P&G Struggles to Hang on to Top Gillette Talent

Merger Was Supposed to Create All-Star Exec Lineup, but Big Guns Keep Leaving

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BATAVIA, Ohio (AdAge.com) -- The plan when Procter & Gamble Co. bought Gillette Co. for $57 billion in 2005 was to acquire much of the company's management and marketing talent as part of the deal, to "field the best team," combining the top Gillette talent with P&G's.
Who's in at P&G

But two years later, many of Gillette's top managers have chosen free agency over taking the field with their new team. And when P&G delivered the lineup card recently following its latest management shuffle, it was missing three key Gillette executives brought in to head P&G businesses.

Graduating class
Set to retire before yearend are Bruce Cleverly, 62, who headed the companies' combined oral-care businesses but has been on special assignment reporting to Chairman-CEO A.G. Lafley since this winter; Mark Leckie, 53, who heads the Gillette, Duracell and Braun businesses; and Mary Ann Pesce, 52, who heads the companies' combined deodorant and personal-wash businesses. Mr. Leckie did not return calls, Mr. Cleverly declined to comment and Ms. Pesce couldn't be reached.

All three were key players in the success that made Gillette attractive to P&G in the first place. Ms. Pesce was the driving force behind Venus, which made female shaving a major growth engine for Gillette. Mr. Leckie led Duracell to some of the best results the battery business had ever seen under Gillette, and at one point was favored by former Gillette Chairman-CEO Jim Kilts to become the company's next CEO, according to people familiar with the matter. And Mr. Cleverly led Oral-B from a competitor badly beaten by P&G's Crest in battery-powered toothbrushes to a player that put Crest on the defensive in the segment.

Other top executives who decided to depart at or near the outset of the acquisition include Mr. Kilts; Peter Hoffman, former president of the blades-and-razors division; and Susan Wagner, longtime VP-market research for Gillette, who left last year to become VP-strategy and insights for PepsiCo.

A P&G spokesman said in an e-mail that the company hated to see the Gillette executives go, "but we understand and respect their decision," adding that the departure of each "was an individual and personal choice."

He added that P&G still has three officers who came from Gillette and are "leading significant businesses for us," including Ed Shirley, group president-North America; Bracken Darrell, a P&G alum who rejoined the company via the Gillette deal and heads Braun; and Joe Dooley, president of the Duracell business.

'Told you so'
But the most recent Gillette executive departures, coming on the heels of P&G results for its fiscal third quarter showing the acquired Gillette businesses lagged overall company top-line growth rates, has elicited groans of "Here we go again" and chortles of "I told you so" from longtime company watchers who predicted ballyhooed efforts to retain Gillette talent would fail.
Who's in at P&G

Some close to the company say Gillette managers have had trouble fitting into P&G's culture, where junior marketers are far more numerous and assertive, ownership of projects and decisions much more diffuse, and meetings way longer than at Gillette. And several key players couldn't be persuaded to move to P&G's Cincinnati headquarters from the Boston area.

Among the cultural differences were divergences in marketing philosophy -- regarding consumer segmentation, for instance. P&G long has made segmentation a science. But in a discussion with a P&G marketing executive, one key executive on the Gillette brand reportedly said, "We don't have segments. We're for all men." P&G's spokesman declined to comment.

Easy exits
A person close to the company, however, said lucrative change-of-control provisions that gave Gillette executives substantial golden parachutes for leaving made retention of top executives much harder.

Overall, P&G has said 95% of Gillette managers offered jobs by P&G have taken the offers, which the spokesman said "means that we are retaining the vast majority of Gillette continuity, mastery and talent." He declined to break out a retention number for the top 10% or 25% most highly compensated executives, but said the most recent departures are neither a sign of cultural problems nor of any problems in the Gillette integration.

"The integration is proceeding as expected," he said, adding that the company is "comfortably ahead on the acquisition economics" and that "retention of people who were offered positions is a benchmark in the industry."
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