Procter & Gamble Co. will hire more people from outside, including in its marketing ranks, in what could be the biggest change ever to its legendary promote-from-within culture, new CEO David Taylor said in a presentation Thursday to the Consumer Analyst Group of New York in Boca Raton, Fla.
P&G Will Hire More From Outside, Including Marketers, New CEO Says
It was among steps he outlined in his first public appearance since taking the post in November. He focused on steps P&G is taking to accelerate top-line growth that has lagged that of rivals in recent years.
But the company also will launch a round of $10 billion in cost cuts over the next five years, similar to one announced four years ago at the same conference. This time, Chief Financial Officer Jon Moeller didn't get into details, including how much would come from marketing, and a spokesman said they would come primarily from such areas as cost of goods sold.
Mr. Taylor said pointedly in response to a question that P&G is sticking by prior plans to increase advertising spending by several hundred million dollars through the end of its current fiscal year, which ends June 30. P&G will not cut ad-spending plans in its final fiscal quarter, as he acknowledged had been the case in some prior years when profit pressures arose.
"The consumer buys our categories 12 months of the year," he said. "They don't take a holiday" in April, May and June, he said.
The outside hiring could be a big change if only because it could extend to P&G's line marketing ranks, which has seldom happened in the past outside of bringing back executives who'd left fairly recently.
P&G has long brought in outside hires above the entry level in specialty areas such as legal, information technology, engineering or design. But Mr. Taylor mentioned sales as an example, and in an email, spokesman Damon Jones said P&G will consider hiring outside for brand managers, brand directors or even general managers.
"Campus recruiting and developing talent from within remains our primary strategy," he said. "However, we will be more open to source the best available people for our business, whether internal or externally experienced talent based on the needs."
Some recent P&G alums, who've welcomed the opportunity to hire outside marketing talent in their new roles, have said privately the strict promote-from-within policy, unusual among competitors or marketers generally, makes it harder to recruit the best talent for marketing roles. They've noted the business case for the policy has become untenable as P&G's growth rate slowed compared with rivals.
"P&G is fortunate to consistently source and develop strong talent," Mr. Taylor said. "But there are times when the best talent is not inside the organization."
Outside hiring is one of several organizational changes P&G is making, Mr. Taylor said. That includes efforts to keep marketers working in their categories longer rather than switching frequently in an effort to advance careers. He noted he'd spent the first 17 years of his career in the paper business and obviously did just fine.
P&G executives have been talking about increasing tenure on brands and categories for 15 years, since the early days of Chairman A.G. Lafley's first stint as CEO, so how well the plan will stick now remains to be seen.
P&G is also streamlining its organization to make roles and responsibilities clearer. And it's changing its annual bonus system to reward managers more on the results of the businesses they control directly and less on the company's global results, Mr. Taylor said.
Having already narrowed the company to 10 categories and 65 brands, Mr. Taylor said P&G will focus particularly on the four biggest -- fabric care, baby care, hair care and grooming -- and top countries, particularly the U.S. and China. Only 38% of P&G brands are growing users, he said, and the company wants that to be north of 50%. In China, P&G's second biggest market, the company is growing users in none of its top categories and declining in most, he said. "This is unacceptable."
In that market, where he said e-commerce has grown to 18% of sales in P&G categories, the company's e-commerce market share is about half its offline market share -- so e-commerce there needs to be a major focus, along with shifting the product mix to higher-end products appealing to the middle class.
Mr. Taylor held out the U.S. Tide business as one example of how it plans to expand users, including the launches of Tide and Downy products designed to lift odors from athletic wear, and Tide PurClean, a green-positioned "bio-based" detergent.
"Our overall impression of Taylor was positive, as he came across engaged, listening and managing questions thoughtfully," said a research note from Bernstein Research analyst Ali Dibadj, who's been one of the company's toughest critics. "However, we remain cautious but hopeful as we have heard a lot of this before and believe the industry will continue to be highly competitive."
Editor's note: Hear more from P&G at the 2016 Ad Age Digital conference. Chief Brand Officer Marc Pritchard will be presenting during the April 5-6 event in New York City. Get all the details here.