Lafley needs to rebuild P&G’s bench of talent so the firm won’t face a crisis when he leaves

May 24, 2013
May 24, 2013

The management prowess of Procter & Gamble used to be seen as an example of how to groom and keep talent. When AG Lafley retired as CEO in 2009, the market wasn’t worried because P&G had a deep bench of other qualified executives.

But after Bob McDonald took over from Lafley, P&G’s performance started to lag and several executives left the firm. Now Lafley is back, replacing the man he himself had picked as a successor.

Lafley was a great CEO at P&G. He increased sales by 110% over nine years by building around the “consumer is boss” mantra. There are high hopes that he can turn the company back around. But he’s also 65. Can he stick around long enough to revitalize P&G, while also grooming current executives so the company once again has a deep bench when he is gone—and, while he’s at it, pick a better successor this time?

The fact that P&G had to bring Lafley out of retirement shows how its “Build From Within” system, which tracks every manager’s performance, has fallen off. It’s a system that helped P&G find CEO candidates from inside the firm in the past. But this time, P&G apparently couldn’t find anyone qualified enough.

Some of the people who could have taken over had already left during McDonald’s tenure, in an exodus of top executives unusual for the company. Ed Shirley and Robert Steele, both former vice chairmen at P&G, and Chip Bergh, who had been president of male grooming, all left the firm in 2011. Craig Bahner, who was vice president of P&G’s important hair care business in North America, also left that year.

By the time Lafley leaves, hopefully he will have built up an array of qualified candidates to take over. One possible CEO who has been mentioned in the past is Melanie Healey, a group president. Another option is for P&G to look outside the company, but that may be too much of a leap. One of the strikes against Healey is that she’s been with the company for a mere 23 years. Prior to that, she was with SC Johnson. Lafley spent his entire career at P&G.

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