P & G Succession Planning Lessons

June 4, 2013 by Wally Bock

How the mighty have fallen. In 2009, P & G’s “Build from Within” system was described as a “leadership machine.” Moheet Nagrath, P&G’s global human resources officer, told a Fortune reporter that

Today I could show you the next generation of successors to current leaders, the generation after that, and the generation after that.”

But that was then. When A. G. Lafley was called back from retirement to resume the CEO role it was a signal that maybe the bench wasn’t as deep as everybody thought it was. After all, if there were other qualified candidates, why not put one in the job and move on?

Lesson: The binders don’t count. The only way to measure the success of a succession or leadership development plan is to evaluate the performance of the leaders it produces.

P & G has a reputation as an “academy company,” one that other companies raid for leaders. Both Jeff Immelt and Steve Ballmer started their careers as product managers at P & G. But that was long ago.

P & G also has a reputation as a company with long CEO tenure. The company and others often mention that they’ve only had twelve CEOs in more than a century. But you have to look closer to see the truth of this one.

Two of those CEOs were Proctor family members and they served from 1890 to 1930. Let’s take them out of consideration. The next five CEOs, served a total of sixty years, with the shortest tenure being seven years. But since 1990, the company has had five CEOs, three with tenure of less than five years.

Lesson: Reputation doesn’t count. Succession planning and talent development are things you have to keep working at and adapting.

Bob McDonald didn’t work out as CEO. And some reasons there weren’t people ready to step up to fill the slot when he was removed have nothing to do with the succession plan. More than half a dozen highly-touted people left for a variety of reasons over the last five years.

Lesson: Succession planning and talent development do not exist in isolation. Individual ambitions, compensation, and luck all have an impact.

Wally Bock is a coach, a writer and President of Three Star Leadership.

Posted in Leadership Development

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