Succession Planning at P&G
"If I get on a plane next week and it goes down, there will be somebody in this seat the next morning,” - A.G. Lafley, P&G’s CEO as quoted in Fortune magazine.Lafley took over Procter & Gamble (P&G) as CEO in 2000 and since then has been very successful in increasing sales by 110% and tripling profits. Does he have a succession plan? If he does he has not disclosed it yet and is certainly not overly concerned judging by his above statement. What is the reason? Does P&G have a strong leadership development program
P&G’s Leadership Program and Proctoids
P&G’s leadership program is called “Build From Within”. The program helps track the performance of each manager in a very detailed manner. The program ensures a manager is ready for the next level. According to CEO Lafley, “Each of the top 50 jobs already has three replacement candidates lined up.” Lafley himself oversees the development of the top 150 employees.
At P&G, a business school graduate is recruited at an entry level position. This position offers him/her a major window of opportunity for becoming what's known in the company as a Proctoid (less than 5% of hires come from the outside at a later stage). Proctoids discuss their business goals, their ideal next job, and what they've done to train others during monthly and annual talent review sessions. The recruits select a career track depending on his/her goals and P&G's needs. They are then trained to work in different countries and businesses. This helps build deep bench strength. So when a position is open, P&G has a pool of employees who are ready to move in to the new position in a particular country or region. According to Lafley, "We can fill a spot in an hour, that's the beauty of the system."
Training and Internal Reputation
P&G has a training center near to the CEO Lafley’s office where all executives teach and hold weeklong "colleges" for employees entering new levels. An executive’s willingness to train others ultimately determines who advances. Moheet Nagrath, head of human resources at P&G believes, “If your direct reports aren't ready, neither are you. A manager who isn't good at developing others doesn't attract the best talent [to be on his team]. Internal reputation is crucial.”
Advantages and Success Factors for the program
- Loyalty
- P&G rarely hires from outside, promoting talent from the inside
- At P&G, less than 5% of hires come from the outside at a later stage
- P&G maintains a comprehensive database of its 138,000 employees. An employees’ performance (stars) are tracked carefully through monthly and annual talent reviews.
Disadvantages
- Promoting from within can build well oiled teams that act quickly but at the same time builds an insular culture where most people think in similar ways. This can hinder innovation.
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