The board of directors at Procter & Gamble (P&G), dissatisfied with the performance of the world’s largest consumer products firm, recently decided to replace its CEO. In doing so, the firm brought back former CEO A.G. Lafley. Is this a good move or a desperate one?
This is the view of Rosabeth Moss Kanter (the Ernest L. Arbuckle Professorship at Harvard Business School), as reported by the HBR Blog Network: “P&G’s board has been under a great deal of pressure from an activist investor who has made his views on the pace of the restructuring clear and vocal. Regardless of the merits, that begins to wear everyone down. If the current CEO is under attack, that becomes a distraction for the company and makes it harder to execute or gain credibility with certain stakeholders. Even if the performance improvement plan is on a good path, that noise becomes a distraction (and psychologically, it leads to dreams of escape or wishes for a bold dramatic move). Appointing a new CEO buys everyone time, and thus quiets the noise for a while. But note how P&G did it. Asking A.G. Lafley to return is a sign of how much the company values continuity and company knowledge.”