In 2016, the new CEO of Procter & Gamble started to implement organizational restructuring in an effort to make the business simpler and more responsive and to give product-category leaders full responsibility for performance. By the middle of 2017, however, the slow pace and lack of clarity in the restructuring led to an activist investor taking a large stake and initiating a proxy contest to gain a seat on the company’s board. That bid ultimately failed, but, interestingly, the activist was offered a seat on the board in any case. In November 2018, P&G announced its largest organizational change in 20 years, implementing many of the measures for which the activist had advocated.
By the first quarter of 2019, P&G was reporting its best quarterly organic sales in over a decade. Investors had already decided to get behind the stock—but how confident could they be that this was the sustainable result of a genuine turnaround within the business?
One way to get additional insight is to ask the people working there. Gathering the ratings that employees leave on the recruitment website Glassdoor is one way to do that. While the sample size was limited, the results were resoundingly clear.
Glassdoor Business Outlook and CEO Ratings – P&G
Source: Glassdoor, Neuberger Berman.
Asked if the company’s business outlook will improve in the next six months, the proportion of returns with a “positive” response began to climb steadily, from a low of 45-46% at the end of 2018 to almost 60% by September 2019. The turnaround in employee sentiment coincided precisely with the announcement of organizational changes.
Moreover, despite the proxy battle, when asked if they approved of the CEO, after falling from 95% to 81% between mid-2017 and the end of 2018, the proportion of employees who approve has climbed back to 87%. The average CEO approval rating for consumer staples companies is 77%.
Alongside traditional reported data, these Glassdoor survey results seem to indicate that P&G’s employees are buying into the major changes underway at the company, and enjoying the new freedom and responsibilities they have in their product categories. This example is a reminder that employees generate useful data as well as consumers. This data can offer an insider’s perspective on the ethos and performance of a company, especially at times of change, long before these things show up in traditional corporate reporting.