MASTER OF BUSINESS ADMINISTRATION PROGRAM SCHOOL OF BUSINESS AND MANAGEMENT BANDUNG INSTITUTE OF TECHNOLOGY YOUNG PROFESSIONAL 51B 2014 ii
TABLE OF CONTENTS
TABLE OF CONTENTS ................................................................................................................................ ii LIST OF TABLES ........................................................................................................................................ iii I. Company Profile ............................................................................................................................ 1 II. Culture Dimensions ....................................................................................................................... 3 2.1. Involvement ........................................................................................................................ 3 2.2. Consistency.......................................................................................................................... 3 2.3. Adaptability ......................................................................................................................... 4 2.4. Mission ................................................................................................................................ 4 III. Contributing Factors and Strong Culture System ......................................................................... 6 IV. Management Practices ................................................................................................................. 7 4.1. Unique Recruitment System ............................................................................................... 7 4.2. Internal Promotion Program ............................................................................................... 7 4.3. Delegation System ............................................................................................................... 7 4.4. Training, Mentoring, and Supervision Program .................................................................. 7 4.5. Brand Management System ................................................................................................ 7 V. Conclusion ..................................................................................................................................... 9 iii
LIST OF TABLES
Table 1. Products Categories of P&G ...................................................................................................... 1 Table 2. Product History .......................................................................................................................... 1 1
I. Company Profile
One of well-known Fast Moving Consumer Goods (FMCGs) in the world is Procter and Gamble (P&G) which is focused on providing branded consumer packaged goods of superior quality and value to consumers. Their products are generally classified as: Table 1. Products Categories of P&G
Procter and Gamble (P&G) founded by William Procter and James Gamble in Cincinnati, Ohio, United States of America in 1937. Procter is a candle maker and his brother-in-law named Gamble is a soap maker who have a mission to produce relatively an inexpensive household products, but have a superior quality. The company grew rapidly during the civil war when it supplied the Union Army with soaps and candles as its two first main products at that time. After that, the company began to build factories in other locations. The following are several P&Gs products: Table 2. Product History 2
Years Products 1911 Crisco 1946 Tide Laundry Detergent 1947 Prell Shampoo 1955 Crest Toothpaste 1960 Downy Fabric Softener 1961 Pampers 1966 Olestra Potato Chips 2005 Gillette, Oral-B, Rembrandt, Right Guard, Soft and Dry, Dry Idea 2008 Tag Body Spray 2009 Pringles 3
II. Culture Dimensions
As one of prestigious FMCGs in the world, this case study portrays that P&G could be first career choice for hundreds of highly talented graduates and have the incredible growth record of doubling itself volume because of its intriguing and strong corporate culture. There are four dimension of culture, namely involvement, consistency, adaptability, and mission which will explain below: 2.1. Involvement This company very concerns about 3 underlying values which influence employee engagement: a. Teamwork Oriented P&G has encouraged few individual accomplishments and most team achievements in the workplace. It has succeeded in developing a system in which the goals of individuals and the goals of organizations are largely compatible. b. Understanding of Employee Needs P&G tried to reconcile the interest of employee and employer by practicing profit sharing for employees and employee conference committees. c. Internal Promotion P&G prefers to choose its best internal candidates to fulfill important positions because this company really knows that great employees who could be survive and stay at P&G are able to align their vision and missions with companys objectives. Those who cannot adjust their selves and refuse to be involved will ask to leave the organization. From this illustration, P&G believes that coercive side is needed to maintain involvement culture. 2.2. Consistency It can be defined as a continuous effort to achieve goals. Besides that, it also can be described as always behave in the same way. There are 3 values to support consistency culture at P&G, viz., thoroughness, objectivity, and efficiency. a. Thoroughness Being details is one of contributors to be successful at P&G. Once carelessness occur, it would be like a sin for them. One example that P&G promotes thoroughness as a culture is carrying market research out. P&G always sought facts and will never launch products to mass market without executing research to produce superior product and innovative ways to advertise and market them. Another instance that shows P&Gs thoroughness is the use of memos. For getting facts and avoid individual judgments, it emphasizes writing communication rather than 4
oral communication. The message must deliver with clear points and no need to talk nonsense. P&G designs its own memo to convey effective communication. b. Objectivity In this case study, it is indicated by P&Gs willingness to avoid assumptions and underscore market research to explore consumers needs. c. Efficiency It is influential value to support this culture because by doing things right, it will reduce waste things and save costs. P&G believes that the mindset of efficient will lead consistency culture in organized way. Thoroughness and objectivity have a close relationship with effectiveness. Based on the example above, the implementation of thoroughness and objectivity will lead to efficiency in every activities, such as no misunderstanding in communication which can be a cost and waste time to redouble job.
This case study also informs that even though its greatest asset is its people, it is the consistency of principles and policy that gives P&Gs direction and self-discipline. This is why the conformity is applied in this company because it is a methodical approach to do business. Nevertheless, it has disadvantage because many talented managers can adapt well and resign to pursue another carrier, however, the interesting fact is they mostly still use P&Gs method in their new workplace. In this company, decisions may be slow, but the outcome is always impressive. Another problem that P&G face in implementing this element is difficult to change. It is a reason why most great employees leave this gigantic business and seek challenging life.
2.3. Adaptability P&G adapts well to consumers needs in mass market based on their market research and product research. However, when it moves outside its traditional markets to special markets, or markets driven by taste, the company has more limited ability to adapt. Several managers described the company as being a good science, not art.
2.4. Mission P&G is an excellence example of strong mission since it is able to underscore their main goals which are dominating market share and being first career choice. In reaching their strategy, P&G has 3 values which are secrecy, innovation, and effectiveness. A secrecy is an important value to achieve their goals. Its people are encouraged to keep confidential information from competitor and outsiders. The top management could not attain P&Gs mission without any innovation in its organization, such as: 5
a. Direct retail sales In 1920, P&G moved to eliminate brokers altogether and directly sell to retailers across the entire country. This allowed them to respond to a stable demand for its products rather than volatile demands of wholesale brokers. b. Brand management system In 1920 1930, Harvard graduate named Neil McElroy built this system by creating a separate organization for each brand. Each brand maintains a separate marketing and advertising budget and separate product identity in the marketplace.
In obtaining its missions, effectiveness is they key element to undergo business. P&G always wants result is the same or beyond the strategy. Effectiveness at P&G has meant growth over a long period and dominance of selected mass markets. Being relied on market research and its recruitment system are instances for this companys effectiveness.
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III. Contributing Factors and Strong Culture System The reason behind a successful culture implementation at P&G is the ability of management to formulate well-understood values and its communication to all its people. The impact of this two factors is individual identity can be minimized and everyone complies the rules. As a result, they have a similar behavior to run the business. Moreover, conformity plays a critical role to uphold existing values at P&G.
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IV. Management Practices
The P&G culture is supported by and expressed to a set of concrete management practices which will be explained below: 4.1. Unique Recruitment System P&G selected employees who have a potential character to meet its culture. This company only chose the most talented graduates from the best universities. They sought a leader who can make a breakthrough to support its innovation value and adjust well with its culture. 4.2. Internal Promotion Program This FMCG has policy to only promoting from within. P&G placed its people in highly competitive situation and saw who can smoothly survive in existing system. Those who meet P&G culture will remain stay and have an opportunity to be promoted and those who can not will encourage to seek employment elsewhere. Young managers compete on relatively objective grounds and are subject to regular reviews by their superior. Developing and mentoring young managers is a highly valuated management skill at P&G. 4.3. Delegation System P&G always attempts to distribute responsibility to the lower level of organization. This system is not only implemented to their permanent employee, but also to their new recruits called trainee. The new one will get a project by management as their final assessment whether they are proper or not to be part of P&G. As mentioned before that P&G has a team-oriented value which underlines We instead of I, this corporation emboldens their people to give their contribution to given tasks and share their loads to another capable team member. 4.4. Training, Mentoring, and Supervision Program P&G makes a lot investment in each employee through training, mentoring, and supervision. The top management expects that they will return this to the company in terms of motivation, dedication, and long hours spent working on challenging projects. 4.5. Brand Management System The system has become the archetype for running a consumer marketing business. The characteristic of this concept are specific brand and independent cost center. The brand management system creates a separate organizational structure for each brand. The brand manager is in charge and directs a staff of several assistant brand managers and a number of brand assistant. Career advancement usually means taking a better assignment at a different brand and moving up the ladder to brand manager. Responsibility is highly decentralized in the brand management system, but authority is very centralized. As alluded before, each brand maintains a separate 8
marketing and advertising budget and separate product identity in the marketplace.
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V. Conclusion
After reviewing this case study, there are several lesson learned: 1. Dynamics of an Internal Labor Market P&G prefers to use internal promotion practices. From its point of view, when an internal labor market exists, a high level of consistency and a strong sense of direction are far easier to achieve. In contrast, when it does not exist, an organizational has a far more difficult time creating a distinctive culture and a sense of mission. Where there is no internal labor market and socialization process, occupational, regional, or ethnic cultures are more likely to dominate the organization. In this company, a change of position is very dynamic and one will never stay in the same place for individual development. This company believes that committing to an internal labor market means a major commitment to a long-term course for the future of the organization. Recruitment and socialization must be directed at a clear future vision and strategy, but add to the inertia that must be overcome if a change in direction is required. 2. Time and Inertia It can be concluded that to build a culture at P&G takes a long period. As time goes by, the culture become richer and more complex. The longer this process continued, the greater the strength of the culture. This means that if the mission and strategy are still appropriate, then the culture will continue to continue to effective performance. This also means that culture much more difficult to change. 3. Selecting Performance Targets In this huge company, all targets are captured by a number of performance measures. Only with a measure, such as average growth over 5 decades or lack of variation from 7% profit per year over 25 years could a performance measure really begin to capture the target toward which P&G has aimed. As P&G always seek for facts, the performance pattern complements the companys culture very well.