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Key Topics
Requirement
Procter and Gamble: Global Business Services
Solution
GBS – a services unit of P& G – was established in 1999 to move P&G from operating by regions to operating by-products. GBS brought together accounting, reporting, facilities management, human resources services, and information technology into a single global organization. With the help of new technology, GBS standardized the work processes of P&G to deliver improved services at significantly lower costs. It helped P&G save several hundred million dollars in its first three years of operations.
However, due to increase in cost, presence of more capable outsourcing companies than GBS, and a fear among P&G management of losing focus on their core business and concern that whether GBS was the best use of the company’s resources, P&G management decided to investigate few critical options for GBS. They were: spin off GBS as a separate business, outsource all of GBS in one deal to one partner, outsource GBS division separately to best-of-breed companies, or retain GBS in house.
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Chairman of the Governance Team, Dave Walker, was to give the recommendation to the board on one of the best options to choose from. However, being empathetic towards employees of GBS, he had many concerns. For instance, if he considers to hand over GBS to an outsider, then following issues will be worth considering beforehand: (i) Guaranteed employment: whether the new employer will retain all the current employees of GBS?, (ii) Length of employment: whether former employees will be fired shortly after the transfer?, (iii) Salary/benefits: whether new employer will provide similar – as P&G’s – benefits to the employees?, and (iv) Credit for years of service: whether new employer will agree to ensure that GBS employees would not lose their credit for years of service?
P&G management, instead of retaining the information of change to them, decided to announce it openly to the employees at the earliest date possible. This step helped the company in preventing destructive rumors to float. However, this information deterred most of the employees. Many changed their jobs from GBS to core P&G business, few of the employees left the job, and many were happy that they will get the opportunity to work under new management.
Along with proper information dissemination, P&G management started taking feedback on their decisions of choosing a new organization for GBS. It wanted to know employee input on the reputation of the companies that was getting selected. Teams of managers and employees were sent to each of the prospective partners to see and judge everything and then report back on what they liked, what they didn’t like, what they thought looked good and what they were concerned about.
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Place Your OrderLessons Learnt:
Change always bring reactions, be it positive or negative. Management is trying its best to handle the situation as delicately as they can. They are concerned about the situation and issue employees will face after any decision. This case helped me understand the various issues that can crop up when any decision is made which has a substantial effect on people’s lives.
Recommendations:
P&G should choose the company that is ready to accept all the four conditions mentioned above. This decision will have an affirmative impact on people. P&G’s priority above all should be to search an organization whose organization culture matches to this company.
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