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                Begins at Home
                by James R. Stengel, Andrea L Dixon,and Chris T.Allen

                          Procter & Gamble practically wrote the book on market
                          research. But when the company used those techniques
                          to learn how its employees felt, it discovered a whole new
                          way to improve morale-and profits, too.

                               HE MOST BASIC PRINCI PLE i n the       saying-in spite of good intentions, usu-
                              consumer products industry is "lis-     ally-is endemic to corporate life.
                              ten to the customer." Without an           It was just this type of disconnect that
                          intimate knowledge of ever-changing         Procter & Gamble uncovered three
                          trends and tastes, you're destined to       years ago, when it was struggling with
                          lose out to competitors who are more        both market share and morale. CEO
                          tuned in.                                   A.G. Lafley recently told BusinessWeek
                            The notion that success also depends      that people and brands are the com-
                          on listening to employees might sound       pany's most important assets. But when
                          just as basic. But it's not as easy as it   Lafley took the helm in the summer of
                          sounds, and a company's leaders - re-       2000, haJf of P&G's top 15 brands were
                          gardless of industry-are often oblivious    losing market share, and employee mo-
                          to what employees are concerned about       rale had been devastated by a series of
                          and why. A good example is the Jayson       reorganizations and a dramatic fall in
                          Blair episode at the New York Times. By     the company's stock price. When a mar-
                          the time senior leaders got around to       keting-driven organization like P&G Is
                          really listening to their employees' con-   in distress, it's a clear sign that its mar-
                          cerns about the reporter's misdeeds,        keting group is in distress as well. Lafiey
                          much damage had been done to the or-        was looking to marketing to restore
                          ganization's reputation. The problem of     growth and profitability, but the group
                          managers not hearing what staffers are      was in no position to do so, especially

106                                                                                   HARVARD BUSINESS REVIEW
since P&G's centralized corporate mar-     ition of a few individuals at corporate leaders needed to gain a much deeper
keting group - which had provided a        headquarters.                              understanding ofthe challenges facing
good deal of support to the company's         What's more, each ofthe company's their internal consumers-that is, their
global marketing organization-had es-      leaders had a different diagnosis and employees.
sentially been dismantled during a 1998    cure. One believed that the answer lay       So began P&G marketing's most com-
companywide restructuring.                 in developing a curriculum for a major prehensive internal research effort to
   To rebuild P&G's marketing strength,    training program. Another suggested date. Allen and Dixon contacted hun-
Jim Stengel, then heir apparent to the     adding a level to the hierarchy. Still an- dreds of employees and asked them
chief marketing officer position, began    other thought that the company's in- what was working and what wasn't.
working with University of Cincinnati      tranet could be beefed up to provide They asked them how they felt about
professors Chris Allen and Andrea Dixon    on-line leaming. Although these execu- the company and why they thought
on a new training program that would       tives knew that employees were un- P&G brands were losing their luster.
fill the marketing organization's skills    happy, they didn't understand the rea- And they used the same information-
gaps. But when Allen and Dixon began        sons for that unhappiness, nor could gathering techniques that P&G had
interviewing P&G's senior executives        they see how those feelings related to long deployed with extemal consumers.
to get their perspective on which skills    P&G's business results. In short, while What they heard led not just to a new
most needed enhancing and which types       the company's leaders knew a great deal training curriculum, changes in the hi-
of programs would be appropriate, they      about consumers and their needs, there erarchy, or a beefed-up intranet but to
realized that current plans for market-     was much they didn't know about the the most dramatic and sweeping re-
 ing's recovery were being developed not    people in their own organization. To get design of P&G's marketing organization
on the basis of data but on the intu-       back on track in the marketplace, P&G's in 60 years.

BEST P R A C T I C E   • L i s t e n i n g Begins at H o m e

                                                  noiogy that's unique to P&G that no-           15 minutes of coaching from your boss
Appraising the Emotional
                                                  body tells you up front. I tumed to my         every day. We now have nothing....
                                                  [brand manager! for help and was told,         Coaching is a skill we have lost."
The first stage of the research, which            'That stuff is mundane; you have to fig-          While this research was going on,
began in April 2001, was designed to ob-          ure it out.' I'm just not getting the coach-   Stengel convened a task force headed
tain qualitative data about the state of          ing I need."                                   by Renee Dunn, director of human re-
P&G's marketing group-using the com-                On the other hand, shadowing people          sources for global marketing, and made
pany's existing process for seeking data          also reveals positive behaviors that a         up of P&G's top change experts, most of
from consumers in the early stages of             company can then use as a model for            whom came out of the product supply
planning a product launch.                        other employees. We followed a man-            group-the people who run the plants.
   We had access to a cross section of            ager of one of P&G's top 15 brands and         Each had successfully led major organi-
P&G marketing directors, brand man-               found him to be in constant motion.            zational change efforts, and we wanted
agers, and assistant brand managers,              He was busy gathering information and          to pick their brains about what worked
and as a first step, we shadowed ten of           making requests in person, tasks that          and what didn't. Among other things,
them, each for a full day. We literally           could easily have been done by phone           this group made it evident that P&G
followed these employees as they went             or e-mail. When we asked why he had            needed to think about change system-
about their work, appearing in their of-          done the work in person, he pointed out        atically - that is, the company couldn't
ficesfirstthing in the moming and stick-          that such encounters not only build re-        just add training classes to bridge the
ing with them as they met with col-               lationships but also allow him to take         skills gap but rather needed to rethink
leagues, checked and sent e-mail and              advantage of on-the-spot training op-          rewards, management systems, career
voice mail, and walked the halls. We set          portunities. This type of impromptu            paths, and any other aspect ofthe orga-
one ground rule for the people being              coaching wasn't the norm, according            nization that might send a signal to
shadowed: "Go about your day as you               to what we saw and heard, but it gave          employees about what was important.
normally would, as if I weren't here.             us a window into what could be, if the         While this might seem like common
Don't worry about moving from place               practice were spread.                          sense, it was a real departure from the
to place; I'll keep up. If you want to ex-                                                       initial plan for recovery and under-
                                                     Next, we conducted focus groups
plain who 1 am when you meet with                                                                scored the fact that there would be no
                                                  where we could continue to probe the
others, feel free to do so, but don't feel                                                       silver bullet.
                                                  question of what was on employees'
obliged to introduce me."                         minds. We held a two- to three-hour ses-         After all these conversations, which
   Shadowing the marketing people                 sion for each of the three levels - mar-       unfolded over six months or so, the next
gave Allen and Dixon an unedited look             keting directors, brand managers, and          step was to obtain quantitative data
at how employees experienced the work-            assistant brand managers - with six to         through an employee survey. The lis-
place. And once the employees got used            eight people in each group. We asked           tening we had already done shaped the
to having a "shadow," some took the op-           open-ended questions and then sat back
portunity to vent their irritation at cer-        and observed as the employees engaged
tain aspects of P&G's culture - in par-           in discussion. To encourage candor, the        Note: The Procter & Gamble employee
ticular, the training {or lack of training)       meetings were held off-site, at a facility     research initiative and subsequent train-
they had received. After a long day of            at the University of Cincinnati. Like all      ing program detailed in this article were
attending team meetings, trying to keep           ofthe research, the groups were closed         a team effort involving the authors and
up with e-mail and voice mail, and par-           to P&G managers (including Stengel,            teams and individuals at P&G.Through-
ticipating in an extended conference              an author of this article).                    out the project, we worked closely to-
call with an ad agency, for instance, one      We also held 22 one-on-one inter-                 gether to listen to employees and re-
assistant brand manager conveyed frus-      views in the United States and Geneva                spond to what they said. But not all of us
tration at not feeling adequately pre-      with P&G general managers, market-                   were involved in all aspects of this under-
pared to do her job, even though she        ing directors, brand managers, and as-               taking, and when it came to specific em-
held an MBA from an elite institution.      sistant brand managers. In these taped               ployee feedback, P&G'sJim Stengel delib-
"There's a lot about process and termi-     conversations, which lasted from 60 to               erately kept his distance to preserve the
                                            90 minutes, we heard many ofthe same                 confidentiality of people's responses.
James R. Stengel is the global marketing themes that had come up in the shad-                    Nonetheless, we've written the article in
officer at Procter & Gamble headquartersowing and focus groups. "There is a real                 the first person throughout. So while the
in Cincinnati. Andrea L. Dixon is an assis- need to get back to the basics of people             word "we" doesn't necessarily refer to all
tant professor of marketing, and Chris T. development," said one manager. "No-                   of us every time it appears, it does reflect
Allen is the Arthur Beerman Professor body even to eval-                       our joint purpose and the spirit ofthe lis-
of Marketing, both at the University of uate people anymore." Another said,                      tening initiative overall.
Cincinnati.                                 "When I came to P&G, you got your                                                   The Authors

108                                                                                                              HARVARD BUSINESS REVIEW
                                                                           Listening Begins at Home • BEST PRACTICE

survey questions and allowed us to                                                           cording to one manager, such
use language that reflected the con-                                                         projects were inevitably cut a few
cerns raised in the qualitative phase                                                        months later, signaling that mar-
rather than the general language                                                             keting innovation wasn't really
that employee surveys often use.                                                             a priority. "This happens every
   To make sure people knew that                                                             year,"the manager claimed."We're
their answers would be kept pri-                                                             told [to plan] two to three inno-
vate, employees received the sur-                                                            vative marketing test ideas. We
vey in an e-mail with a link to the                                                          come up with them and set aside
University of Cincinnati's secure                                                            the money, and then the first
server. Approximately 3,5oo P&G                                                              [budget] cuts come. They say,
marketers worldwide received an                                                              '[The ideas] were experimental."'
e-mail from Stengel encouraging                                                                Lack of Training. At one time,
their cooperation, and 1,200 in-                                                             P&G had extensive formal and
vested the time to complete the                                                              informal training programs for
entire questionnaire, which had                                                              marketers, including skill-specific
more than 300 questions. To ensure that                                                apprenticeships and on-the-job train-
the survey tracked the issues that were
                                            Our Findings                               ing and coaching. The organization had
 most important to employees, we used                                                  held an annual eight-week spring lec-
                                            The research uncovered some data that      ture series where advertising managers
 structural equation modeling, which        could have been pretty demoralizing.
 measures responses to key topics by                                                   would explain the ftindamentals of good
                                            Across the board, employees assailed       advertising and P&G's approach. An
 asking more than one question about        P&G's historical characterization as a
 each. (See the sidebar"Using Structural                                               intemal awards program called atten-
                                            marketing powerhouse. But at the same      tion to the year's best campaigns. But
 Equation Modeling to Analyze Survey        time, a certain degree of pride and de-
 Results.")                                                                            these programs had been coordinated
                                            termination came through. P&G mar-         and led by the centralized corporate
   While the survey was an effort to take   keters clearly wanted to do their jobs     marketing group, and when the group
P&G's-and, in particular, the marketing     well-indeed, they were demanding the       was downsized in 1998, the training pro-
organization's - temperature, Stengel       opportunity to excel. But they felt that   gram fell apart.
and his leadership team sought to create    certain aspects of the organization and
a more complete picture of the com-         its culture were interfering with their       As a result, many marketers felt ill-
pany and its woes by consulting extemal     effectiveness. And they were strikingly    equipped to do their job. In the words
sources such as advertising agency rep-     consistent in where they saw room for      of one manager: "We have good people
resentatives, industry consultants, and     improvement.                               trying to do their best with a rusty tool
academics. We asked them, for instance,        Devaluation of Marketing as a Pro-      kit." Said another: "At P&G, people are
which skills were most in need of atten-    fession. P&G is widely viewed as a top     rewarded for building business; they
tion at P&G and what the company's          training ground for marketing profes-      are not rewarded for developing peo-
strengths and weaknesses were. The          sionals because of the hands-on expe-      ple." Others found that the culture im-
resulting feedback supported intemal        rience the company provides. Yet mar-      plicitly discouraged training: "Now [the
complaints about a lack of employee         keters there felt that their profession    implication is], why did you go? Why
training but offered a different perspec-   wasn't valued within the company; it       did you waste the money? Couldn't you
tive. For example, the outside parties we   was no longer considered as prestigious    have saved travel expense and maybe
spoke with unanimously agreed that          as, say, general management. Previous      [gone] nextfiscal[year]?"
P&G promoted people too quickly, giv-       indicators that marketing was valued          Misplaced Focus. P&G marketers
ing them little opportunity to build        at P&G ~ such as the presence of senior    widely perceived that rewards and pro-
their knowledge and confidence or to live   marketing statesmen, who were viewed       motions were given based on the num-
with their results. Some ofthe responses    as sage old-timers - had disappeared.      ber of initiatives an employee launched
were more positive. The ad agencies         Opportunities for advancement came         rather than on the results of those ini-
that work with P&G, for example, said       more readily to those with a broader       tiatives, leading to a flurry of activity
that the company was "more demand-          business focus than to those with deep     without enough emphasis on what that
ing but more caring" than many other        marketing talent and passion, and there    activity should produce. This dynamic
organizations when it came to market-       was no clear long-term marketing ca-       was self-reinforcing because tenure in
ing campaigns and that it has "brand-       reer path.                                 a particular job averaged 24 months.
building in [its] DNA." P&G had lost fo-                                               The expectation was that if you had
cus, perhaps, but it had innate strengths      And while marketers were encour-
                                            aged to put new, experimental initia-      done a good job, you would be pro-
to draw upon.                                                                          moted after about two years in a role.
                                            tives into their budgets each year, ac-

 NOVEMBER 2003                                                                                                              109
 BEST P R A C T I C E   • L i s t e n i n g B e g i n s at H o m e

The unintended consequence was that                      Marketers were also increasingly ex-     put it, "The last two months, the ship-
marketers would set a lot of develop-                 pected to shoulder nonmarketing re-         ments and sales were not coming in, so
ment projects into motion, knowing                    sponsibilities such as leading project      we had to put together.. .plans to drive
that they would be gone before the re-                teams and managing artwork on packag-       cases in the month of June. Absolutely
sults of those initiatives came in and                ing-activities that had been orphaned       foolish in my mind. [The sales] are not
that it would be up to the next manager               by the 1998 restructuring and went by       going to pay out."
tofixany problems that had arisen. Said               default to the brand managers, since           Loss of Discipline. With managers
one senior marketing director: "The                   they were ultimately responsible for the    becoming busier and training becom-
company's Achilles' heel is that we say               success or failure ofthe brand. The extra   ing less of a priority, employees had seen
we promote people based on business                   work left the brand managers stretched      a growing disregard for some ofthe pro-
results, but...people get [new] assign-               for time and less able to focus on their    cesses that had traditionally supported
ments every two years, and that is an in-             marketing duties.                           the company's marketing planning. In
centive to get something out the door,                                                            earlier years, brand managers were ex-
                                                        Fiscal pressures exacerbated the prob-
completed. That's what gets you pro-                                                              pected to know how to produce a stan-
                                                      lem, as managers scrambled to make
moted. People don't stick around for                                                              dard set of documents such as business
                                                      their numbers for the current month, at
business results to show."                                                                        reviews, budgets, and monthly reports.
                                                      the cost of future sales. As one manager

Using Structural Equation Modeling
to Analyze Survey Results
            Based on the shadowing, focus groups, and interviews used             tency reduces the weight of a particular statement because
           in our research, we identified 36 issues that P&G employ-               it shows that people aren't of one mind with respect to
           ees were concerned about, such as long-term orientation                that statement. For exam pie, the statement "We regularly
           and business unit effectiveness. We wanted to find out                 focus our efforts on long-term brand-building activities,
           which issues were most pressing and how they related to                 not Just short-term business results" had a greater weight
           one another, but since they are intangible, we needed                  or impact on tbe degree of concern over long-term
           to develop a survey that would look at each issue from a               orientation than did the statement "We invest a significant
           number of different angles. In other words, we had to ask              amount of time in things that will pay off in the future."
           about each one in several different ways.                              That means that employees answered the former question
              To accomplish this, we developed a 300-item questionnaire           more consistently and with stronger agreement than
           with ten sections. The issues-the "latent variables"-were              they did the latter. This analysis helped us gain a more
           grouped under those sections. For example, training                    accurate sense of employee concerns and allowed P&G
           and coaching were addressed in the "development and                    to design programs and communications so as to address
           promotion"section, and business discipline and marketing               those concerns head-on.
           climate were dealt with in the "work environment" section.                SEM's structural weights-like regression weights-range
           For each variable, we developed several statements that                theoretically from o.otoi.o. Typically, the weights are
           looked atthe variable from a slightly different angle and              in the .20-.50 range. Seldom do we have an issue that can
           asked employees the extent to which they agreed or dis-                be driven largely (more than a .50 weight) by one variable.
           agreed with the statements.                                            The more complex the outcome (and the outcome in this
               This diagram presents a sample set of statements from              example, business unit effectiveness, is indeed complex),
           the employee questionnaire (shown in the rectangles).                  the more likely that the structural weights will be closer
           Each statement relates to one ofthe variables being                    to the .20 level. Depending on the size of the sample, weights
           measured (shown in the ellipses). The factor loadings in               below .20 can still be statistically significant but may not
           each rectangle show the relative weight attached to the                be all that meaningful to our understanding.
           statement being measured, meaning how important each                      The results shown here indicate that P&G employees
           was to PSiG marketers in relation to one another when                  view long-term orientation, brand equity enrichment,
           it came to their perceptions ofthe organization.                       and clarity and alignment as essential to business unit
              We arrived at these numbers using structural equation               effectiveness. We were also able to determine that these
           modeling (5EM) software, which uses algorithms to map                  three variables have similar weights and thus comparable
           patterns in data. When many employees answer a question                impact on business unit effectiveness. Interventions to
           the same way, the software assigns it greater significance             improve business unit effectiveness should focus equally
           than if there were more divergence in opinion. Inconsis-               on all three of these variables.

110                                                                                                               HARVARD BUSINESS REVIEW
                                                                                            Listening Begins at Home - BEST P R A C T I C E

The classic one-page memo was a hall-                  A Disconnect with the Marketplace.                      Without that direct contact, it's diffi-
mark of P&G marketing culture, and                  While managers at all levels considered                 cult to build an emotional connection,
new hires received specific training in             direct contact with consumers to be                     which is what ultimately drives brand
how to produce one. No more. A num-                 critical to their success, their internal               loyalty. As a result, while P&G products
ber of employees in our research-par-               commitments made it difficult to con-                   were well regarded for their functional
ticularly in the older generation - la-             nect with the marketplace. P&G mar-                     qualities, competitors had better posi-
mented the loss of these tools and the              keters reported that time spent in meet-                tioning in consumers' hearts. In other
discipline they engendered. "With all               ings and answering e-mail, along with                   words, there was a lot of trust, but there
the time pressures [and with brand                  broadened responsibilities, left them                   wasn't a lot of love. P&G's Pampers
managers] having broader responsibili-              less than six hours per month on aver-                  promised "dry baby bottoms," a posi-
ties [than] just marketing, the thing that          age to spend with consumers through                     tive but somewhat clinical image, while
fell by the wayside was the paper," said            formal research activities like focus                   Kimberly-Clark's Huggies brand had
one 2oyear veteran. "What we didn't                 groups and informal activities like ap-                 established a tie with toddler develop-
realize was that the thinking that went             proaching consumers in stores to ask                    ment. And while P&G's Crest was known
into the paper [disappeared along with              questions about what they were buying                   forfightingcavities, Colgate had become
the paper]....It's hard to bring it back."          and why.                                                associated with a variety of cosmetic

   statements:                                         Statements:
   I agree with the business plan that we              We have a clear strategy at P&C that
   are trying to execute.                              will win long term.
   (Factor loading - .66)                              (Factor loading = .58)                                  Statements:
                                                                                                               Our brand equity statements provide
   I have a clear sense of direction from               Long-term results are what really                      an effective basis for the development
   those above me.                                      matter at P&G.                                         of communication strategies.
   (Factor loading = .49)                               (Factor loading = .67)                                 (Factor loading = .84)
   I can typically get the information that            We invest a significant amount of time                  I useour brand equity statements on
   I need to do my job effectively.                    in things that will pay off in the future.              a regular basis.
   (Factor loading = .73)                               (Factor loading = .51)                                 (Factor loading = .66)
   The leaders in the marketing function               We regularly focus our efforts on                       Our brand equity statements
   help me understand today's business                 long-term brand-building activities,                    reliably yield actionable insights for
   priorities.                                         not just short-term business results.                   differentiating our brands.
   (Factor loading = .65)                              (Factor loading = .73)                                  (Factor loading = .83)

      Clarity and alignment                                Long-term orientation                                 Brand equity enrichment
           SEM weighting = .17                                  SEM weighting =. 18                                    SEM weighting •= . 19

                                                Conclusion: These three variables are all perceived                                 (SEM weighting shows
                                                  as contributors to business unit effectiveness.                                     the relative weights
                                                                                                                                           ofthe three
                                                                                                                                      different variables.)

                                                        Business unit effectiveness

                                              My brands have gained market share relative to that of
                                              our primary competitors in the past year.
                                              (Factor loading = .69)

                                              The profitability of my brands grew in the past 12 months.
                                              (Factor loading = .61)

                                              My brands are well positioned for long-term sales growth.
                                              (Factor loading = .84)

                                              My brands are cultivating an increasingly committed and
                                              loyal set of consumers.
                                              (Factor loading - , 77)

                                              My portfolio of brands is viewed as essential by our retail
                                              (Factor loading = .58)

NOVEMBER 2003                                                                                                                                           111
BEST P R A C T I C E   • L i s t e n i n g B e g i n s at H o m e

and aesthetic benefits, such as tooth
whitening.                                                                Hearing Your Employees
  A Culture of Cynicism, Conflict, and
Mistru5t. A formerly people-centered                       Listening toemployees-and truly hearing them-takes morethan just walking the
culture had given way to one that dis-                     halls and checking in from time to time (although those things are important). If you
regarded people's development and                          really want to know what's on their minds, a structured research process can help.
morale. Employees reported an atmt>
sphere where people were promoted,
in the words of one manager, "leaving                           Start with a clean slate. You can have some hypotheses of your own,
a string of dead bodies in their wake."                         but letyour people drive the research focus.

A Plan for Renewal                                              Shadow a sample of employees to identify issues that might not
We were struck by the degree of candor                          come up in conversation,
in the employees' feedback. We prom-
ised anonymity, but even with that                              Conduct a series of focus groups off-site. Keep group composition even;
stated pledge, it wouldn't have been un-                        don't mix higher-level and lower-level workers. Guide the group process
usual for employees to fear reprisal and                        in a way that addresses the areas identified through the shadowing.
sugarcoat their responses to company                            Here's a sample guide to consider:
surveys. Not at P&G. Even in our taped                              Perceptions ofthe company, work environment, functional work environment
interviews, oniy one of the 22 people                               ' What is the company doing right?
we met with took us up on the offer to                              • How can the company improve?
turn off the tape recorder at any point                             • How would you compare your current experiences at this company
in the conversation.                                                  toearlier work experiences (at another time in this company or at
   We believe that the employees'straight-                            other companies)?
forward responses were prompted by a
                                                                     Perceptions of roles and responsibilities
range of emotional, cultural, and finan-
                                                                    • In which areas do you contribute to this organization?
cial issues, all of which fostered a deep
                                                                    • For which activities are you rewarded?
commitment to the company's success.
                                                                    • Who identifies and develops what you will work on?
From an emotional standpoint, employ-
                                                                    • How does your work relate to those who operate a level above you?
ees' pride was wounded. People saw
                                                                      Below you?
themselves as stewards of a legacy: They
had a 166-year history and a reputation                             Career preparation
for marketing mastery to uphold, and                                • Were there times when you truty felt unprepared for the task at hand?
they knew in their hearts the company                                 If so,
could do better. Many employees, in                                 • How frequently did this occur?
fact, had lived through better days and                             • Did you ever have situations handed to you without adequate
were confident that the company could                                 training or preparation?
regain its footing.                                                 • What happened?
   From a cultural perspective, P&G's                               • What types of training programs would have helped you through
promote-from-within tradition led em-                                 these times?
ployees to feel especially committed to                             Expectations for the company
the company and determined to suc-                                  • What were your expectations when you first started at this company?
ceed. They saw themselves as having                                 • Were you disappointed in anyway?
long careers at P&G and had very per-
 sonal reasons for wanting the workplace                        Use a series of in-depth interviews across a variety of levels to explore
to be supportive. Moreover,the research                         the themes identified in the focus groups.
followed a familiar company method-
ology, and it had been blessed by the                           Develop a survey instrument that embraces the issues-using your
 seniormost marketing person, a power-                          employees'own language-identified in the previous steps. Signal the
ful signal at an organization as hierar-                        importance of this research. Use frequent messages from a senior officer.
 chical as this one. The company's em-
 ployees are very sensitive to time, and                        Examine the prevalence ofthe issues that exist throughout your
 Stengel's blessing signaled that it was                        organization. Determine how these issues relate to key outcomes such
 appropriate to spend half a day travel-                        as business effectiveness, morale, and loyalty.
 ing to and attending a focus group.

112                                                                                                                      HARVARD BUSINESS REVIEW
BEST PRACTICE         • L i s t e n i n g B e g i n s at H o m e

    And from a financial standpoint, em-                                                        enzymes), COEs are formal, global net-
 ployees knew that their retirement                                                             works of marketing employees, each de-
 funds had taken a huge hit when the                     The best way to avoid                  voted to a specific competency. Each
 stock price dropped, so they were moti-                                                        network has a leader, with a dotted line
 vated to bring it back up.                          detachment is to actively                  reporting relationship to Stengel, and
    Whatever the reasons, employees'                                                            a number of "masters," chosen by the
 willingness to be candid was absolutely              seek employee feedback                    leader for their particular expertise. So,
 critical to bringing about change. So was                                                      for example, a manager who does media
 the management team's willingness to                       and to listen to the                planning and buying in Japan migbt
 hear the bad news. Rather than sweep                                                           have to know a lot about wireless com-
 the results under the rug, we chose to
                                                        feelings and folklore in                munication because wireless penetra-
 use the feedback as the foundation for                                                         tion is so high in that country. He might
 changes designed to restore profession-
                                                              the organization.                 be a master in the Cormecting with Con-
 alism to the marketing organization,                                                           sumers COE.
 reestablish P&G as a top marketing                 management began using tbe language            Masters are selected, but anybody
 training ground, and, more generally,              of tbe framework immediately, focus-        within the P&G community can be a
 improve morale. We chartered a task                ing conversations on who, what, and         member of a COE. Group members can
 force of marketers from across the                 how. (If the boss is talking this way, it   contribute ideas, and they can enter
 globe - from Germany, Italy, and India,            must be important.) Over time, people       their COE site through the company in-
 among other locations - to develop                 came to see that witb simplicity comes      tranet and search for information and
 concrete plans for solving the problems            clarity. Tbe framework forced people        experts by topic. The COEs also run
that had been revealed in the research.             to slow their pace ever so slightly and     speaker series and other forums. For
The task force, along with CEO Lafiey,              think through a broader set of issues be-   instance, the Connecting witb Consum-
 Stengel, and Stengel's global leadership           fore formulating a plan of action. In the   ers COE recently held a symposium in
team, launched the following programs,              process, it helped change the day-to-day    Kuala Lumpur, with presentations on
 al) carefully designed using the results           conversations of 3,500 P&G marketers        a broad range of topics such as inter-
ofthe research.                                     around tbe world.                           active marketing and ad campaign wear-
    Develop a Common Language. To                     Establish a Marketing University. To      out tracking. So far, P&G has created
 reintroduce discipline into marketing             provide the formal training P&G mar-         four centers, based on where employ-
planning, P&G needed a simple, com-                keters were asking for, a new program        ees said there was the greatest need, and
                                                   offers weeklong "colleges" for new and       tbe company intends to implement oth-
mon language for framing discussions-
                                                   newly promoted employees, along with         ers going forward.
what would come to be called the P&G
"brand-building framework." It man-                refresher courses in a variety of sub-          Focus Marketing Roles. To bettertie
dates that all marketing campaigns ex-             jects such as interviewing skills and how    performance to results, P&G is now
plicitly address three questions: who              to provide coaching. Employees fiy to        keeping marketers in their jobs for
(the target of the campaign, defined               Cincinnati and other regional head-          longer stretches of time - three to four
very specifically), what (the desired              quarters worldwide both to attend and        years or more - and marketers' plans
brand equity or positioning), and how              to teach. The curriculum is based on the     are expected to cover two years as op-
(the mechanics of execution). To help              feedback from employees and comple-          posed to focusing on quarterly results
employees meet this requirement, the               ments the other programs P&G im-             alone. Managers still reap the rewards
corporate marketing organization has               plemented. For example, new employ-          of their contributions, but now they live
appointed who, what, and how experts               ees have a full day each on who, what,       with their mistakes, a change that has
                                                   and how to get them conversant with          discouraged them from blindly pursu-
on staff to serve as internal consultants
                                                   tbe brand-building framework. The pro-       ing initiatives. The shift met with some
to the brand managers.
                                                   gram also allots plenty of time for in-      resistance because tbe assumption tbat
    Many within P&G viewed their new
                                                   formal get-togethers, which is a crucial     you'd get promoted if you were any
brand-building framework as too sim-
                                                   part of building global networks and         good at all was so deeply held, but the
plistic and not very new at all. Some had          cross-generational relationsbips. These      external research provided the data to
expected more from an organization                 relationships, in turn, help pave the        convince employees to be patient. In
tbat prides itself on being a marketing            way for ongoing informal coaching and        particular, the ad agencies were of one
thought leader. But employees' resis-              mentoring.                                   mind about the value of keeping people
tance was worn down by a carefully ex-
                                                                                                in place longer, and company leaders
ecuted rollout, witb tbe people who had              Create Centers of Expertise (COEs).
                                                                                                were able to point to that fact again and
developed the framework personally                 A concept borrowed from the technical
                                                                                                again when employees began asking for
visiting offices around the world to pro-          part of the business (the company's
                                                                                                new assignments or early promotions.
vide training, lt helped, too, that senior         R&D group, for example, has a COE on

114                                                                                                            HARVARD BUSINESS REVIEW
                                                                                   Recent surveys show that P&G employ-
                                                                                   ees now see themselves staying at the
                                                                                   company for longer than they did a few
                                                       COLUMBIA                    years ago, suggesting that they are com-
                                                         BUSINESS                  ing to accept the longer tentire.
                                                        SCHOOL                         Jobs are also being more carefully de-
                                                                                   fined through collaboration with other
                                                                                   groups to better delineate leadership
                                                                                   and ovmership of tasks. Cross-functional
                                                                                   teams are looking at activities like proj-
                                                                                   ect management and artwork coordi-
                                                                                   nation, which had crept into the mar-
Learning that                                     Performance"                     keting group's realm of responsibility,
                                                                                   to determine where the work should ac-
                                                                                   tually be done.
                                                                                       To promote more direct interaction
                                                                                   with the marketplace, P&G also estab-
                                                                                    lished new metrics to track how much
                                                                                    time marketers spend with consumers,
                                                                                    and brand managers and marketing di-
                                                                                    rectors are assigned to retail teams in
                                                                                    the field to get a better handle on shop-
       Columbia Executive Education                                                 pers' experiences. The mantra now is,
                                                                                    "If you are losing energy, passion, or
                                                                                    focus, get out of the building and into
We set the global standard for success—for individuals and organizations.           the store. Spend some time with con-
Cutting-edge program designs and an active learning approach create                 sumers, and you'll get reenergized."
                                                                                      Redefine Marketing as a Career.
a results-oriented environment unmatched in the world, our                         P&G is also taking steps to create a long-
                                                                                   term career path for marketers and re-
commitment to our clients' needs has helped us to achieve the # 1 ranking
                                                                                   store prestige to those who choose to
in executive education for fOur C O n s e c u t i v e y e a r s {Financial         pursue marketing over general business.
                                                                                   While marketers always had the chief
Times, 2000-2003). We give you the ideas and toots you need to                     marketing officer job to aspire to, there
                                                                                   was otherwise little opportunity for
             power your performance.                                                advancement. So P&G resurrected its
                                                                                    Harley Procter program, in which em-
                                                                                    ployees who have acquired a high level
                                                                                    of expertise can be designated Harley
                                         COURSES.                                   Procter marketers. (Procter was the
                                                                                    founder's son, who named the Ivory
Negotiation and Declslon-IVtakIng        Executing Breakthrough Strategy            brand.) These leaders serve as intemal
Strategies [November 17-18]              [December 14-19]                           consultants, travel the world to scout
                                         Leading Strategic Growth and Change
                                                                                    out new marketing best practices, pro-
Creating Breakthrough Strategy
                                                                                    vide training, and are generally regarded
[November 3O-Decamber 5]                 [May 2-May 7]
                                                                                    as well-positioned, senior employees.
Rnance and Accounting for the            Fundamentals of Management:                The role comes with a budget, which
Nonfinancial Executive                   Highlights of an MBA                       Harley Procter marketers can use at
[December 1-5]                           [May 16-27: Tokyo, Japan                   their own discretion to support market-
                                         June 13-25]                                ing innovation.
Leading and Managing People
[December 7-12]                          The Coiumbla Senior Executive
                                         Program [June 27-July 23]                  In a global, multitiered marketing firm,
                                                                                    it's not unusual for senior management
                                                                                    to become emotionally detached from
                                                                                    its people. The best way to avoid such
              800-692-3932 | 212-854-3395                                                           HARVARD BUSINESS REVIEW
                                     •                                         *
detachment is to actively seek employee
feedback and to listen to the feelings
and folklore in the organization.
   The process can be wrenching. It's
one thing to ask employees how they
feel; it's another thing entirely to stand
bare as they drench you with buckets of
emotional ice water. But it can also be
very powerful. Certainly, trust at P&G
hasn't been completely restored, but it
is building over time as the company
demonstrates that it cares about what
employees have to say and keeps its
commitments. P&G said it would im-

prove continuity in marketing roles and
assignments, and now it is actively track-
ing tenure. The company said it would
strengthen its training, and it did so. It
promised to establish centers of exper-
tise to build marketing capability, and             GRADUATE SCHOOL OF BUSINESS
it has established four, with more on the
way. And it vowed to grow the busi-          EXECUTIVE EDUCATION
ness again, and 19 ofthe company's top
20 brands are now increasing volume.
P&G's employee surveys show a dra-               2004 FINANCIAL MANAGEMENT PROGRAMS
matic improvement in confidence about
the future. In just 12 months, the num-
ber of employees who strongly agree                Credit Risk Modeling for Financial Institutions
with the statement "We're on the right
track to deliver business results" went
                                                                          April 1 8 - 2 3
from i8% to 49%. And the number of
employees who strongly agree v«th the                        Finance and Accounting for the
statement "I have confidence there is
a plan in place to grow the business"
                                                                 Nonfinancial Executive
jumped from 26% to 56%.                                      May 2 - 7 , and November 14 - 19
   Listening to employees isn't something
you do once and then go back to busi-
ness as usual. Stengel continues to travel                  Financial Management Program
from city to cily, talking with employ-
ees and helping them connect with the
                                                                           July 1 1 - 1 6
CEO's vision for the company. Gaining
the hearts and minds of every employee
in an organization of P&G's size is no       CHANGE LIVES, CHANGE ORGANIZATIONS, CHANGE THE WORLD
small challenge, and it's one that senior
managers have to wrestle with every
day to succeed. That's what we do with
our customers-and now we're making
sure we do it with our own employees.
In an organization known for rigor and        866.542.2205 (toll free, U.S. and Canada only) or 650.723.3341
logic in pursuit of market dominance,                                Stanford, California
we rediscovered that first and foremost,
marketing is about the people.           ^

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