US: P&G Promotes Insider To CEO Amid Major Revamp

In the midst of a radical overhaul of its operations, Procter & Gamble will undergo a key leadership change in the fall. As of November 1, company insider David Taylor will take over as CEO from A.G. Lafley, who has held the position from 2000 to 2009 and from 2013 to the present.

Taylor, who joined P&G in 1980, is currently group president for global beauty, grooming and healthcare. “I think he is the obvious choice for P&G in that he understands the problems of the company and is well respected within it,” says Neil Saunders, managing director of retail research and consulting firm Conlumino. “That said, he has a mountain to climb in order to turn P&G around.”

Negatively impacted by the slowdown in emerging markets and by a rising US dollar, the consumer products maker has seen its sales and stock price dwindle. As a result, it launched a far-reaching transformation, selling dozens of brands to concentrate on a smaller cluster of its best-performing products.

Given all the change that’s taken place, P&G’s choice to appoint a company veteran surprised some.

“While P&G tends to be an organization in which individuals move up from within the ranks,” says Erin Lash, Morningstar’s senior equity analyst for consumer packaged goods, “we were encouraged by Lafley’s recent reference [to] bringing in outside talent to the organization, as we think fresh perspectives can prove highly valuable.”

Saunders says Taylor’s background in engineering and manufacturing is an asset, but that P&G’s main challenges are in marketing and branding: “He’ll need to focus on those first, if his tenure is to be a successful one.”

Lafley will remain executive chairman, which should help with the transition. “Overall, under Taylor’s leadership, I think we will see a simpler, more streamlined P&G that makes faster decisions,” concludes Saunders. But that might “take some time to emerge.”