved and affected will ask questions and analyze purpose and implications. This is especially true if they haven't been involved in the planning. Acknowledging the level and nature of concerns and questions and building a degree of  involvement can also provide insight and information about how best to manage the process. The pitfalls encountered by Jager’s Program Organization 2005:

1. Ineffective and unachievable goal setting: The business goals set and stretching employees potential led to employee frustration which affected employee performance. 2. Unrecognized costs: The costs of implementing and supporting change were not planned for or adequately acknowledged. Resources need to be allocated, workloads adjusted, and responsibilities reassigned. 3. Limited and unidirectional communication: Jager did not enroll employees in change and substituted one bureaucratic organization for the other. Employees had limited opportunities to ask questions.

Chan ge using in qui r y, engagement, r eview and design (Positi ve Change M odel ) 

The best way to get people to share good stories is through a inquiry and engagement. Based on this a better future can be envisioned and designed. Positive Change Model

Initiate inquiry

Positive Change Imparted by Lafley Initiate inquiry: Lafley spent time communicating with the employees

Inquire into the best practises

Discover Themes

Inquire into the best practises: Lafley did not change the core values and traditions

Discover Themes: He proposed how people can work and innovation from outside

Envision a Preferred Future

Envision a Preferred Future:

Design and Deliver ways to create a Better

Design and Deliver ways to create a Better Future: Proposed

Better Profitability. Happier and comfortable employees

changes in structure and culture

This model involves 5 phases: : Determining the subject of change and member involvement in 1. Initiate inquiry  identifying organizational issue to be changed. In case of P&G: Lafley spoke to employees which Jager neglected to do. Communication would force to think differently and invite them to broaden their perspectives regarding organizational values.

: Gathering information as to what is best in the organization. 2. I nqu ir y into best practices  Since the topic in P&G was innovation, both Jager and Lafley collected ideas from the employees about their new ideas that can be developed and implemented. The difference  between them was, as Lafley identified, innovation was happening within the organization on the same products i.e product quality and feature enhancement not new product development. Therefore, he was right in suggesting that the members look outside for products. 3. Di scover themes: Examine the stories of people to identify a set of themes representing the

common dimensions of people’s experiences. At P&G, the innovations and new structural setups by Organization 2005 program may have given stories and themes about how managers gave people the freedom to explore new ideas and post them on the intranet, how the stretch goals had both pros and cons, and how exposure to customers all over the world sparked creative thinking due to transfers and geographic dispersions. The themes represent the basis from what is to what could be. 4. Envision a preferr ed fu tur e: The themes are identified, the status quo is challenged and a

compelling future is described. Lafley envisioned better profits and happier employees and therefore more productivity. 5. Design and D eli ver : Ways to create a the desired future. Lafley introduced flexible work 

 programs, promoted competition among the managers, tried to change innovative mentality of employees, and reorganized structure to disperse the many hierarchies and communication gaps. Interventions conducted at P&G to manage change i. Restructural Reengineering

Jager and Lafley aimed at structural redesigning and reengineering, which involved fundamental rethinking and, according to Jager, radical redesign of business processes to achieve dramatic improvements in performance. Reengineerign required an almost revolutionary change, such as the transfers brought about by Lafley to change how P&G designed its structure and work. This identified and questioned the underlying assumptions of  how employees perform and resulted in radical changes in thinking and work methods. This also resulted in a shift from specialized jobs, tasks, and structures to intergrated processes. As  pointed out by Jager, in radically changing businesses, reengineering makes use of new information technology, which be change agents and help organizations break out of their 

traditional ways of thinking and embrace new ways of producing and delivering products. Reengineering is also transformation of organizational structures and work designs such as formation of GBUs. ii. Employee Involvement Intervention 

Both Lafley and Jager seeked to achieve employee involvement both in different ways.



EI intervention can improve the capabilities of the employees, increase motivate leading to organizational effectiveness. By doing this communication is enhanced. Improved Communication and Coordination

Employee Involvement Intervention

Improved Motivation

Improved Productivity and Organizational Growth

Improved Capabilities

iii. Culture Change Interventions

P&G required a change in strategy which Jager, felt could be accomplished by change in corporate culture, values, and work designs within the organization. Lafley on the other hand felt cange should be through preserving the original culture, innovation, development of new strategies, and determining the basic assumptions shared by organization employees. This influences how members perceive, think, and behave at the work place. This also affects how effectively firms can implement new changes which is evident from the outcomes of Jager’s and Lafley’s efforts. Jager did not really diagnose the organization’s existing culture and

assess the cultural risks and HR issues of making changes.

Lafley used a softer approach be preserving original culture and communicating the need for  change. His was a symbolic leadership with clear vision, commitment, with sensitivity to employees deviations.

Question 1: Established in 1837, P&G was the leading FMCG company with more than 100000 employees spread across several countries in the world. Explain briefly the HR’s practises and corporate culture. What, in your opinion are the positive and negative aspects of P&G’s culture? Answer: HR practises and culture since P&G’s inception

P&G as a company was, undoubtedly, committed to the company employees, had extremely strong core values, a traditional, distinctive, and ethical method of doing business, and a clear  set of internal, informal, widely accepted rules regarding “do’s and don’ts” for organizational  behavior. These characteristics contribute to the foundation of a “strong culture” that endures over time and is consciously believed by all the organizational members However, P&G’s culture was also rigid, non-flexible with unquestioning adherence to past  precedents, deeply rooted. The culture was averse to risk and tradition bound, not moving along with the times thereby stifling innovating and quick commercialization due to the methodical, conservative, and insular outlook. The culture at P&G was a bureaucratic as well as a clan culture. : Clan Culture  

The original culture of P&G was a clan culture where P&G’s management treated its employee’s like family members.



The company's core values i.e. leadership, integrity, ownership, passion for winning, and trust and with their purpose and principles and vision to strive for people and organizational excellence and business productivity were focused on the development of  its people.

Compensati on and B enefi ts:  

P&G in accordance with their vision to value their employees by providing benefits and compensation, granted Saturday afternoons off with pay, started a profit-sharing plan, and offered sickness, disability, and life insurance plans.



Even during the Great depression, P&G's soap plants continued to function as P&G encouraged lifetime employment by offering stock options and other benefits to those who stayed with the company.



P&G was also one of the first companies to grant employees forty-eight weeks of  employment in a year.



Retirement benefits were provided via the Procter and Gamble Profit Sharing Trust  –  defined contribution profit sharing plan and postretirement health care benefits.

P& G cul tur al legacy:  

P&G conducted almost all its recruitments from campuses. Resumes of promising candidates were scanned, including those students who had not signed up for interviews for functions, such as finance, manufacturing, marketing, research and sales.



Therefore, strong relationships were developed with college placement offices and faculty.



Conducted written tests known as the M Test) that measured the candidate's interpretative and reasoning skills to evaluate the applicants' aptitude for leadership and problem solving.



Studies showed a strong positive correlation between high scores on the M Test and success on the job.



Interviewing process was purposeful and behavior-based, past experience and accomplishments for leadership, problem solving capabilities, initiative and ability to work with others.

Empl oyee Poli cies, Practi ses, and Tr ain in g and Development (Nu r tur in g Cultu r e): 



Policies for new recruits emphasized on early responsibility impartment and charted out a rapid career path to build long-term careers with the company.



Training was imparted through a Work and Development Planning System (W&DP), which was reviewed annually and updated regularly, where superiors were encouraged to train and develop their subordinates and supplement the programme with informal, ongoing coaching.



Components used for training were 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.



P&G College: Senior Managers shared experiences and insights with subordinates and new recruits spent several days here during their first year of employment.

Diversity 



Policies focused on a diverse culture, practised through the employment of nonmanagement graduates.



Employees were given opportunities to pursue careers outside geographical limits, which helped spread P&G culture worldwide.

Code of Conduct (Bur eaucratic Cul tur e) 



Employees were given a 24-page manual, which prescribed a code of conduct to employees stating with strong emphasis on “doing the right thing” and avoiding risks



Good-housekeeping was emphasized upon.



Ethical behaviour was expected from all employees.

Dr ess Code, Publ ic Relati ons, and N on-di sclosur e 



Strict formal dress code was expected.



Staff was discouraged from making public announcements on behalf of the company.



Technical people could not join trade organizations



 No revelation of identity when travelling by way of ID tags



 Non-disclosure documents had to be signed by Senior Management.

tive and Negative aspects of P&G’s culture Posi  Positi ve Aspects 



Employees were treated as family and priority was given to the development of  employees.



Employees were given compensation and benefits which took care of the daily and retirement requirements of the employees. This demonstrated a caring culture



Fresh talent was given a chance to prove their mettle, with help in career growth and training opportunities. This also provides an inflow of fresh blood and ideas.



Training programme set up (W&DP) helped in employee development and linked employee’s training to the objectives, goals, strategies, and measures of the department,

which is linked to that of the region and finally to the organization. 

HR policies focused on diversity of culture.





Laid emphasis on doing the right thing.  Non-disclosure agreements signed by managers prevented leakage of information and innovative ideas.

Negative Aspects 



Lifetime employments schemes, such as profit sharing may led to complacency and decreased commitment and innovation.



Fresh talent only was hired from campus recruitment and there is no mention of hiring of  experienced individuals from competitor’s through head hunting or external recruitment.

There would not have been experienced individual to lead the company in a different direction or change the direction of the company. 

During campus recruitment, the resumes of those individuals who had not signed up for  interviews were also scanned. There is a possibility, if offered a job, these individuals would take up the job while simultaneously searching for new jobs. This would lead to employee turnover and decrease in employee loyalty.



The culture was too stringent and bureaucratic, which is seen in imposing a strict dress code, no freedom of speech, curbing their rights to join trade organizations, and  prohibition on wearing tags to disclose identity.



The company’s culture was too deeply rooted and resistant to change i.e. tra dition bound.



The signing of non-disclosure demonstrated a risk averse culture and bureaucracy was stifling innovation.



Due to slow progression and resistant to change, there was a high turnover rate which impacted the financial position of the company and cause stagnating revenues.



The leadership were veterans immersed in the old culture and set in their ways.

Question 2: According to Jager, “Organ ization 2005 marks the most dramatic change in P&G’s structure, work processes, and culture in the company’s history.” Explain how Jager attempted to change P&G’s culture radically when he launched the program. Answer: 

In 1999, P&G‟s CEO Durk Jager had initiated a major reorganization and restructuring  process termed as “Organization 2005”



The program aimed at radically changing P&Gs methodical, bureaucratic, conservative and slow moving culture to a fast moving, IT savvy one. He attempted to create a more adaptable organization.



Intended to accelerate innovation and create an informal environment fostering knowledge sharing.



The mission of “Organization 2005” was to take P&G’s global turnover from $38 billion to70 billion



The objective was to raise profitability by changing the work culture



The change drivers identified were the attributes of Stretch, Innovation, Speed(SIS)



Under this programme the following drastic and rapid changes were implemented: 

The working culture was revamped to focus on a new stretch, innovation, and speed  policy, which focused on acceleration of growth and faster go-to-market.



The performance appraisal system was moved to a stretch goal plan for appraisal to see how far employees could stretch themselves. Many a times this led to unrealistic and unachievable goals which could lead to employee frustration and turnover.



Geographical business units (GBUs) were replaced with global business units based on  product lines, which increased the responsibilities of the GBU manager of product development and customer service.





Structural changes made included: o

Global business service centre

o

Eight market development organization based on region

o

Four global business units based on product lines

P&G discarded old dress code, introduced measures to play down hierarchy, indiscrimination among senior and junior employees.



P&G decentralized its 3,600 strong IT department and selected 54 employees to act as change agents across 7 GBUs and facilitating teams to work together.





The intent was to create a multidiscipline organization and information dispersion.  New technology for managers and more employee empowerment by increased collaboration and generation and sharing of ideas via intranet and videoconferencing.



Changed its culture into a more, aggressive, outspoken and risk taking culture.



Reduced product development time by half by decentralizing the decision-making  process, reducing formalization and employee empowerment.



Attempted to minimize employee turnover by open job postings to enable employees to find more suitable job opportunities within the organization. This was an attempt to retain talent.



However, the downside was the program involved significant job cuts with retrenchment of over 15,000 employees.



Jager’s plan was aggressive and confrontational and tried to implement too many changes

in a short period of time. 

Therefore the Cultural changes affected by Jager were: 

Alignment of the company on common goals with trust as the foundation



Risk taking and team collaboration stemming from coaching and teaching



Leaders are challenged



Organization driven by innovation, stretch, and speed towards breakthrough goals.

Question 3: Lafley was able to solve the problem faced by P&G under Jager’s regime. Compare and contrast the measures taken by both CEOs to manage cultural change at P&G. Whose efforts do you think is “fundamentally correct” for P&G? T ake a stand and justify it. Answer:

The major difference between Jager’s and Lafley’s efforts to manage cultural change was

their way of functioning. Jager’s method of functioning 



Lafley’s method of functioning

Jager, in his efforts to restructure, substituted on

•

Soon after becoming CEO, Lafley rebuilt the top

matric organization for another matrix and

management team and made efforts to improve

complex organization.

P&G's operations and profitability by transfers

Changes in Management Structure: Women

•

Changes in the management structure: He assigned

empowerment was not seen. Average age of 

senior positions and higher roles to women.

seniors was 54, with senior management already

Average age came down to 49.

immersed in the original culture. 

There

was

no

competition

among

top

•

its top management team, which lead to innovation

management. 

Jager created a bureaucratic culture by creation of 

Lafley made efforts to promote competition among

•

Lafley attempted to make the company more

GBUs. 

Jager

flexible and focused (Adaptable culture) did

increase

communication

between

•

Spent time with employees and increased communication

employees but did not spend time addressing the needs of the employees. 

Jager’s approach to cultural change was harsh and

•

Lafley tried to change the culture through a soft approach and communication

did not give employee’s time to adjust fr om the  previous “strong culture” at P&G 

Jager

adopted

innovation

the

through

in-house IT

approach

deployment

of 

•

from in-house innovation to out-of-the box thinking

and

through products from other organizations

employee’s ideas. 

Jager tried to cange the core culture of employees



Jager’s attempts to change lead to huge cost

Lafley tried to change the employee’s mentality

•

Lafley tried to preserve the core culture.

•

Lafley tried to minimise cost implications and retrenchment through voluntary separations and

implications for the company

alternate opportunities 

Jager tried to implement change fast with rapid restructuring

and

no

external

third

party

•

from a different perspective

involvement 

Jager tried to change to fast to quickly

He hired an external third party to aid in change

•

Lafley tried to maintain cultural equilibrium

Even though Lafley claimed that Jager’s approach was fundamentally correct, the approach

was harsh and rapid without giving employees time to adjust. Jager tried to change the entrenched core values of P&G while Lafley maintained the core values and pulled people where he wanted to go. He did not ask people to make changes but enrolled them in the change process by convincing them of the applications and the benefits of the program. Therefore, Lafley’s approach was fundamentall y correct.

Question 4: Analysts had expressed doubts whether the measures taken by Lafley would sustain P&G’s growth in the long term. What measures must Lafley take to ensure the cultural equilibrium at P&G as well as improve the company’s growth in the future? Answer: 

In order to maintain equilibrium between authority (bureaucratic culture) and responsibility (adaptable culture), Lafley should find a balance between rewarding employees and penalizing in case of unachieved targets.



Lafley should also maintain an equilibrium between individual interest i.e. company employee empowerment and promotions and the organization’s interest reconciliation of  individual interest with that of the organization interest. This can be done through equitable remuneration of personnel.



Lafley should also balance the organization's need for personnel and its personnel resources through hiring and firing of personnel and assigning tasks to people He should also encourage a learning and innovative culture while maintaining traditional values.



Lafley will have to explain to the executive team and the company that the path they’ve  been on can be productive if they accelerate innovation and decentralize decision making.

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He should scrutinize the entire portfolio and product/country mix to identify the most and least profitable and promising for growth, and then to make any needed people changes or  adjust investments, such as marketing or product extensions. That’s immediate, along

with any financial quick fixes. 

He should also stress on accountability. Maybe some of the improvement plan underway was happening too slowly because one area or unit or part of the world dragged their feet and made changes too slowly.

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If Lafley accelerates progress on the operational and financial improvements underway, and people see success as reflected in profitability and stock price, then he can look for  the creative ideas for innovation, large and small.

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Also, he should also stress on global brands rather than regional brands by creating strong brand equities, robust strategies to combat competition and innovation in products

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A strategic challenge is not only getting the product and category mix right, but also attracting talent while also integrating people across the portfolio as “one enterprise” that can find synergies and leverage learning, resources, and talent mobility.