CINCINATTI: The planet's largest advertiser – and arguably its most efficient fmcg machine – last week committed itself to cutting 15% of general-management level jobs along with the excision of an unspecified number of below-target brands.
But what distinguishes Procter & Gamble's latest strategy from the common herd is that chairman/ceo Alan G Lafley (above) plans to achieve zero overhead growth (ZOG as it is known within P&G's executive washrooms) without layoffs.
In a presentation Friday at the Consumer Analyst Group of New York conference in Boca Raton, Florida, Lafley told the serried ranks of moneymen that P&G's slimming regime won't rank alongside the crash diets recently pursued by Kimberly-Clark, Colgate-Palmolive and Unilever.
Instead, the majority of P&G brands will be restricted to ZOG, which will peg employment to existing staff levels despite projected increases in sales growth.
But in sectors of high growth potential – P&G's beauty care business, for example, or China and central/eastern Europe – overheads will be limited to HOG (half overhead growth), where growth in employment costs will not exceed half that of sales.
Moreover, the company will seek to divest itself of its lowest-performing brands, while those remaining will aim for NOG (negative overhead growth), in which employment and other overhead costs decline as a percentage of sales.
In an interview following the presentation, Lafley told AdAge: "The only time we'll announce a layoff is when we're shutting down a manufacturing site. But most of our brands we're handling from attrition.
"We're handling it through growth [without commensurate hiring]. I don't rule anything out, because we need to do what's right for the shareholders. But [layoffs are] not the plan."
However, P&G will continue to recruit entry-level marketers into the ranks of associate brand manager [it is not famed for cutting its own throat] but "we're not hiring as many as we used to," Lafley continued.
"And if we weed the brand portfolio that will result in fewer marketers who were formerly assigned to divested brands."
As to which brands those might be, Lafley's lips were sealed.
But what distinguishes Procter & Gamble's latest strategy from the common herd is that chairman/ceo Alan G Lafley (above) plans to achieve zero overhead growth (ZOG as it is known within P&G's executive washrooms) without layoffs.
In a presentation Friday at the Consumer Analyst Group of New York conference in Boca Raton, Florida, Lafley told the serried ranks of moneymen that P&G's slimming regime won't rank alongside the crash diets recently pursued by Kimberly-Clark, Colgate-Palmolive and Unilever.
Instead, the majority of P&G brands will be restricted to ZOG, which will peg employment to existing staff levels despite projected increases in sales growth.
But in sectors of high growth potential – P&G's beauty care business, for example, or China and central/eastern Europe – overheads will be limited to HOG (half overhead growth), where growth in employment costs will not exceed half that of sales.
Moreover, the company will seek to divest itself of its lowest-performing brands, while those remaining will aim for NOG (negative overhead growth), in which employment and other overhead costs decline as a percentage of sales.
In an interview following the presentation, Lafley told AdAge: "The only time we'll announce a layoff is when we're shutting down a manufacturing site. But most of our brands we're handling from attrition.
"We're handling it through growth [without commensurate hiring]. I don't rule anything out, because we need to do what's right for the shareholders. But [layoffs are] not the plan."
However, P&G will continue to recruit entry-level marketers into the ranks of associate brand manager [it is not famed for cutting its own throat] but "we're not hiring as many as we used to," Lafley continued.
"And if we weed the brand portfolio that will result in fewer marketers who were formerly assigned to divested brands."
As to which brands those might be, Lafley's lips were sealed.
Data sourced from AdAge.com; additional content by WARC staff
