Organizational Leader who Excels in Diversity - Term Paper Example

Organizational Leader who excels in Diversity Organizational Leader who excels in Diversity College Abstract According to Cedric Herring, higher sales and revenues are reported in those companies which have higher racial diversity, especially for the multinational companies which operate in various nations. A business leader who encourages diversity in his organization no doubt will see higher business performance. This research essay deeply analyses how Alan George Lafley, who was the CEO of Proctor & Gamble between 2000 and 2010 took the P&G to financial heights by paying more attention to diversity programs in his organization. Background. What is the professional background of this leader? Is there any Personal information or experience that led to his or her passion for managing Proctor & Gamble is a world-renowned consumer product leader, and its products are widely used by about 4.4 billion consumers around the globe with its portfolio of quality and trusted consumer products and some of its famous products are Pampers, Whispers, Oral-B, Head & Shoulders, Gillette and Duracell. P&G has present operations in about 80 nations, and its brands are available in more than 180 nations around the world. Established in the year 1837, its reported revenue in the year 2011 was about $82,559 million and its employee strength was reported as 129,000 in the year 2012. This research essay will analyse the significance given to diversity in the P&G by Alan George Lafley during his tenure as CEO of the company between 2000 and 2010. Diversity? In his young age, A.G. Lafley earned his graduation from Fenwick High School, which is situated in Oak Park, Illinois and also got his A.B from” Hamilton College in 1969”. He underwent a doctoral program in the 1970 at the University of Virginia and during the Vietnam War, he worked as the supply officer with the U.S Navy. Then, he underwent” M.B.A program at Harvard Business School and received his M.B.A in 1977.” Upon his graduation, he was recruited by Proctor & Gamble (P&G) as trainee, and later he rose to the position of Chairman, President and Chief Executive of P&G in June 2000 and retired from P&G in 2010. As assistant brand manager for Joy dishwashing soap, Alan George Lafley joined the P&G in the year 1977. He was promoted as CEO of P&G in the year 2000, from that of the head of North America operations after many successful years of service in P&G due to the resignation of his predecessor Durk Jager. When Lafley became CEO, P&G has become a reputed company that marketed more than 300 brands in over 140 nations around the globe thereby actively spotlighting on resolving the requirements of its very diverse stakeholder’s demands. Thus, Lafley’s commitment to P&G diversity initiatives has brought credit to the organization both externally and internally. (Shriberg & Shriberg, 2011, p.53). When Lafley took over as CEO of P&G in 2000, the company was in doldrums. However, he was managed to put the company again in the profit track within the couple of years after he became CEO of the company. Since 2001, after Lafley took over charge, the annual sales soared 5% and there was an increase of 12% in the EPS (Earnings per Share) of P&G, and cash flow rose by 112% and market capitalization of P&G shares had witnessed 200% increase. Lafley was widely acknowledged for his leadership in P&G, and Chief Executive Magazine awarded him the title “CEO of the year 2006.” In 2009, he received from the CED the “G. Peterson award for Business Statesmanship.” In acknowledgement of his involvement to diversity, marketing, innovation, he was awarded the” Edison Achievement Award” in the year 2010. Lafley wrote many books like How you can drive Revenue and Profit Growth with Innovation and the Game Changer and also wrote many articles to Harvard Business Review Journal namely “Executive Pay: Time for CEOs to Take a Stand “, “What Only the CEO can Do”, “the Art and Science of Finding the Right CEO “, and I Think of My Failures as a Gift”. Lafley stressed much about the significance of the diversity and demonstrated how P&G had benefited due to diversity. In P&G, about 40% of the top executives were non-US employees, and about 35% of the top executives were recruited from over 12 countries around the world which includes citizens of Portugal and Tanzania. Further, in P&G, about half of the managers were women, and one woman manager was the president of P&G business in China. Lafley is of the view that P&G is not only a diverse organization in line with its diverse gender and ethnicity but also is having much diverse in leadership approaches, career experiences and thinking habits but more efficient in comprehending the demands and tastes of the consumers from all parts of the world, and its diverse workforces are more efficient in exploiting the diversity of outside business partners. (Sakikawa, 2009, p.2). Lafley is of the view that P&G’s customers, clients, consumers and suppliers turned to be more and more diverse on day to day basis and hence, P&G’s success wholly reliant on its capability to comprehend diverse needs of its consumers and to strive efficiently with suppliers and consumers around the globe. Lafley feels that diversity is the distinctiveness that all stakeholders from employees to suppliers tries to accomplish P&G’s Principles, Values and Purposes. (Lafley, 2006). Lafley when asked why he substituted about 50% of the P&Gs top management with non-US employees, he replied that his company should have a wider basis – more cultures, more women and diverse nationalities. (Preethi & Kavita, 2010, p.52). Lafley is of the view that a diverse business organization will always out-think and surpass the performance of a homogenous business organization in each and every single time. (“Stewart, 2010, p.6”). Lafley is of the strong view that about half of the P&G products and technologies are being sourced outside P&G. This stride is known as “connect and develop” or C&D and to recognise these “acquisitions” at any phase in the innovation sequence- discovery through the market and from the commercialized and the best illustration is that Gillette, which was acquired by P&G. At P&G, the C&D concept has turned to be a best practice and Henry Chesbrough generalized the same as “open innovation.” (Marquardt & Pantelides, 2006, p.51). Lafley is not just satisfied in introducing the diversity at the organizational level in P&G but also at the Board of Directors level at P&G. Lafley named three women to the Board of P&G during his tenure. Bob McDonald, who is the successor of Lafley in P&G followed the tune of Lafley and appointed two more women to the Board of P&G. All the women directors of P&G are listed in the Fortune Magazine annual Most Mighty Women list. Lafley also inducted one black male director to the board of P&G during his tenure. (Sellers, 2011).  Status of Organization. What role did diversity play before the leader became a part of the organization? P&G has a vibrant heritage of commitment, tenure and responsibility for diversity since it acknowledges its direct association to the Corporate’s bottom line, and that it influences the whole supremacy of all of its employees. P&G is of the strong view that diversity ushers competitive benefits through the tireless pursuit of honouring, valuing and trusting cultural variances. Thus, Diversity is the basic ingredient of P&G’s culture and essential part to it’s “how to win” business strategy for success. Diversity policy is not just introduced in Proctor & Gamble, and it is the part of the business itself in Proctor & Gamble. Well before Lafley joined as CEO in P&G, the then Chairman of P&G John Pepper communicated to each employee of the organization that P&G success as an international company is a direct outcome of their talented and diverse workforce. P&G capability to develop new customer ideas and insights and to manage the same in an excellent style around the globe is the best litmus test for the power of diversity that any business would ever have. Durk Jager who was the immediate successor of Mr. Pepper also stressed how P&G is able to bank upon diverse experiences, backgrounds and cultures for its growth around the globe. (Arthur, 2001, p.9). P&G spends about $ 1.8 billion per annum with minority and female vendors, and this is one of the diversity programs followed by P&G in its procurement process. Further, P&G has introduced awards for minority suppliers which offer match-making and training to bring together about 600 minority suppliers. (USBE, 2007.P.25).  Philosophy. What is the leader’s philosophy on diversity management? A.G.Lafley, the past Chairman, President and Chief Executive of P&G personally paid more attention to lead diversity and supervising the progress in each division of P&G during tenure. He loved to work with the head of each business segment of P&G to make sure that they lay broad diversity objectives and cater them without any fail. More focus has been given in the areas like active leadership, creating a comprehensive culture, have accountability and marketing to diverse customers. At P & G, diversity occupies more spotlight thereby leveraging the distinctiveness, each of its employees brings from around the globe to accomplish principles, values and purposes of P&G. The differences in P&G are material in nature like gender, race and age. It also include less perceptible diverse like differences in nationality ,thought , language ,cultural heritage , sexual orientation, religion , leadership style , disability , status in the company , functional expertise and others. Employees in P&G function together to establish the benefit through their diversity, attached by their common value of respect for the individual and their common aim of enhancing the lives of its customers around the globe.  Strategies. What strategies did the leader implement to transform the way in which the organization managed diversity? At P&G, top executives carry out detailed diversity reviews every year with the heads of the business all over the world to evaluate progress and emphasize leadership accountability for remedial actions if any required. The stock option awards to the top executives in P&G are tied to their diversity efforts, and top ratings are given if there is strong diversity performance. Diversity action plans are tailored to suit the needs of P&G operations in each part of the world to mirror the vast chances available for the development of local diversity strategies and to stimulate a tradition of reverence for each and every individual employee of P&G. (P&G Annual Report, 2011, p.56). At P&G, a council has been established, which is chaired by the CEO of the company which consists of the team of senior-level organization and business leaders. Its main objective is to offer insights, configuration and support to the company’s diversity initiatives, to evaluate the outcomes against its targets, and to push across the organization towards its accountability. By establishing a wholly involved and a diverse organization, P&G always aims to be the Employer of the Choice. P&G is able to attract best talented and skilled employees all over the world thereby leveraging each candidate through efficient promotion and assignment planning strategies, and implementing the same that take care of retention of each employee. Further, diversity in P&G workforce is ensured through creating a long-run association with world-renowned universities and colleges that have diverse, highly talented student enrolments. To attract highly talented students into its workforce, P&G has introduced Taleo, a global web oriented candidate management system. Further, P&G also actively participates in intern programs; regularly take active part in recruiting conferences, and carrying outreach to high-school students. To attract talented work force, P&G has introduced special programs like P &G marketing, Careers in Business Initiative (CIBI), IDS, R&D, winter/summer camps for finance students, mainly as an introduction of P&G’s success stories to the student community. Further, P&G is actively involved in recruit women workforce around the world, especially from disabled, military and minority candidates all over the world and in the US. (P&G Annual Report, 2011, p.57). Further, P&G has a foundation system that is designed to retain employees which offer join-up /on-boarding programs during their first year with the P&G , offering a good match with the first manager, developing mentoring, coaching / advocacy association, offering high-quality confronting career –work strategies, training through external / virtual classroom and offer supportive life/work strategies and policies. (P&G Annual Report, 2011, p.57). As a broad diversity strategy, P&G has three international Corporate Affinity Groups for Lesbian, Bisexual and Gay employees, for women and disabled persons. In US, P&G has also four diversity Affinity Groups for Native Americans, Asian /Pacific-American, African-American and Hispanic. (P&G Annual Report, 2011, p.57).  Goals. What were the diversity-related goals implemented by the leader? What are his or her future goals related to diversity? In P&G, Lafley is able to introduce diversity successfully with the whole-hearted support of the top management of the company. Thus, leadership support is regularly conversed to workforce, mainly through its website, periodic business updates and annual Diversity letter. Lafley is more interested to incorporate the diversity strategies into the business plans, mainly to foster its accountability and its outcomes are regularly monitored. Senior Executives in P&G regularly carries out diversity reviews every year spotlighting on recruiting, promotions, representations and separations. Further, a well-conceived succession planning process makes sure that minorities, and women are accorded with development and growth environment they merit. Moreover, Lafley also paid more attention in recruiting individuals with disabilities and offered them with all the assistance they require for becoming successful employees at P&G. Lafley formed a special task force who would visit college campuses and searched for people with disabilities but skilled who are frequently abandoned by other recruiters due to their handicap. Further, Lafley organized diversity training programs and support groups, which would make sure an ever augmented understanding and awareness among P&G employees. (Shriberg & Shriberg, 2011, p.53). Lafley gave more significance to leveraging diversity, which is strongly motivated by his faith in the business need of such initiatives. Lafley treated diversity in P&G as a business strategy instead of deeming it as “feel-good” efforts. Under Lafley guidance and direction, P&G has assumed the diversity initiatives with strong emphasis instead of treating it as just internal efforts thereby employing the same with more influence with its suppliers to cherish them to be more inclusive. Thus, Lafley and P&G symbolize a great illustration of inclusive leadership within a corporate structure. (Shriberg & Shriberg, 2011, p.54). Lafley knows that for long-term success of P&G, there is a need to manage the diversity effectively. He also knew that diversity programs are consuming long-time as to have a grunt on the organization performance. Lafley sets the following as the future targets for achieving the diversity in any organization, including P&G. Lafley strongly believed that the top management should have a concise communication of the business case for diversity. The top management should be conscious that diversity can usher improved competitiveness through better comprehension of, and entry to, diverse markets. An inclusive culture in any organization could be a major motivating factor for employees, and it will result in enhanced productivity emanating from enhanced job satisfaction, morale of the employees. Diversity also brings the broader talent-pool, enhanced innovation, creativity and problem solving. Diversity also results in improving a company’s change-readiness and adaptiveness. Diversity also helps to minimise the susceptibility to probable lawsuits. Lafley is of the opinion that there should be a clear conscious about the present scenario. The management should always be abreast of the present scenario but not in terms of figures and statistics but also in terms of demenors and mindsets. Lafley cites how Eastman Kodak engaged external diversity panel to assess the company’s current hiring policies and how could they rectify the inequities and how cultural barriers obstruct to retain and develop a diverse workforce. Lafley is of the view that diversity should be pushed from the top management. He is of the view that unless diversity is supported from the top management, such programs may not attain success. He has cited how Lou Gerstner recognized diversity one decade ago as a major effort for IBM internationally. Gerstner created eight task forces symbolizing various minority groups and thereby thrusting on concise results within quantified time limits for every one of the taskforces and then he personally evaluated the progress on these outcomes. Lafley is of the view that diversity needs basic change in the majority of business organizations, which can only be accomplished through the support and encouragement of the top leadership. Lafley feels that diversity leadership is an independent function to be carried at senior management personnel. Lafley cites that how IBM, HP, National Australian Bank Limited, Coles Myer Limited, and Australia and New Zealand Bank Limited, which have created top management, position to manage diversity effectively. Lafley desires that diversity programs in business organizations are to be given more spotlights on cultural change instead of just redressal of inequities. Minority workforce may not be an asset for the organization if the diversity programs are not visualized by the top management as an ancillary instead of integrating the same in the business itself. Thus, successful diversity management needs a thorough change in the demenors and mindset in the whole of the organization. Lafley is of the view that there should be a direct link between performance pay and the diversity objectives. He cites how Hyatt Hotel Group has allocated about fifteen percent of the probable bonus to diversity objectives. Lafley strongly believes that diversity programs require to cascade down through the business organization and it demands the involvement and engagement of all the employees. He cites that how in IBM, the employees were required to offer their ideas and input about how the company would become more inclusive culture. Thus, Lafley is of the view that diversity programs should not be confined to board or senior levels only, but it should involve at the grass-roots level also for its success. (Allen, Munn & Neck, 2011) “ Current Status. What is the current status of the organization in terms of diversity in particular and overall success in general?” Presently and always P&G prolongs to emphasize on diversity as an international stratagem and anticipate its employees to become more diverse increasingly, thereby facilitating them to serve more number of consumers around the globe. Enrollment by gender on the global level at P&G is detailed below: (P&G Sustainability Report, 2011, p.56). The above table shows that P&G is giving more significance to employ women both in the management cadre and in the other workforce category thereby giving more thrust to diversity. The percentage of female and minority employees employed in the United States is given detailed below: (P&G Sustainability Report, 2011, p.56). Bob McDonald, the present CEO and successor of Lafley involve himself for leading diversity functions and constantly supervising its progress in every unit of P&G around the world. McDonald stresses that business heads of each division of P&G to implant diversity into their business models, formulate concise expectations and to exhibit personal accountability. (P&G Sustainability Report, 2011, p.56). In P&G, McDonald has insisted that top executives should carry-out in-depth diversity appraisals with business heads of each unit to evaluate advancement and reiterate leadership responsibility for any corrective actions if needed. Stock options awards in P&G are now linked with diversity results of the top executives and if an officer is able to give vibrant diversity performance, then it will definitely result in higher ratings. (P&G Sustainability Report, 2011, p.56). Employing diverse suppliers has been a major objective of giant U.S based companies, including P&G. It treats suppliers as its decisive partners in assisting it to foster innovation to life, to control cost and to enhance productivity. P&G strives to have vibrant association with the suppliers as it treat them as most significant than ever to accomplish P&Gs sustainability objectives and holding up the growth of the company and moving forward. Some of the senior leaders in P& G are also board members during McDonald’s regime. About a third of the top second levels of senior executives also act as board members and about 66% of them also involve in the monitoring programs. About ten percent of bonus is linked to diversity-management outcomes. Critical claim Jones et al (2000) employing the illustration of Aotearoa/ New Zealand demonstrate that a diversity footed upon the geographies and vibrant cultural practices of USA could be unsuccessful and may, in fact may hamper local diversity issues. Since, P&G is operating in more than 80 nations, if it wants to adopt a USA footed diversity program in other nations instead of recognizing local culture, and traits may prove to be devastating. (“Clegg, 2006, p.533”). Lafley managed the diversity in P&G very well as he knew diversity plays important role in improving the bottom line of P&G. Lafley created a special task force for recruiting from college his diversity training programs and support groups, augmented understanding and awareness among P&G employees. In P&G, Lafley is able to introduce diversity successfully with the whole-hearted support of the top management of the company. Lafley treated diversity in P&G as a business strategy instead of deeming it as “feel-good” efforts. Lafley strongly believed that the top management should have a concise communication of the business case for diversity. Lafley created top management position to manage diversity effectively. Lafley strongly believed that successful diversity management needs a thorough change in the demeanors and mindset in the whole of the organization. Lafley is of the view that diversity programs should not be confined to board or senior levels only, but it should involve at the grass-roots level also for its success. The proponents of diversity argue that diversity is normally advantageous for business and has resulted in higher earnings and contributed to bottom line of the organization. However, opponents argue that diversity is of nonconsequential to the success of the business or in actual parlance it is damaging to the organization as it creates conflict, discouraging cohesion and thus results in decreased productivity. Cedric Herring (2009) employing the data from a survey found that diversity practices in the business, in fact, has resulted in the increase in revenues , increased customers , larger market share and increased revenues. Herring was of the view that gender diversity in fact is linked with enhanced sales, greater share of profits to the business. Thus, we have to agree with the Herring views as P&G by employing diversity practices is able to demonstrate increased revenues, enlarged customers and greater share of profits to its stakeholders. (Herring, 2009). References Allen J, Munn A & Zehnder E. (2011). Seven Success Factors for Managing Diversity. Retrieved on 14 February 2013, http://www.ceoforum.com.au/article-detail.cfm?cid=6100&t=/Jane-Allen-et-all/Seven-success-factors-for-managing-diversity Arthur, D. (2001). The Employment Recruitment and Retention Handbook. New York: AMACOM Clegg, S. (2006). Organization Studies. New York: SAGE. Herring, C. (2009). Does Diversity Pay? Retrieved on 16 February 2013, http://asr.sagepub.com/content/74/2/208.abstract Krishnan, P., & Maloo, K. (2010) Emotional Intelligence and Mentoring in the in the context of Gender Diversity Program. Retrieved on 14 February 2013, http://ifeil.org/pdfs/eibook/Chapter05.pdf Lafley, A.G. (2006). Procter & Gamble diversity supplier brochure. Retrieved on 14 February 2013, from http://www.pg.com/images/company/who_we_are/diversity/supplier/SD_Brochure_2006.pdf. Marquardt, W., & Pantelides, C. (2006). Challenges and Opportunities in Process Innovation. 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