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Procter & Gamble names 'team builder' as next CEO

Alexander Coolidge
acoolidge@enquirer.com

Procter & Gamble’s David Taylor will become its next CEO on Nov. 1, the company said Tuesday night. P&G insiders describe Taylor as a team builder who commands a loyal following with quiet authority.

Taylor, 57, will become the consumer product giant’s 14th CEO.

Current CEO A.G. Lafley, 68, will stay on the board of directors as executive chairman to smooth the leadership transition.

In an interview with The Enquirer, Lafley praised Taylor and said P&G was ready for a new leader to take charge, now that deals for nearly 100 brand divestitures have been unveiled and other restructuring is well underway.

“David is such a broad-gauged leader – people follow him, he has followership,” Lafley said. “You put him in the middle of a business and the whole team gets better.”

Lafley says he’s known Taylor since the late 1990s, when Taylor was made general manager of Hong Kong and the hair care business in China.

Lafley said he will continue to serve at the pleasure of the board, but he and the governing panel are envisioning a longer transition period than when Lafley first retired in 2009. Back then, Lafley retired as CEO, turning the reins over to Bob McDonald, and quit the board a few months later.

“We think two heads through a transition is better,” Lafley said.

Taylor became the leading candidate to replace Lafley in January after he was handed roughly half of P&G’s business, overseeing its beauty, grooming and health care units.

Lafley came back for a second turn as CEO in 2013 after McDonald resigned under fire. Lafley said the board studied previous transitions that were more successful, where an outgoing CEO remained board chairman for a couple years while the new CEO settled into the new job.

Taylor – P&G’s group president for global beauty, grooming and healthcare – is a 35-year company veteran and a North Carolina native.

The change comes a little more than two years after Lafley came out of retirement to reboot P&G’s operations. Lafley slashed more than 7,000 jobs and cut deals to sell or exit almost 100 laggard brands, but sales growth remains tepid.

P&G announced the shift after the market closed, but the Wall Street Journal reported late Monday the change was likely this week, citing an unnamed source. Investors shrugged off the unconfirmed report Tuesday with P&G stock closing at $80.23, up 26 cents, with a normal level of shares trading hands.

What’s kind of leader is Taylor?

Taylor joined P&G in 1980 and his early career was in manufacturing, including a stint running P&G’s largest factory in the world in Mehoopany, Pennsylvania. He later took several management jobs in baby care, beauty and family care. He’s been stationed in Asia, Europe and North America.

From 2007 to 2013, Taylor headed P&G’s home care business before being tapped to oversee the company’s highly profitable razor business and its health care unit.

Taylor declined an interview request through a spokesman. But he gave a wide-ranging perspective last fall on his career and his management philosophy during a recorded presentation at his old college.

In that talk, Taylor said he discovered his love for team-building during his junior year of college working a summer job at Carowinds amusement park, a sister property of Kings Island near Charlotte, North Carolina.

An engineering student at Duke University, Taylor realized he liked being part of a crew focused on maximizing the park’s efficiency, while his fellow students on break were pursuing more technical projects, such as rebuilding cars.

“That’s when the light bulb went off: I have an aptitude here, but I have an interest and passion in the area of working with people,” Taylor recalled. The future senior executive later took his first job at P&G because it offered him both the opportunity to use his engineering background, but also train to become a leader.

Taylor discussed how he left a promising career after 12 years in plant management at P&G to “start over” as an assistant brand manager at 34. He wanted to learn from the brand-building side of P&G’s business and worked alongside recent college graduates again after previously overseeing nearly 1,300 factory workers.

Taylor also told Duke students he liked “messy meetings” where team members were encouraged to provide input and occasionally disagree with one another respectfully. He said it was leaders’ job to clearly outline objectives, provide guidelines, but otherwise give subordinates wide latitude on how to achieve goals.

“I’ve had bosses that are very prescriptive and I’ve found that very limiting, it didn’t bring out the best in me,” Taylor said. “The kind of leaders we have want to be engaged and have a conversation versus being told what to do.”

Taylor recalled in 2001, he was a new vice president of family care in western Europe when he agreed to scrap a global advertising campaign for Bounty paper towels in the United Kingdom for an idea championed by his team in the country. P&G had otherwise successful campaign called “Little Kids, Big Spills and Messes” that depicted cute kids making messes and moms being stressed out until Bounty towels saved the day. But the ads were not boosting sales in the U.K.

Local brand managers advocated a Monty Pythonesque ad featuring two men dressed in drag, bumbling in a kitchen and making a mess before Bounty came to the rescue. Taylor sold the idea to top management back in Cincinnati. Taylor deferred to his people on the ground and U.K. paper towel sales surged 25 percent that year. The campaign subsequently was rolled out in other markets.

Taylor is a member of the board of visitors of Duke’s Fuqua School of Business, as well as the board of the Cincinnati Freestore Foodbank. He is a former member of the boards of TRW Automotive and Feeding America.

P&G remains a company in the midst of transition

Taylor’s team-building skills will be put to the ultimate test as he ascends to the top of a company deep in the midst of a painful restructuring. P&G has announced deals to sell or exit 93 slower-growing brands, but many of those businesses must still be run before the deals close by December 2016.

P&G is also deep in the middle of previously unveiled plans to slash between 3,000 and 6,000 office jobs on top of thousands of jobs leaving the company through the divestitures. By mid 2017, P&G is poised to slim down to a worldwide employee count of 95,000 to 98,000 – the smallest payroll since at least 2003 and possibly since 1991.

Following his initial retirement, Lafley (he was P&G’s 11th and is its 13th CEO) co-wrote a book on business strategy, “Playing to Win,” in 2013. He had previously co-written a book, “The Game-Changer,” in 2008 while he was still with P&G.

Lafley’s 2013 return to the helm was a calming influence. Yet analysts didn’t expect him to remain for more than a few years.

Some Wall Street analysts have speculated since April a leadership transition at P&G could occur by late summer, after the company announced the last of its major brand divestiture plans. Others thought P&G should resolve more of its issues – closing brand sales and improving financial results – before breaking in a new CEO.

Since Lafley’s return, he has focused on cost-cutting and simplifying the company’s brand portfolio to faster-growing core businesses, such as Tide detergent, Pampers diapers, Gillette razors and Crest toothpaste.

Earlier this month, Lafley secured a deal to carve out 43 beauty brands and merge them with New York-based Coty Inc. by December 2016. The pact delivered on a Lafley promise to have the bulk brand exits announced by the end of summer.

Still, a sluggish worldwide economy and unfavorable foreign exchange rates have overshadowed Lafley’s turnaround progress.

Excluding one-time items, P&G is expected to report Thursday an $11.4 billion profit on sales of $76.4 billion for the fiscal year ended June 30, according to Bloomberg. That would compare with an $11.6 billion profit on annual sales of $83.1 billion in the same period a year ago.

P&G’s closely-watched organic sales – which exclude the impacts of acquisitions, divestitures and foreign exchange – were up 2 percent during the first nine months of P&G’s current fiscal year, and were up 3 percent in its last fiscal year.

By comparison, Lafley averaged 5 percent organic sales growth during his celebrated 2000-09 tenure.

P&G’s stubborn performance made some analysts believe Lafley would end up staying on longer. And he may, but only as chairman.

“Sales growth has only decelerated since Mr. Lafley’s return two years ago. ... As such we’d thought Mr. Lafley (and the Board) would surely prefer he stay on until the company was on firmer revenue footing,” Barclays analyst Lauren Lieberman wrote in a note to investors.

Bernstein analyst Ali Dibadj said the switch won’t bring radical change.

“Although we continue to be supporters of A.G. Lafley, change at P&G is good,” he wrote in a note to investors. “Taylor will be more continuity than change at P&G.”

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