On June 9, Procter & Gamble Co. announced its second major reorganization of the decade, with 15,000 jobs being slashed in order to help fuel growth. Three weeks later, the company announced it was discontinuing animal testing for practically all of its products.
On the surface, the two moves were completely unrelated. But they did show a hairline crack on an otherwise impeccably smooth facade — a tiny admission that maybe, just maybe, the world’s largest consumer product conglomerate (and Cincinnati’s No. 1 corporate citizen) might not have all the answers.
And that’s OK. One can admire a large company for making tough decisions and dealing with the consequences in a public forum. P&G’s reorganization plans got lukewarm response from the investment community, which seems not very convinced that the shake-up will bring the desired results, but they’re being pushed ahead. And its new position on animal testing is an embarrassing admission that P&G’s previous product development policies were outdated and wrong.
But there’s no getting around the strange vibes emanating from the company’s twin towers. You can practically hear the brain gears grinding throughout Greater Cincinnati: If Procter & Gamble doesn’t have all the answers, who does? If you can’t trust in a lifelong job at P&G, who can you trust?
If P&G is in trouble, is Cincinnati itself in trouble?
Having not been born and raised here, I have a difficult time understanding the curious relationship Cincinnatians have with P&G. Only a few such entities and people (Carl Lindner, Marge Schott, Simon Leis, Pete Rose) generate as much blind faith and gratefulness as Procter & Gamble. To most Cincinnatians, these heroes can do no wrong.
In a way, P&G and Cincinnati have made each other what they are. The company has benefited from a loyal, hardworking citizenry, while the city has gotten well-paid jobs, arts and cultural support and tax revenues in return. It’s hard to tell what came first — P&G’s notorious white-shirt-only dress code or Cincinnati’s buttoned-down conservatism.
The city and the company grew through the years joined at the hip. Procter & Gamble — makers of Ivory Soap (“99 44/100% Pure”) — developed into a mega-multinational and the world’s largest advertiser. Cincinnati became, well, Cincinnati.
Along the way grew the local legend about P&G’s “family” of employees. If you were smart enough and worked hard enough, the legend went, you could have a job at P&G for life. You’d be promoted from within. You’d be a pillar of your community. You’d retire rich based on your stock options.
P&G wrapped nurturing corporate arms around its employees as well as its extended family — the rest of us — and safe in a protective cocoon we trudged together through the decades. Both the city and the company grew by sheer will, took few risks and almost never looked outside of itself for inspiration.
As we enter the new millennium, however, that approach doesn’t seem to work anymore. Cincinnati has fallen behind the nation’s “gazelle cities,” development experts tell us. P&G’s sales and earnings are “flat,” Wall Street experts say.
So Procter & Gamble tries to streamline operations, making the company leaner and meaner and better able to hike earnings, profits and stock prices. But I’m left wondering why. Why isn’t it enough that P&G had operating income (profit) of $6 billion in 1998? Six billion dollars. And it was a 10 percent increase from 1997.
Why isn’t that enough? And is it really worth cutting 15,000 jobs to goose the bottom line by another $1 billion or so?
Be certain what “cutting 15,000 jobs” means. After sifting through normal attrition, early retirements and leaving vacancies unfilled, you’re left with a bunch of “firings.” As in: “Your services are no longer required. Thanks for your years of dedication, but we need to make more profit. A career change will do you good. Leave the stapler behind.”
It’s people. My friends. Your neighbors. Even some of you reading CityBeat right now. Out of a job.
Yeah, it’s a tough world out there. Getting tougher all the time.
Maybe I shouldn’t take Procter & Gamble to task for what probably was an agonizing business decision. Almost every major U.S. multinational company is downsizing these days, claimed a particularly patronizing Enquirer article after the June 9 announcement, so don’t blame P&G. And besides, said a Business Courier article, those unemployed P&G folks can get jobs with other local companies and improve them, which actually helps us all in the long run.
In other words, firing a bunch of people helps everyone — the company, its investors, the city and even the fired employees themselves? Right! There’s some major spin for you.
Speaking of spin, I find it interesting that Procter & Gamble made no mention of PETA in its announcements concerning a halt to animal testing. As you’ll remember, representatives of People for the Ethical Treatment of Animals have hounded P&G for years over its alleged abuse of animals in testing cosmetics and other products. They picketed company shareholder meetings. They ran derogatory ads. They even pied Chairman John Pepper.
P&G set up a nice section on its corporate Web site to discuss new developments in product testing (www.pg.com/ animalalternatives). There’s a page of links to other “sites of interest” on the topic of animal testing — nine sites are listed, but not PETA’s (www.peta-online.org).
It’s fairly clear that P&G made its own considered decision regarding animal testing. The company has layers of management that bog down the process of making major corporate decisions — one of the problems the new reorganization hopes to address. But it’s also clear that, had PETA not publicly humiliated P&G about its internal policies on animal testing, the company might not have made the change.
Maybe I hold Procter & Gamble to much too high of a standard. Maybe we all do. It’s obvious P&G can’t do it all anymore. What does that mean for them, and for us? ©
This article appears in Jul 14-20, 1999.