Procter & Gamble : Organization 2005 and Beyond |
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Organization 2005 contd...
Company Culture: P&G redesigned reward systems and training programs to improve result orientation amongst employees. Organization 2005 involved substantial costs. Of the approximately $1.9 bn in costs, $400 mn were planned for 1999, $1 bn over the next two fiscal years, the balance during fiscal years 2002-2004. However, these costs were expected to be more than offset by savings from the program. The company expected to increase its after-tax profits by approximately $600-700 mn annually by fiscal year 2003/04 and $900 mn by fiscal 2004. Approximately 10,000 positions would be eliminated through fiscal 2001 with a further 5,000 cut after 2001. P&G indicated that approximately 42% of total workforce reduction would occur in Europe, Middle East and Africa; 29% in North America; 16% in Latin America; and 13% in Asia. Despite the substantial retrenchment, Jager remained confident that employee morale would not be affected. He believed that Organization 2005 was about accelerating growth, not cutting jobs2. “These job reductions are principally an outgrowth of changes, such as standardizing global manufacturing platforms, to drive innovation and faster speed to market, as always, we have considered these decisions very carefully with deep concern for the impact on our people. We would carry out the changes with maximum respect and attention to the welfare and future of our employees”. P&G announced it would make full use of normal attrition and retirements, hiring reductions, re-locations, job retraining, and voluntary separations to help reduce the number of potential involuntary separations. In cases of involuntary separations, P&G would offer employees financial assistance to help them in their new careers. [2] P&G press release: Organization 2005 Drive for Accelerated Growth Enters Next Phase, June 9, 1999. |