Graduate HR Strategies, Policies and Practices within Procter & Gamble

Executive summary This report provides an analysis and evaluation of Procter and Gambles (P&G) graduate HR strategies, their policies and practices. The report takes an in-depth look at how P&G recruit and select graduates, how they train and subsequently reward them. It provides a critical understanding of P&G and its graduate scheme with relevant links to HR models and practices. The use of mainly secondary data was used to create an understanding of P&G as an organization targeting graduates. This was mainly through the use of their website, journals, newspaper articles and case studies. This report found that;y y P&G is one of the leading organizations in their field of expertise. They insure their sustainability through their unique build from within approach. y P&G use both vertical and horizontal integration of human resource strategies in their graduate schemes. y Their recruitment and selection strategy is very complex focusing on four main stages of selection. y They use a strategic approach to training their graduates through on the job training, formal learning, coaching, e-learning, on-going assessment and annual appraisals. y y The main HRM model used was the resource based approach. P&G reward graduates through financial benefits and promotional opportunities.

Recommendations include: y y Considering external ways of training. That the assessment should not be focused mainly on success driven factors. y That P&G should look to an increase in recruitment from outside and not rely as heavily on internal recruitment. 1

Graduate HR Strategies, Policies and Practices within Procter & Gamble

Contents

1. Introduction 1.1 Terms of reference 1.2 Overview of HRM 2. Methods 2.1 Data collection methods 2.2 Issues and challenges 3. Background 4. Culture & Diversity 5. Findings 5.1. Recruitment & Selection ( R & S) 5.2 Training & Development (T & D) 5.3 Performance Management & Reward (PM&R) 5.4 Employee Involvement 6. Conclusions & Recommendations 6.1 Conclusion 6.2 Recommendations Appendix 1. Bibliography

Graduate HR Strategies, Policies and Practices within Procter & Gamble

1. Introduction
1.1 Terms of reference

The main aim of this report is to critically evaluate graduate HR strategies, policies and practices within Procter and Gamble (P&G) by analysing:

y y

The culture and diversity of P&G The process of recruitment and selection, and the methods used by the company in employing graduates.

Graduate training and development strategies within the company. Are graduates empowered or are they consider just a means to an end?

How the performance and reward system brings a competitive advantage to the company, and if it is directly related to training and development.

1.2

Overview of HRM

This section will focus on theoretical concepts that will be related to P&G throughout the report.

Human resource management or HRM can be defined as the strategic and coherent approach to the management of an organizations most valued assets, its people. (Armstrong, 2006). It is these people who are working there who individually and collectively contribute to the achievement of the objectives of the business. HRM simply means employing people, developing their resources, as well as utilizing, maintaining and compensating their services in tune with the job and organizational requirement (Armstrong, 2006).

A key model in HRM is the resource-based model. The resource-based model adopts an internal perspective to explain how a companys unique bundle or collection of internal resources and capabilities represent the foundation upon which value-creating strategies should be built (Openlearning, 2007). These 3

Graduate HR Strategies, Policies and Practices within Procter & Gamble

resources are inputs into a companys production process, such as an individual employees skills. So according to this model, a companys resources and capabilities are more critical to determining the appropriateness of strategic actions than the conditions and characteristics of the external environment (Openlearning, 2007) Thus, strategies should be selected that enable the company to best exploit its core competencies, relative to opportunities in the external environment. (Openlearning, 2007)

There are two types of approaches to HRM; they are the Hard and Soft approaches. The hard approach to HRM emphasizes an employee as a resource, in the same manner as other resources such as land or capital (Daswani, 2009). Employees in this approach are only treated better if they play a central role in helping to achieve the organizations goals. The hard approach is a way of regarding people as human capital, and whose development will help return more gains for the organisation (Daswani, 2009). Other organisations prefer to use the soft approach, which emphasises more on an employee being resourceful, as opposed to just being another resource (Daswani, 2009). The employee thus becomes a major source of competitive advantage for the organization. This is achieved by the use of human relations which involves enhancing performance by using motivation, communication and leadership to increase loyalty and commitment (Daswani, 2009). This soft approach will be highlighted in P&Gs strategies later on.

It is also important to look at strategic human resource management, or SHRM. This is a strategic approach to HRM, and as such, it is referring to a managerial process requiring human resource policies and practices to be linked with the strategic objectives of the organization (Bratton, 2007).

The fit between HR practice and business strategy has been emphasised in studies relating to SHRM. These fits are vertical and horizontal integration. Vertical integration can refer to the alignment of HRM practice with the strategic 4

Graduate HR Strategies, Policies and Practices within Procter & Gamble

management process of the firm (Schuler & Jackson, 1987 cited in Wei 2006). Beardwell (2004a) further states that vertical integration is a fundamental part of the companys strategic approach to people management thus the performance management of graduates. In general, vertical integration is viewed as a critical step towards attaining the organisational goals through initiating human resource strategies that are aligned with the firms objectives (Wei, 2006). On the other hand, horizontal integration refers to the congruence among the various HRM practices (Baird & Meshoulam, 1988 cited in Wei 2006). It refers to the coordination of the strategic human resource planning and acquisition, utilisation, development and retention elements found in the management of human resources (Eldridge & Idris, 1998). This involves the coordination of human resource planning and the personal functions such as recruitment, training and career management (Eldridge & Idris, 1998). Horizontal integration is more specifically the linkage between the actual HR policies and line managers that will evidently be assessing graduate performance management.

2. Methods

2.1 Data collection methods Secondary data collection was used in the method of the internet mainly for this report. Online journals, articles and case studies were researched with the main source being the P&G official website. Further secondary data was also used in the form of Newspaper articles and Human Resource Management books.

2.2 Issues and challenges The information researched was limited therefore an in-depth analysis could not be conducted. This was because primary data could not be researched as access to the company was limited. Our research was based only on secondary data and for a further study and an in-depth report it is recommended 5

Graduate HR Strategies, Policies and Practices within Procter & Gamble

that interviews with P&G graduates should be conducted, to provide a fuller and unbiased report.

3. Background

P&G is a well established organization who have been at the forefront of their field since their birth in 1837. P&G was founded by two men called William Procter and James Gamble, who married Sisters Olivia and Elizabeth Norris. Procter and Gamble originally started out as a small soap and candle company, this thrived and grew rapidly. It has now grown to a substantial business and by 2008 it was ranked as the 8th largest organization by market capitalization. Since the beginning P&G has been at the forefront in their industry. This is particularly highlighted in a few key dates that show them being the market leaders.

o 1887-P&G introduce a pioneering profit sharing program, this gave employees an ownership stake in the company.

o 1924- P&G became the first company to conduct deliberate, databased market research with their consumers. These were two market leading, innovative ideas that were not introduced anywhere else in the industry.

o 1941-They established a consumer relations department. This reflects their ideals even today that they keep the consumer at the heart of everything they do.

o 1995-2002- P&G introduce many products that are breakthrough products, constantly improving the lives of many.

Graduate HR Strategies, Policies and Practices within Procter & Gamble

All of these achievements have helped P&G stay at the forefront of their industry and they have kept these goals at the heart of the organization, sustainability, innovation and willingness to experiment. (P&G, 2009a)

4. Culture and Diversity

P&G consider themselves as one company but with many cultures. They believe that it is diversity which makes the world unique and consequently the organisation. Their Diversity mission statement is as follows:

P&G believes a fully engaged and leveraged diverse work force is a competitive advantage. Our goal is to grow that competitive edge by fostering an inclusive culture (P&G,2009b)

With this in mind each year P&G recruit an array of graduates. When selecting future employees the company looks for a number of personal characteristics. Attributes such as, race, sex, age, cultural heritage, personal background, and sexual orientation are all taken in to consideration.

Culture and Diversity is important to P&G as they want to gain a competitive advantage and this is one of the reasons why they strive for equality. The recruitment process considers gender differences and believes in equal opportunities, P&G offers the same roles within the organisation to both males and females.

In the past P&Gs business environment was purely male dominated. It has been found that, in Engineering male graduates make up 78% of the employees. P&G therefore needed to set up a recruitment strategy which allowed them to attract a high percentage of female graduates if they were to succeed in their target of 50% recruitment of level 1 female managers. As a result of the recruitment strategy P&G have already seen an increase in women being recruited at level 7

Graduate HR Strategies, Policies and Practices within Procter & Gamble

one to approximately 40%. Their work will-continue in order to meet their 50% target. (Pamplin, 2009) In 1997 statistics shown that P&G were losing female graduates. The impact was great as there was an in balance of managers at middle and senior level. Consequently P&G introduced measures to retain female graduates. Measures which allowed females to work at home, career breaking and job sharing. By 2002 the number of females working as managers at group level increased from 25 to 42 percent. (The Royal Academy of Engineering, 2006)

From here, it can be seen that P&G recognised this and responded by recruiting talented females ensuring that their company is diverse. Thus it can be said that graduates who wish to join P&G will not be discriminated on the basis of gender differences.

5. Findings

5.1 Recruitment & Selection (R&S)

One of Procter and Gambles core values is to attract and recruit the best. The organisation believes that the men and women of Procter & Gamble always will be our most important asset. (P&G, 2009b) They also stress the importance of a good social life within the organisation to strengthen their workforce. Graduates have a sense of belonging when faced with their recruitment drive as their core value is their people. P&Gs recruitment strategy is to ensure their graduates reach management level within five years of joining.

Procter & Gamble are recognised as being one of the top employers for graduates. Compared to IBM they offer a more creative recruitment model as they are not only concerned about the Graduates degree but their creativeness 8

Graduate HR Strategies, Policies and Practices within Procter & Gamble

and innovative nature which is demonstrated in their online recruitment exercise. They are different in their approach to attracting graduates by emphasizing the importance of their employees to the sustainability of their organisation.

Beardwell and Claydon (2007b) define recruitment and selection as a process concerned with identifying, attracting and choosing suitable people to meet an organisations human resource requirements.

Within the recruitment and selection process, there are five key questions that an organisation needs to ask before beginning this process. y y y y y Who do we want to join us? How can we identify them? How can we attract them to our organisation? How do we know we have got it right? Who should be involved in the recruitment and selection process?

These questions although very broad, once answered will enable an organisation to be efficient and effective in choosing the right people for the job. In P&Gs case, the use of a success drivers assessment, reasoning screen, reasoning test, and two interview stages allows them to be absolutely sure they are making the right decisions when offering a position. They also have many ways of targeting and attracting possible candidates towards the organisation such as by sponsoring the IBM University Business Challenge.

P&G also target students through social networking sites such as Facebook, which increases the awareness of the company and the graduate schemes they offer. (http://www.facebook.com/group.php?gid=5332536068 )

Graduate HR Strategies, Policies and Practices within Procter & Gamble

P&G y Employs approximately 138,000 people globally, about a quarter of their employees work in 17 countries in Western Europe. y Will recruit roughly around sixty graduates out of 260,000 that will come out of UK universities, according to The Careers Group, University of London (2009) y Applicants must compete and stand out, offering outstanding attributions.

For a very large and well known organisation such as P&G, the competition is extremely high between candidates, therefore, the recruitment process is vital to their end result. This also means that P&G get to choose the very best people who are the most suited to the organisations working environment. To reduce the amount of time wasted in going through unsuitable candidates, P&G gives a lot of information as to what they want from an employee, what qualifications and experience the employee needs to have before applying.

Along with the necessities of the post, P&G are very specific with the type of people they want to be working within the organisation. Their main priority is sustaining their Purpose, Values and Principles (PVP), the core of the organisation and what makes the success drivers. (Please see Diagram 1. )

Diagram 1. (P&G, 2009c) 10

Graduate HR Strategies, Policies and Practices within Procter & Gamble

There are three assessments that have to be completed before the interview stages. The assessments consist of a y Success Drivers Assessment - a standardized assessment of the graduates background, experiences, interests, attitudes and ultimately measures their competence in successful job performance. y Reasoning Screen - looks at the individuals qualifications and abilities to perform the job they have applied for, and it consists of 15 questions, with each question only allowing two and a half minutes for completion y Reasoning Test- the final test, however; this is only used in the application for certain job types. It is a pen and paper test which takes place on-campus and lasts 65 minutes long. It measures the individuals reasoning skills with three different types of questions. (P&G, 2009d)

5.2 Training & Development (T&D) At P&G, beside the salary and social benefits graduates are also offered learning opportunities. Graduates have to engage in different activities that help them develop their Personal Leadership skills, People and Communication skills, Project Management and many others. (P&G, 2009e) Further, they view education as a means of improving quality of life, consequently P&G are more than happy to welcome and recruit a mass number of University graduates annually.

Graduates are trained through internship programmes and placements. Their length varies: some of them last six months and others one year. The programmes are designed to give graduates a good insight into the chosen sector of P&G and to allow them to develop general business and functional skills. In their first month, graduates have to attend regular sessions of P&G

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

Beginnings corporate programme that helps them integrate into the organisation culture.

P&G rarely recruit for top jobs such as managers or directors; as they believe in their build from within strategy. They build their human capital from entry level and train them up to key positions through their ongoing training and development programme. In other words they prefer to recruit graduates and tailor their skills according to the organisations needs. Only 5% seem to be hired directly from outside for a top position. The CEO A.G. Laftey from New York headquarter declared: "We promote from the inside, because that's our primary source of talent," (Kimes, 2009)

At P&G graduates are introduced to the build from within strategy through: y y y y y formal learning (classroom instruction) on-the job training, coaching, e-learning, self-study module.

The on-the job training is confirmed by one of the interns, Quinn (2008) in her blog on P&G website: as she was visiting individual businesses around UK, with a team of P&G professionals, she received training on how she should approach consumers and how she should present the company offers.

From day one graduates: y are given responsibilities in order to develop themselves into independent leaders y are receiving support and guidance through regularly feedback.

Furthermore, P&G is aware that investing in the T&D of human capital will have a direct impact on the organisations performance:

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

They have recognized the need in the way all employees are developed, as it has shifted its HRD strategy from training to learning in order to develop a learning culture across the organisation. (Stern 2004, citied in Harrison, 2005 pp.20).

Since 2000, P&G has adopted a more strategic approach in training their graduates (as seen earlier this is shown by on the job training rather than the older training workshop). In addition, the organisation has also developed a coaching culture that allows the development of all employees from top management to shop floor level. This is an example of vertical integration. For graduates this is very important as they can receive continual support and a rapid feedback. (Harrison, 2005) (Please see Appendix 1. for coaching benefits and results of a survey made by The Charted Institute of Personnel Development)

In training and developing their employees and thus graduates are highly valued in P&Gs human resource strategy as it emphasises on the soft side of HRM. This is because: y They consider stakeholders interests and engage them in the process of learning. y y Graduates are empowered and encouraged to be proactive. A supportive and risk-taking management style is adopted and allows graduates to develop their skills through a proactive approach. The new comers would be more confident in taking responsibility at the workplace and would be more eager for continual development. y Of the resource based model identified in their strategies. The resource based approach states that, the internal human resources of an organisation, are valuable, rare, inimitable and a source of sustainable competitive advantage .(Barney, 1991 cited in Way and Johnson 2005). As mentioned earlier, the resource based model of strategic human resource management argues that both human capital and organisational 13

Graduate HR Strategies, Policies and Practices within Procter & Gamble

process add value to the company. In this case the main role of human resource is to implement effective HR strategies, which ensure that once individuals are recruited, they are developed, rewarded and managed in order to reach their maximum potential. This can be directly compared to P&G as they recognize that HR is a key strategic player in developing sustainable competitive advantage.

Building from within strategy adopted from P&G has advantages and disadvantages. Advantages y Benefits the company as it helps building committed teams and it assure high professionalism among individuals. y y Learning opportunity for graduates As graduates are trained from zero, they also have the chance to find their way into the organisation, to recognise their abilities and to create strong relationships. Disadvantages y The building from within strategy may lead to a herd behaviour in the organisation (everyone thinking the same) which may hinder innovation. Recommendation y One way that P&G counteract this could be through the use of placements that they send their employees on. This enables them to get another perspective on how organizations are run.

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

5.3 Performance Management & Reward (PM&R)

P&G offer a strong commitment to their graduates, not only through training but also performance management which lead to financial rewards..

Through controlled performance management, P&G ensure that they recruit graduates for the duration of their working life. To ensure the sustainability of the organization, strong performance management ensures the control of their employees and thus graduates motivation and loyalty. By offering ongoing training and support to their graduates as well as financial rewards they ensure that they retain their recruited graduates for life. This brings us back to the concept of their build from within strategy mentioned earlier.

By investing in graduates performance and ensuring an integrated approach to development and reward P&G gain a competitive advantage. Graduates have close performance management throughout their career. They can be assured that if they meet their individual objectives and thus meeting the business goals they can expect to be rewarded accordingly.

P&Gs performance management is based on their recruits performance as their people are the core of the organisation. P&G know how to keep their workforce motivated to perform well, through their T&D and rewards incentives, such as bonuses and promotion.

P&G set out their management objectives clearly before the recruitment stage and they expect their graduates to be at managerial level in a certain timescale. In return for selling their skills graduates are offered:

A highly competitive package to their graduates with a promise that they will train and develop them through planned steps at the moment they begin their career. This can be appealing to graduates whom like to know 15

Graduate HR Strategies, Policies and Practices within Procter & Gamble

that there is most definitely career progression and prospects with joining P&G however it is increased pressure from the individual from the offset. Graduates understand what is required of them and that the organisation is an extremely competitive working environment which could lead to health problems and other related job issues for the weaker personality.

Financial benefits: P&G offers a competitive salary, stock ownership, pensions and all other benefits that you would expect from such a high profile employer. These are standard when you join P&G but also there is a chance for travel, which is extremely attractive to graduates.

As it can be seen from the above, for the career driven individual P&G is the ideal job for any graduate as it not only offers an impressive financial package but a chance to improve knowledge and wisdom through their commitment to training and development of their employees.

It

has

been

identified

that

the

successful

development,

performance

management and reward system is due to vertical and horizontal integration of human resource strategies. y Vertical Integration is evident in P&Gs performance management as it links business objectives with individuals goals to the measurement and rewarding of that business goal. (Beardwell, 2004a). This allows P&G to provide a highly incentive-based compensation system and it encourages graduates to successfully maintain the objectives of the company. y The congruence between HR policies and practices in recruiting, developing and rewarding graduates reflects the horizontal integration of HR strategies. (Beardwel et al., 2004a)

To conclude this section it is evident that P&G ensure the sustainability of their company through performance management to control graduates motivation to 16

Graduate HR Strategies, Policies and Practices within Procter & Gamble

perform and loyalty to the company ensuring a profitable HR competitive strategy that is different from other companies.

5.4 Employee Involvement

Throughout this report employee involvement has been highlighted. P&G encourage high levels of involvement in every aspect of their organization. In their training and development P&G expect the graduate employees to fully immerse themselves in the P&G way of thinking and learning. They have to take responsibilities from day one this not only encourages them but motivates them with responsibility. Through their performance management and rewards system P&G consciously involve graduates in the decision making process.

6. Conclusions & Recommendations

6.1 Conclusions

As it can be seen from this report, P&Gs HR strategies, policies and practices for the graduates can be explain in 4 steps: y Firstly P&G attracts new Graduates through recruitment and selection strategies y y y develop them by way of training and development closely supervise their contribution to performance management and retain them through attractive reward systems

Although graduates are empowered they receive an ongoing support throughout their career.

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

At P&G HR strategies, policies and practices are implemented through vertical and horizontal integration. P&G uses a strategic approach in developing their graduates where a resource based model can be identified. Thus it can be seen that P&Gs unique approach to HRM strategy is evident in their workforce. Not only have they a low turnover of staff but they build a stronger and more reputable company etiquette and reputation, that can only be evident of a loyal and knowledgeable workforce.

6.2 Recommendations: y The way P&G train their graduates can be seen as being narrow minded as their build from within attitude is seen as the only way to progress. Therefore we would recommend considering external ways of training. y The environment is extremely pressurised for the graduates from day one as it is based around success driven strategies, such as continual assessment. This could result in many graduates not coping with the intense learning environment. Therefore we recommend that the assessment should not be focused mainly on success driven factors. y That P&G should look to an increase in recruitment from outside and not rely as heavily on internal recruitment as this can hinder innovation. However, they still need to maintain a high level of graduate recruitment to continue their successful build from within strategy.

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

Appendix 1
The above lists of coaching benefits has been imported from the Chartered Institute of Personnel Development (CIPD) guide on Coaching and Buying coaching services 2004.

(CIPD 2004)

(CIPD, 2004)

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

In 2004 according to a survey made by CIPD , a third of respondents said that line managers delivers majority of coaching. Thus it is likely probably that the coaching began to be a trend among companies. P&G has recognised the trend and adjusted according to its need. Furthermore according to the respondents 44% of graduate where receiving coaching in 2004.

(CIPD, 2004)

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

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Beardwell I, Claydon T & Holden L , (2007b), Human Resource Management a Contemporary Approach, (4th edition), (Pages 42, 523533), Harlow: Prentice Hall

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

P&G

(2009a)

P&G

Heritage

Brochure

Available

at:

http://www.pg.com/company/who_we_are/P&G_heritage.pdf 18th November 2009) P&G, (2009b), P&G Global Diversity

(Accessed

Available

at:http://www.pg.com/company/who_we_are/diversity/global/index.shtml (Accessed 22 November 2009

P&G,

(2009c),

P&G

Career

Centre

Available

at:

http://www.pgbalkans.com/career/success_drivers.asp November 2009)

(Accessed 18th

P&G,

(2009d),

P&G

Careers

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at:

http://www.pgcareers.com/howtoapply/applicationprocess/interviews/page/ 222/default.htm (Accessed 22 November 2009)

P&G,

(2009e),

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

Quinn,

D.

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