Procter & Gamble’s Succession Management Slip-Up Consumer products giant Procter

Question

Procter & Gamble’s Succession Management Slip-Up
Consumer products giant Procter & Gamble made headlines recently when CEO Robert McDonald retired and was replaced with former CEO A. G. Lafl ey. McDonald’s retirement was not a surprise, because P&G had struggled to recover since the recent recession dampened sales of P&G’s premium brands such as Tide detergent and Pampers diapers. What did surprise observers was that the company brought back a former CEO—implying it had not prepared anyone to move into the CEO’s position. Lafl ey previously served as CEO from 2000 to 2009, during which time he gained a reputation for promoting innovation and for leading a successful international expansion. He mentored McDonald, who was chief operating offi cer when Lafl ey retired. However, McDonald did not hold positions that gave him practice in setting strategy or leading organizational change; he focused on managing operations.Expectations are that Lafl ey will stay for a few years and make grooming a replacement one of his main goals. This would be in keeping with Lafl ey’s behavior during his previous tenure as CEO, when he directed the board to begin thinking about his successor just six months after he took the position. Lafl ey’s return raised questions about why P&G had no one ready to fi ll McDonald’s shoes. Some observers pointed to the departures of several leading executives during McDonald’s tenure. Still, at a struggling company,the board of directors (which is responsible for finding a replacement) would know it will need a replacement at the top in the near future. This failure in succession planning was surprising to many because P&G has been known for its strong development program. Given its vast size and global scope, it offers many opportunities for management development through job experiences, and top executivesusually are promoted to their jobs from within the company. P&G’s learning team has a mission of developing an employee over 30 or 40 years through formal learning and varied job experiences. Each employee’s career development aims at goals spelled out in a development contract agreed upon by the employee and his or her
manager. P&G also has a sophisticated computer system for managing its succession planning. Despite the departures of some key executives, some who remain may have potential to become the next CEO. Examples include Melanie Healey, group president of North America; Deb Henretta, group president of the global beauty care business unit;
Martin Riant, group president of global baby care; and David Taylor, group president of global health and grooming. Other possible candidates are executives who left P&G to run other businesses, including Estee Lauder Companies and the private-equity firm Carlyle Group.
Questions
1. Although the board of directors is responsible for filling the CEO position, how could HR managers support the board with a succession management program?
2. Based on the information given, what developmental approaches were part of McDonald’s career development? What approaches would you recommend for preparing P&G’s next top executives?

Explanation / Answer

1.

P&G has strong succession planning system and along with board of directors, HR managers could also support with a succession management program. There are huge factors to consider while giving responsibility to former CEO. In the present case, one can understand that successful 9 years of tenure of Lafley and his strategic decisions in playing a vital role to top the P&G in global market and its expansion. Comparatively, Lafley has tremendous experience than rest of the CEO’s and he also mentored present retired CEO McDonald. In his huge tenure, Lafley could understand the common pitfalls of the market and its business and remained as successful CEO in P&G history. More importantly, Lafley has creative and strategic ideology of the business expansion and risk minimizing techniques what he learned from his experience. These characteristics of Lafley are unique and cannot be simply underestimated by any other CEO. As it is the case, HR management could accept and support the decision of the board of directors.

2.

McDonald never ever hold the positions which give him practice in setting strategy. He also never practiced leading organizational change in his tenure. As a CEO one should dare to challenges and to undergo best practices and must be ready to face any kind of adverse situation while he must think for risk minimizing strategy. CEO position is as important as the success of business or its destruction. In other words, CEO is in the first line in the war as he is responsible for both reward and risk. One cannot suggest McDonald as he in-capable of the CEO position because of unchallenging or unwilling to new ideas.

                Lafley is no doubt a best CEO for P&G and therefore it is important to use his guidance and experience to the new top executives like Martin Riant and David Taylor. It is also important to make Martin and David to participate in new business ideas and other relevant matters with Lafley as long as Lafley is in tenure. Therefore, it allows other capable executives to take tremendous responsibility as a CEO after Lafley. Company or board of directors should also in the process of selecting next capable person as a CEO with the support of HR management.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.