Next P&G CEO may be their first woman

Next P&G CEO may be their first woman

Earlier this year, when Procter & Gamble lost three of its top leaders in the space of five months, P&G watchers wondered what was happening at the top of the world’s largest consumer products company.

Could the loss of two vice chairmen and the head of the company’s $4 billion Gillette business be signs of trouble?

Photos: 10 candidates to become P&G's next CEO

Moheet Nagrath, P&G’s top human resources officer, says it’s all just part of the ebb and flow of business at the Cincinnati headquarters of the global company.

The departures – and some promotions announced at the same time – were among the first clues under CEO Bob McDonald as to who might succeed him in the corner office of the $80 billion-a-year enterprise.

McDonald, 58, is only two years into his tenure and not expected to leave anytime soon. But the recent moves in P&G’s 11th floor executive suite are the most visible signs of how McDonald is doing one of the most important jobs of P&G’s chief executive – planning for a successor.

Succession planning is built into company culture, not only at the top, but throughout P&G in a program called “Build from Within.” It methodically tracks and measures the development of leaders at a company of more than 125,000 employees.

But only one can be CEO. The position is not only the face of P&G around the globe, but is one of the most closely watched and potentially influential roles in corporate America.

In its 174-year history, P&G has never hired a CEO from outside the company. And at least in the near future, it won’t.

“We have a very deep bench, and we have a pipeline,” Nagrath says. “For any given position, we could have two to four candidates lined up.”

So who’s lining up to be P&G’s next CEO?

Could P&G be hiring its first woman CEO?

It’s still early, but P&G watchers say the next leader may be its first woman CEO.
Two of the top contenders are women who have built impressive resumes with the company and are currently running major portions of the business.

A leading contender is Melanie Healey, a 21-year P&G leader who now oversees the company’s largest market – North America. Healey, 50, is a group president, just a notch below CEO.

She’s recently taken on a higher profile outside the company, representing P&G at the recent convention of the League of United Latin American Citizens, which the company sponsored in Cincinnati. She also was recently named to the board of the Cincinnati/Northern Kentucky International Airport, the first Ohioan to serve on the Kentucky-based governing board.

Among her strengths is lots of experience marketing P&G products in Latin America, one of the fastest-growing regions for P&G sales. Healey was born in Brazil and worked in that country and other parts of Latin America in the first eight years of her P&G career.

Healey, however, did not begin her career at the company, unlike more than 90 percent of employees who started at P&G right out of college. Instead, she worked for seven years at S.C. Johnson, owner of the Glade, Pledge and Shout brands, and then Johnson & Johnson, maker of Listerine, Neutrogena and Lubriderm. That experience inside P&G competitors is viewed by some as an advantage.

“Starting her consumer packaged goods career at rivals has given Healey a unique perspective at P&G,” says Ali Dibadj, who covers P&G for New York-based analyst Sanford Bernstein & Co.

She also serves on the board of a large consumer goods company, Bacardi Limited, the $5 billion-a-year spirits maker based in Bermuda.

Another top contender is Deb Henretta, who expanded P&G’s Pampers into its biggest-selling brand. She’s based in Singapore and oversees Asia, a key foreign market, home to some of the world’s fastest-growing economies.

At age 50, Henretta has worked in the core P&G areas of laundry care, including Tide and Cheer, and baby care. Like Healey, she is a group president. She has served on a variety of boards in the United States and Asia, including Cincinnati Children’s Hospital Medical Center and Sprint Corp.

Both Healey and Henretta have been named to several lists of women to watch by national business publications such as Fortune and the Wall Street Journal.

Other executives to watch include Jorge Mesquita, group president of P&G’s global fabric care business, which includes the Tide franchise. The 49-year-old also has the all-important experience in Latin America, having come up through P&G’s ranks in Venezuela, Mexico and Brazil.

Also on the short list is David Taylor, president of global home care, a role that oversees the billon-dollar Febreze brand, as well as Swiffer, Mr. Clean, Dawn and Cascade. The 53-year-old engineer has worked in both manufacturing and brand management in his 30-year P&G career. He’s also worked in the critical markets of North America, Western Europe and China.

Handicapping the CEO race is something of a sport among P&G watchers. What makes it interesting is that the next CEO is almost certainly working at the company now.

“All you have to do is look inside the company, and you have the universe of possible candidates,” Nagrath says.

Many rising stars despite a shrinking 'universe'

Three who were stars in that universe took themselves out of the running recently. Ed Shirley, 54, and Rob Steele, 55, who as vice chairs are part of McDonald’s cabinet, announced plans to retire this year. Chip Bergh, 53, a group president who ran P&G’s Gillette business, also announced his retirement.

Both Steele and Bergh said they’re leaving to pursue CEO roles elsewhere, indicating that a promotion to the top job wasn’t going to happen at P&G.

With the departures, several people were promoted, making them rising stars to watch. Among them is Patrice Louvet, 46, who was promoted to president of global male grooming, running the Gillette business around the world.

Two others were promoted to the president level from vice president: Joanne Crewes succeeds Louvet as president of global prestige brands, and Kirk Perry was promoted to president on special assignment.

The company practices a leadership grooming system that identifies future leaders, gives them assignments they need to move up and measures results. Nagrath says it is one of the keys to P&G’s stability and gives the company a competitive edge.

“We’ve seen these people year in and year out in different roles,” he says. “We’ve seen them operate for decades in different countries. The success rate is unbeatable. You get people who understand your business inside and out. You can’t buy that.”

Nagrath calls it “multi-generational planning.”

“We literally have a supply of talent that could last for two decades,” he says. “We have different generations that can be identified and sent around the world to run different businesses.”

The list of the top performers is updated and reviewed regularly. Nagrath meets once a month with McDonald and his vice chairs to review key staffing changes. Three times a year they meet with all nine group presidents to forecast what executive jobs are going to open up and who might be considered for them.

Once an exec gets to the general manager level, he or she is evaluated on business performance such as sales, volume and costs, as well as less tangible factors such as leadership and innovation. A “destination role” is identified for the person and at least two future assignments are planned to get the executive there.

Once someone is identified as a CEO candidate, he or she is invited to make presentations to the board of directors, which McDonald chairs, and to informal dinners with the board. Board members also travel to P&G offices overseas to meet with leaders in other countries.

Those who get passed over for CEO are sometimes recruited to lead other companies.

Just days after Bergh announced his retirement in June, he was named CEO of $4 billion-a-year apparel maker Levi Strauss. Steele likewise announced that he was retiring from P&G to pursue a CEO position elsewhere. That retirement is effective Sept. 1.

They were among the ambitious who, despite decades-long careers at P&G, make what Nagrath calls “their own personal calculus.”

“Do they want to wait for their chance at P&G, or do they want to try their luck elsewhere?” he says.

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