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;-

P&G is one of the leading organizations in their field of expertise.

They insure their sustainability through their unique ‘build from

within’ approach.

P&G use both vertical and horizontal integration of human

resource strategies in their graduate schemes.

Their recruitment and selection strategy is very complex focusing

on four main stages of selection.

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.

The main HRM model used was the resource based approach.

P&G reward graduates through financial benefits and promotional

opportunities.

Recommendations include:

Considering external ways of training.

That the assessment should not be focused mainly on success

driven factors.

That P&G should look to an increase in recruitment from outside

and not rely as heavily on internal recruitment.

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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

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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:

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 organization’s 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 company’s unique bundle or

collection of internal resources and capabilities represent the foundation upon

which value-creating strategies should be built (Openlearning, 2007). These

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

resources are inputs into a company’s production process, such as an individual

employee’s skills. So according to this model, a company’s 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 organization’s 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

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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 company’s 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 firm’s 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

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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, data-

based 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.

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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&G’s 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

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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 Gamble’s 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&G’s 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

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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

organisation’s human resource requirements.”

Within the recruitment and selection process, there are five key questions that an

organisation needs to ask before beginning this process.

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&G’s

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 )

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

P&G

Employs approximately 138,000 people globally, about a quarter of their

employees work in 17 countries in Western Europe.

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)

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 organisation’s 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)

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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

“Success Drivers Assessment” - a standardized assessment of the

graduate’s background, experiences, interests, attitudes and ultimately

measures their competence in successful job performance.

“Reasoning Screen” - looks at the individual’s 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

“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:

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:

are given responsibilities in order to develop themselves into independent

leaders

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&G’s human resource strategy as it emphasises on the ‘soft’ side of HRM.

This is because:

They consider stakeholders interests and engage them in the process of

learning.

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.

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

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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

Benefits the company as it helps building committed teams and it assure

high professionalism among individuals.

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

The ‘’building from within’’ strategy may lead to a herd behaviour in the

organisation (everyone thinking the same) which may hinder innovation.

Recommendation

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&G’s 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

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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.

Vertical Integration is evident in P&G’s 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.

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

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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&G’s HR strategies, policies and practices for

the graduates can be explain in 4 steps:

Firstly P&G attracts new Graduates through recruitment and selection

strategies

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.

At P&G HR strategies, policies and practices are implemented through vertical

and horizontal integration. P&G uses a strategic approach in developing their

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

graduates where a resource based model can be identified. Thus it can be seen

that P&G’s 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:

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.

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.

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.

Appendix 1

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

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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P&G (2009a) ‘P&G Heritage Brochure’ Available at:

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(Accessed 22 November 2009)

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Graduate HR Strategies, Policies and Practices within Procter & Gamble

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