14 November 2018 - Deborah Wilkes
Procter & Gamble (P&G) has announced a major reorganisation that will see the company "move resources closer to the consumers and customers it serves".
Chairman, president and chief executive officer David Taylor said the reshaping was the "most significant organisation change we have made in the last 20 years".
From 1 July 2019, P&G will operate in its largest geographic markets through six industry-based Sector Business Units (SBUs).
P&G's Personal Health Care brands – including Align probiotic supplements, Meta fibre supplements, Pepto-Bismol upset stomach remedies, and Vicks cough, cold and flu remedies – will be housed in the Health Care SBU, together with the company's Oral Care brands.
The company is in the process of revamping its Health Care portfolio. It announced in April 2018 that it was acquiring Merck’s Consumer Health business for EUR3.4 billion (USD4.2 billion) and terminating its PGT Healthcare joint venture with Israel’s Teva Pharmaceutical on 1 July 2018 (click here to read the News story).
P&G commented that Merck Consumer Health would “replace and improve upon the highly-successful PGT Healthcare joint venture” with Teva.
Each of the six SBUs will have its own chief executive officer who will report to Taylor. "These SBUs will have direct sales, profit, cash and value creation responsibility for the largest markets – the US, Canada, China, Japan, the UK, Germany, France, Spain, Italy, Russia and smaller adjacent countries," commented the company.
P&G said these markets accounted for around 80% of its sales and 90% of after-tax profit.
Responsible for all facets of the business
The SBUs would have responsibility for all facets of the business in these markets, said P&G, including consumer understanding, product and package innovation, brand communications, selling and retail execution, and supply chain. The company will continue to "provide scaled market services to help the SBUs operate efficiently and with high quality".
P&G said the remaining markets would be organised into a separate unit with sales, profit and value creation responsibility. The six SBUs would provide innovation plans and operating frameworks to drive growth and value creation in those markets.
"The intent is to give these markets executional freedom, with just enough framework, to ensure their success," explained P&G.
The company said it would continue to reduce the level of corporate resources, with about 60% of corporate work shifting to the business units and markets.
Corporate Research & Development Group
The Corporate Research & Development Group – which invents upstream platform technologies that benefit multiple businesses and opens up opportunities for P&G to enter entirely new businesses – will be retained.
P&G said chief financial officer Jon Moeller would expand his remit to include the operations side of the company and would have responsibility for those markets not managed by the six SBUs. His new job title will be vice chairman, chief operating officer and chief financial officer.
Much simpler management structure
The company said the reshaping would result in a "much simpler management structure and reporting lines", and would support "continued focus on the streamlined portfolio of 10 product categories".
P&G plans to "supplement internal talent with external hiring and improve category dedication and mastery". The company also intends to strengthen compensation and incentive programmes.
Taylor commented that Procter & Gamble would have a "more engaged, agile and accountable organisation focused on winning with consumers through superiority, fuelled by productivity, and operating at the speed of the market".
In addition to Health Care, P&G will have SBUs for Baby & Feminine Care, Beauty, Fabric & Home Care, Family Care & Ventures, and Grooming.
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