Importance of Organizational Design and Structure in Procter and Gamble

Answer Sheet
LO1 Evaluate the importance of organisational design to the delivery of
sustainable performance
INTRODUCTION
The report below contains substantial information about the organizational
structure and organizational design and how it helps in fulfilling the
organizational strategies. The strength and weaknesses of the organizational
design in relation with the organizational structure of the chosen company
(PROCTER AND GAMBLE) is also mentioned to evaluate the importance of these
factors for a company. Furthermore, different approaches are carried out to
ensure that the HR function contributes to the design of the organization.
Procter and gamble was founded in 1837, by two men William Procter, and
James Gamble. Procter was a candle maker and Gamble was a soap maker.
They both had married two sisters and their father in law convinced them to
become business partners.
Procter and gamble is a global company that operates in 70 countries and sells
their products in more than 180 countries including its one of the head quarter in
UAE Dubai. This company currently holds 29 brands with more than $1 billion
sales. The brands of P&G includes pharmaceuticals, cleaning supplies, personal
care, pet care, hygiene etc. P&G also claims to be the world’s 8th largest
organization. (bitLanders, 2019)
Organizational Structure:
An internal business framework that shows how management is organized and linked
together. Organizational structure shows the lines of authority and how information is
passed through the different levels of organization.
The several structural systems that a business might adopt are hierarchical
(bureaucratic structure), post bureaucratic structure, functional structure (Tall
structure), Divisional structure (flat structure), matrix structure Etc.

(Study.com, 2019)
Procter and gamble Organizational Structure:
Procter and gamble follows matrix structure. A matrix structure is the one in
which the reporting is done in a grid or matrix rather than the traditional
hierarchies. The line of reporting in this structure flows vertically downwards as
well as horizontally that is why it is called as a matrix structure. In this structure
the employees report to different managers instead of one or can be said that for
every department or section employees have individual managers to report.
(Panmore Institute, 2019)
Organizational Design:
Organizational design refers as a company’s workflow, procedures, structure and
system and can be altered or realigned according to the business’s current
position in order to plan new changes. Organizational designs improvements are
made to achieve the overall goal of the businesses by focusing on resources of

the company (Human resource and technical resources). An effective OD helps in
enhancing customer service, profitability of the company, operation cost and
growth of business. (Study.com, 2019)
The history of P&G is a vivid story of organization strategy as it goes through the
entrepreneurial, collectively, formalization, and elaboration stages. It evolves
from a domestic company to multination, global, international, and finally
transnational company. The organization structure keeps growing
correspondingly in its life cycle. As it becomes a globalized company, it is
weighed down by the bureaucracy and hierarchy. Finding a suitable organization
structure and executing the transition smoothly becomes critical to its future
growth. The domestic - Entrepreneurial Stage: at its inception, P&G established
centralized functional structure and focused on product innovation.
To evaluate the strength and weakness of the decentralized structure is that it
has slow innovation and response time and is very hard to build a regional brand.
The increasing demand for coordination among functions and cross-country
product management called for organization change. A Matrix structure of
category and function first emerged there, and then the Global Matrix was
created and extended to the rest of the world. These global functions promoted
knowledge sharing and transfer, consolidated manufacturing and distribution and
extracted massive saving, developed a close relationship with big customers, and
accelerated global product launches. The customers are global and no longer
limited to specific regions. The suppliers are from different countries.
Manufacturing and distribution are consolidated worldwide to reduce cost. Finally,
the information technology made the global standardization possible, enabling a
free flow of information and resource. The global matrix structure streamlined
these processes and also reinforced the power of these global functions.
However, on the other side, regional managers had their responsibility for
financial results.
Procter and gamble use contemporary organization design, it is a flexible
structural method in which the task is divided in response to dynamic
environmental factors. (Panmore Institute, 2019)
Importance of Organizational Design and its relation to the
organizational Structure of Procter And Gamble:
Organizational design and organizational structure is important for the companies
as it helps in improving the communication between the members of the
company, when the communication becomes clear so it directly affects in
improving productivity as well because the objectives and goals are clearly
communicated to employees hence it will lead to innovativeness and
productivity. Organizational design is interrelated with organizational

structure as if the hierarchy is clear then the work flow and procedure can be
communicated in an efficient way. If the structure of the company is strong then
the whole company can work on the similar goal.
 Strengths of matrix structure and Contemporary design to Procter and
gamble infulfilling their organizational strategies
There are various advantages of organizational design that will help Procter
and gamble to achieve their organizational strategies.
1. Procter and gamble strategy is to increase their productivity by developing their
employees through training and development. So Good organizational design will
help the company in achieving this strategy in a more efficient way. As P&G follows
matrix structure so they can clearly articulate the project objectives to all the
employees with the help of this structure, hence this will help the company to
increase their human resource productivity.
2. Procter and Gamble always highlights their quality and value, so for maintaining
that, organizational structure and design plays a vital role. Matrix structure of P&G
helps them in achieving these goals as if the flow of reporting is both horizontal and
vertical so it will be easy for whole organization to work on the common goal so that
they can together achieve the quality and value.
3. Procter and gamble strategy is to increase profitability by using limited resources
so by following Matrix structure company is getting this advantage that it benefits
them in achieving this strategy because matrix structure helps the companies to use
their limited human resource in an efficient way.
 Weakness of matrix structure and Contemporary design to Procter and
gamble infulfilling their organizational strategies
1. As employees need to report more than one boss which leads to organizational
complexity and the employees of P&G cannot focuses on their work properly. This
might led to decrease in innovativeness.
2. As in this the functional and the project management is different, so the decision-
making issues occurs between the members of the management. This leads to
conflicts and might affect the quality of the work.
3. Establishing priorities for P&G by following this structure and design is quite
difficult because sometimes it does not suit both functional and project management.
4. Cooperation is highly required for the members of Procter and gamble in this
structure and design which is time and energy consuming for the members and any
little mistake can lead to big issues because the structure is interconnected with each
other.
Procter and gamble HR function use to contribute organizational design are:

 Work Life balance (Flexibility)
The employees of P&G have this flexibility that they can work from home. There are a
lot of P&G employees who works from
home, as P&G thinks that it is better
because employees can handle both the
personal and working life. (Pg.com,
2018)
In this work life balance P&G provides
employees below mentioned flexibilities;
 Reduce work schedule/ part time.
In this employees have the opportunity to work less, instead of full time job. The job
of the employee in this is reduced in hours or days per week.
(Pg.com, 2018)
 Personal leave of Absence.
In this the employee can take leave of 3 months for study or travel and every 7 years
without pay. The benefits will be given to the employees. (Pg.com, 2018)
 Family leave:
In the employees of P&G can take family leave up to 12 months so that the
employees of P&G can give their family sufficient time.
(Pg.com, 2019)
This shows that the HR function of P&G contributes to the organizational design,
as P&G design and structure is made to maintain the productivity by equally
assigning work to avoid burden. By following this HR practice by the HR
management of P&G it can be seen that the company is contributing to the
design of the organization to maintain its policies and to fulfill is strategic
accomplishments.
 Performance management
Performance management is another HR practice use by Procter and gamble
through different methods. It is the process of checking the performance of
employees by different tools and techniques. The HR practitioners of P&G also
use different methods in order to optimize the employees’ performance.
(Hlbhamt.com, 2019)
The method that is used by Procter and gamble for performance management is
W&DP (working and development plan) in this there are three steps taken by the
company
Self-development evaluation: in this method the professionals of P&G
Checks an individual’s performance by doing self-development evaluation. After learning
and training, the method of self-development evaluation takes place. In this the manager
of P&G checks whether the employee is growing and developing their skills or not . For