Procter & Gamble Co. shakes up management structure

CEO promises 'a more engaged, agile' organization

CINCINNATI - Procter & Gamble Co. announced an organizational restructuring Thursday that CEO David Taylor described as the company’s most significant in the last 20 years.

It’s designed to put six executives in charge of key business units that account for 80 percent of P&G revenue and 90 percent of its after-tax profit. Company spokesman Damon Jones said there will be no employment impact from the organizational change.

That makes it a lot different than the last two restructuring initiatives announced by P&G, which has eliminated more than 40,000 jobs in the last 10 years.

But it is similar to a restructuring proposal floated last year by activist investor Nelson Peltz, as he waged a proxy fight against the company that ended with Peltz joining P&G’s board.

"Certainly seems like a familiar structure," said Bernstein Research analyst Ali Dibadj, who supported Peltz's proxy fight. "We're pleased to see it."

Peltz emerged as P&G's leading critic after years of lackluster growth at the company, which responded by slashing costs, selling off weaker brands and re-investing in manufacturing, distribution and new-product development. Those efforts seemed to finally take hold last month when P&G posted its best quarterly results in five years. But Chief Financial Officer Jon Moeller hinted there might be more changes to come when he refrained from calling it a breakout quarter.

"I would call it a very strong quarter on which we need to build," Moeller said.

Peltz's restructuring plan, proposed in the middle of a heated debate about P&G's future, called for the creation of three autonomous business units that would be overseen by a lean holding company whose main function would be to control "public company functions and costs." Peltz argued that would make P&G brands more responsive to industry changes and less burdened by bureaucracy.

P&G rejected the plan last summer as a first step toward a break up of the company. Jones said the new restructuring differs in many respects from what Peltz proposed last year.

"This is not what Mr. Peltz proposed," Jones said. "He proposed a different structure."

Taylor’s plan, revealed to Wall Street analysts Thursday, gives six business unit leaders more control over product development, supply chain decisions and retail strategies while making its bosses directly accountable for sales growth and profitability. Those bosses will report to Taylor, but the corporate office will cede much of its oversight to business-unit leaders. A P&G press release said "corporate resources" will shrink by 60 percent, as employees are transferred to one of the six business units by next July.

“This is the most significant organization change we’ve made in the last 20 years,” Taylor said. “We will have a more engaged, agile and accountable organization focused on winning with consumers through superiority, fueled by productivity, and operating at the speed of the market.”

The business unit leaders will be:

  • Fama Francisco, in charge of baby and feminine care brands including Pampers, Luvs, Always and Tampax.
  • Alex Keith, in charge of beauty brands including Head and Shoulders, Pantene, Olay and SK II.
  • Shailesh Jerjurika, in charge of fabric and home care brands including Tide, Downy, Swiffer and Dawn.
  • Gary Coombe, in charge of grooming brands including Gillette and Braun.
  • Steve Bishop, in charge of health care brands including Crest, Oral-B, Nyquil and Pepto Bismol.
  • Mary Lynn Ferguson-McHugh, in charge of family care brands including Bounty, Charmin and Puffs.

In addition to the six business unit leaders, Moeller will have operating responsibility for smaller geographic markets that account for about 20 percent of company revenue. It's a promotion for the longtime CFO, who will add the title chief operating officer to his duties.

In addition to the new organizational structure, P&G briefed analysts on new product launches, including the Tide Eco Box and Gillette's SkinGuard razor for sensitive skin. Brand Manager Isaac Hellemn demonstrated the newly formulated liquid Tide product for e-commerce customers. His presentation is in the video attached to this story. Also featured is Troy Nimrick, research and development director for Gillette, who comments on how SkinGuard's design keeps blades from irritating skin while shaving.

 

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