IIBMS – Managing Cultural Changes at Procter & Gamble

CASE – 3    Managing Cultural Changes at Procter & Gamble

IIBMS – Managing Cultural Changes at Procter & Gamble

In September 1998, the Procter & Gamble Company, Cincinnati, USA, announced a major global structural change programme, “Organisation 2005”. The mission of the programme was to take P & G’s global turnover from $ 38 billion to $ 70 billion by 2005. The objective was to raise profitability by changing the work culture at P & G. The change drivers identified were the attributes of Stretch, Innovation, and Speed (SIS). The structural changes to be initiated included setting up of four global business units based on product lines, eight market development organisations based on regions, and one global business service centre. A 14-member cross-functional team named as the Culture Team was set up to oversee the management of change.

            The achievements of the Organisation 2005 programme were to be seen in terms of:

1. changing P & G from being a misaligned organisation to one aligned on common goals, with trust as the foundation
2. evolve from an intense inspection-led organisation where everything is kept under control to one that is a team-collaborating unit
3. shift from a risk-avoiding culture to a stretch-taking one
4. move from running down on complexities to taking on challenges
5. heave from a slow-moving organisation to one which hurtles through stretch, innovation and speed to breakthrough goals

As the news of Organisation 2005 programme reached the P & G Hygiene and Health Care headquarter at Mumbai, India, there was a lot of apprehension among the employees. Uncertainty and suspicion arose with regard to their own future and related to the continued existence of the business division they worked in. It took about a year for the apprehensions to fade away and be replaced by clarity and confidence.

P & G, India adopted the global motto of SIS of its parent. A cultural team was set up to communicate the goals of SIS to the employees and to seek their involvement in creating a new P & G. The team set out to identify projects to help achieve the goal of SIS and to get employee feedback periodically. Outdoor meetings of all P & G India employees were conducted to drive home the SIS message. Weekly indoor meetings were held both department-wise and across hierarchies and categories. Team members were made responsible for communicating formal and informal feedback to and from their department. Monthly updates and communication through newsletters were extensively used. Reassurance of employees thus became an on-going continual process.

Says a P & G employee: “Initially, when the global changes were announced, we were a little skeptical as to what will be its impact on the Indian operations. Now after so much communication and interaction at all levels, we are confident and look forward to this change.”

Question:

1. Comment on whether the cultural changes at P & G are supportive of the strategy being implemented.
2. What in your opinion are the chances of the cultural change being successful? What needs to be done additionally to ensure success?

IIBMS – Managing Cultural Changes at Procter & Gamble

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