Mini-Case A Change at the Top at Procter & Gamble: An Indication of How Much the
ID: 335700 • Letter: M
Question
Mini-Case A Change at the Top at Procter & Gamble: An Indication of How Much the CEO Matters? A. G. Lafley joined Procter & Gamble (P&G;) in 1977 as brand assistant for Joy dishwashing liquid. From this beginning, he worked his way through the firm's laun- dry division, becoming highly visible due to a number of successes including the launching of liquid Tide. A string of continuing accomplishments throughout the firm resulted in Lafley's appointment as P&G;'s CEO in June 2000, a post he held until retiring in mid-2009. Bob McDonald, who joined P&G; in 1980, was Lafley's handpicked successor. McDonald took the top position at P&G; in July 2009, but resigned under pressure in May 2013. Lafley, revered by many, was asked to come out of retirement and return to P&G; as president, CEO, and chair of the board of directors. Lafley said that when contacted to return to P&G;, he agreed immediately to do so, committing to remain “as long as needed to improve the company's performance." However, speculation is that Lafley likely would not remain beyond three years. What went wrong for McDonald, a long-time P&G; employee who seemed to know the firm well and who received Lafley's support? Not surprisingly, a number of possibilities have been mentioned in response to this question. Some concluded that, under McDonald's lead- ership, P&G; suffered from “poor execution globally, an outcome created in part by P&G;'s seemingly ineffective responses to aggressive competition in emerging mar- kets. Other apparent problems were a failure to control the firm's costs and employees' loss of confidence inExplanation / Answer
CEOs are required to run the business organizations successfully. But their job is highly challenging and complex. Some of the challenging tasks of the CEOs are listed here. Irrespective of the financial situation of the company, a CEO has to motivate the employees, himself or herself and the board to upkeep the integrity of the company A CEO has to play multiple roles in the organization as being a leader, follower, judge, counselor, idea man, manager, etc. The work life of a CEO is unscritptable, each day is unique, and any surprises and shocks can pop up anytime Decision making is one of the critical tasks of a CEO. While delegating most of the decisions to the managers down, A CEO must focus only on the strategy level decisions such as what product categories to be maintained, which markets to compete, what innovative products to be developed, etc Somehow a CEO needs to earn respect from the stakeholders, especially the employees Guiding the organization to apply right costs to achieve the organizational goal is another responsibility of a CEO A CEO has the responsibility to drive the whole organization with work culture, values and ethics The communication and messages of a CEO are very vital and must use them effectively 2. There are many reasons, why the former CEOs are called back to lead their previous organizations. Many prominent corporations have done so to tackle the organizational situations of the respective companies. There are advantages and disadvantages attached to the practice of calling back the former CEOs to the company for leading. The advantages of rehiring a former CEO include the following. The company will be able to acquire a leadership that has industry experience, a leader who is acceptable to the employees, and a manger who understands the culture of the organization. The previous CEO can quickly get into the business than a new hire. The disadvantages include, the assumptions of the board may be faulty, as the situations of the organization may have changed and the rehired CEO may not be aware of that. Second, solutions and leadership style of the mast may not work in the changed scenario. Third, the rehired CEO may not have the same degree of commitment and the grit as he or she had in the previous assignment. 3.The task of developing a CEO is very challenging. Many top companies engage in succession planning at least ten years in advance. Identifying, grooming and inducting CEOs are a challenging task. In the Case of P&G, the time available is quite insufficient for a succession planning. The Board of the P&G must decide whether they have to appoint a CEO from outside or select a person from the internal resource. Recruiting a CEO from outside and inside has respective merits and demerits. In the present scenario, the company may have to look for external CEO to take charge. However, the board has to identify the persons as early as possible to hand over the leadership from Lafley to the new incumbent.