Procter & Gamble simplifies organization structure
The Procter & Gamble Company updated shareowners and analysts on significant progress toward its goals of delivering stronger, balanced growth and value creation. The company affirmed its focus on its core growth strategy of delivering noticeable brand superiority; driving productivity improvement and cost savings to fuel investments and margin; and transforming P&G's organization and culture. This growth strategy is driving improved results, including faster top-line growth, increased consumption, and market share growth. Under the theme of "leading constructive disruption," P&G highlighted a broad range of initiatives across innovation, brand building, supply chain, information technology and citizenship that are creating new levels of competitive advantage for the Company and its brands. The Company also announced several organization changes, effective July 1, 2019, that will simplify the management structure and further increase focus, agility and accountability. Building on a series of improvements already in place, the Company announced a new, simpler management structure to provide greater clarity on responsibilities. New reporting lines will strengthen leadership accountability and enable P&G people to accelerate growth and value creation. Beginning July 1, 2019, the Company will operate though six industry-based Sector Business Units for the largest geographic markets, led by Sector Business Unit CEOs who will report to Taylor. These SBUs will have direct sales, profit, cash and value creation responsibility for its largest markets - U.S., Canada, China, Japan, U.K., Germany, France, Spain, Italy, Russia and smaller adjacent countries - accounting for about 80% of Company sales and 90% of after-tax profit. The SBUs will have responsibility for all facets of the business in these markets: consumer understanding, product and package innovation, brand communications, selling and retail execution, and supply chain. In these markets, the Company will continue to provide scaled market services to help the SBUs operate efficiently and with high quality. Responsibility for the remaining markets will be organized into a separate unit with sales, profit, and value creation responsibility. The SBUs will provide innovation plans and operating frameworks to drive growth and value creation in these markets. The intent is to give these markets executional freedom, with just enough framework, to ensure their success. The Company will continue to reduce the level of corporate resources, with about 60% of corporate work shifting to the business units and markets and will retain a core set of corporate resources needed to sustain the ongoing health, viability and sustainability of the Corporation. This includes back-office operations, governance and stewardship, and some areas requiring deep mastery. In particular, P&G will retain its Corporate Research & Development group that invents upstream platform technologies to benefit multiple businesses and opens opportunities for P&G to get into entirely new businesses. Chief Financial Officer Jon Moeller will expand his responsibilities to include the operations side of the Company and will be appointed Vice Chairman, Chief Operating Officer and Chief Financial Officer, continuing to report to Taylor. In this capacity, Moeller will assume responsibility for markets beyond those managed directly by the SBUs, Market Operations providing scaled market services, and functions that support operations. The Company reiterated this structure supports continued focus on the streamlined portfolio of 10 product categories; ongoing efforts to move resources closer to the consumers and customers it serves; supplementing internal talent with skilled, experienced external hiring; improving category dedication and mastery; strengthening of compensation and incentive programs; and ongoing improvements in productivity.