Corporate Culture of

Procter & Gamble (P&G)

Business Ethic, Laws, and Sustainability Assignment




Written by Syndicate 10:

Frans Joflin Panggabean (29114766)
Karina Larasati (29114721)
Lina Setiawati (29114748)
Marnala Joshua Hutajulu (29114880)























MASTER OF BUSINESS ADMINISTRATION PROGRAM
SCHOOL OF BUSINESS AND MANAGEMENT
BANDUNG INSTITUTE OF TECHNOLOGY
YOUNG PROFESSIONAL 51B
2014
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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
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LIST OF TABLES

Table 1. Products Categories of P&G ...................................................................................................... 1
Table 2. Product History .......................................................................................................................... 1
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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
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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
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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
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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:
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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
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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.