On November 13th, P&G announced that it is planning to streamline its existing top ten business units to six. The new organizational structure will take effect in July 2019.
This adjustment is the biggest organizational change of P&G in the past 20 years. At that time, the company will have six departments of textiles and home care, infant and female care, home care and new business, management, health care and beauty. Each department will appoint a CEO to manage the regional sales team and some of the original Responsibilities managed by the headquarters. The CEOs of each department will report directly to the group CEO David Taylor.
After the new organizational structure came into effect, the four department presidents reported directly to the business unit CEO, reducing the position of two sales presidents compared to the current one. A company spokesperson said that no executives would leave because of structural changes.
The CEO of each business unit will be responsible for direct sales, product innovation and supply chain in the top ten regional markets such as the United States, China, Russia and Germany. These top ten markets contribute 80% of the company’s sales and 90% of after-tax profits.
At the same time, smaller markets such as Latin America, Central Europe and Central Asia will be merged into an independent division, managed by the company’s current CFO, Jon Moeller, who will also serve as the company’s COO. These regional sales executives have now begun reporting to Jon Moeller. Since the company’s predecessor, COO Bob McDonald, was promoted to the chairman and president of the group in 2009, the position was vacant.
The promoter of this restructuring strategy is new shareholder Nelson Peltz, who joined the P&G board in March of this year and has been working to reduce the company’s business to three. David Taylor said: “We are adapting to the ever-changing global market by implementing strategies and accelerating the pace of change.”
In October this year, P&G announced its best quarterly results in five years. Despite the adverse effects of the overall economic market, the latest quarterly performance is one of the signs that the company is expected to achieve rapid growth.
At present, P&G adopts a matrix management structure, the key brands are responsible for the corresponding executives, and other brands are managed according to the geographical area. The management structure was completed by David Taylor after taking office in 2015. Under his leadership, the company has set up 10 global business units, each of which appoints a president to be responsible for a product category, such as infant care, oral care, and more. He also maintains six regional sales and distribution teams, each with a president.
After the news spread, as of the close of November 9, P&G shares rose 1.15% to 92.41 US dollars / share.