University of Mississippi eGrove

Haskins and Sells Publications Deloitte Collection

1972 Client profile: Out of the places Anonymous

Roy Stevens

Follow this and additional works at: https://egrove.olemiss.edu/dl_hs Part of the Accounting Commons, and the Taxation Commons

Recommended Citation H&S Reports, Vol. 09, (1972 winter), p. 16-21

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"Out of the IVOEfpalaces"

Who makes Ivory ? Chances are that almost any shopper will answer: "Procter & Gamble, of course!"

But the average man or woman who shops in the supermarket will find it more difficult to name the makers of this list of packaged detergents: , Bonus, , Dash, Duz, Gain, Oxydol, and Salvo. Or such other household products as Cascade, Comet, , , Mr. Clean, Spic and Span, or Top Job; or such bar as Camay, Lava, Safeguard and Zest; or and toothpaste; or Prell and Head & Shoulders shampoo; or Crisco and Duncan Hines prepared baking mixes, or disposable diapers.

In fact, all these products, and more, are made by the producers of Ivory Empty plastic Prell tubes are soap—Procter & Gamble. The consumer carefully inspected before they are put tends to think of them by the brand through filling machine, sealed by name on the package, and by their he at and pressure, then tested to performance, rather than by the insure that containers of this shampoo international company that produces are completely leakproof. them for markets throughout the world. Ornamental facade above Ivory dale A Haskins & Sells client since 1952, plant entrance displays the moon-and- and one of the great success stories in stars P&G trademark, which evolved American business history, P&G has from a crude cross painted on cases of found its way into almost every soap shipped by Ohio River boat. Dates American home. (A quick check into are the years of P&G founding and laundry, bath and kitchen will prove of the building ofIvory dale. the point.) P&G's worldwide sales last year reached $3,178,081,000, of which At annual HirS-PirG discussion of the household consumer products sold in the client audit, OresonH. Christensen, United States accounted for about two- Cincinnati partner in charge, thirds. This means that on the average, (standing, left)andHirS managing P&G sold about $10 worth in the U.S. partner Michael N. Chetkovich (seated, market for every man, woman and right) confer with company officials: child in the country. Howard]. Morgens, chairman of the board (seated, left);NeilH. McElroy, Procter & Gamble is big in almost every chairman of the executive committee of way. Started in Cincinnati as a two-man the board of directors (seated, center); partnership in 1837, P&G now has about DeanP. Fite, vice president-corporate 29,000 employees in the U.S. and close affairs (standing, center); and James to 15,000 in other countries. About W. Nethercott, vice president and one-third of the American employees comptroller (standing, right). are in the Cincinnati area; the rest

17 are scattered in plants dotting the consumer confidence. Other companies map from coast to coast, and from the have had their chance to put together Great Lakes to the Gulf of Mexico. the same elements, yet they have enjoyed Amajority of employees are also P&G nowhere near the same success. shareholders. Ever since 1890, when the original partnership gave way to the Oreson H. Christensen, partner in corporate form, Procter & Gamble charge of the Cincinnati H&S office, dividend payments have flowed in an believes that management excellence is uninterrupted stream to stockholders, certainly a prime factor in the growth who now number some 89,000. of the company: "They are three deep in every position," he says."Promotion at In a survey of 2,300 top-ranking Procter & Gamble is mainly from within. business executives conducted by Dun s They hardly ever go outside to Review in 1970, P&G was chosen as one fill executive positions." of the ten best-managed companies in the country. Only three companies of the P&G was a client of Deloitte, Plender, ten had been honored in a similar Griffiths & Co. for many years before the survey seven years earlier, and P&G merger of DPG with H&S in 1952 and has was one of them. Dun's Review, asking been a client of the Firm since that of manufacturing soap and candles and rhetorically why P&G is the master year. Working with Mr. Christensen on the all things thereto belonging, and also marketer, quoted P&G P&G engagement in Cincinnati have in buying and selling all sorts of president Howard Morgens: been partner Gene Morgerson, principal goods belonging to said trade of soap Bill Teager, senior accountants Bob Cox boilers and candle makers..." "Anybody can bring a product into the and Greg Bier, and numerous staff market with a lot of money and get a accountants. Scores of H&S and DH&S The articles of agreement provided for share. The question is, can they hold accountants are involved in many other a division of their assets after fifteen it? What is the long-range vitality of parts of the world. years. But business was so good that the product? Like people, all products the founders stayed together and kept have a life cycle. They are born, The busy season on the P&G engagement on growing. By 1859 the Cincinnati receive tender, loving care, and runs from May to August, because its factory had eighty employees and annual develop into lusty growth. But those fiscal year ends June 30. Therefore the sales of $1 million—a large enterprise for that lack vitality become obsolescent P&G heat is turned on after the winter- that time. In 1870 the founders turned and die. We try to market only those spring busy season on most other jobs. control of their company over to two products that possess long-range vitality." But as a result, accountants on the of their sons, but, as a recent P&G P&G engagement have had to adjust to booklet notes with amusement,"not Has this policy paid off? The figures late summer vacations. without first admonishing their successors from the latest annual report tell the that an advertising expenditure of story. P&G sales exceeded the $3 billion Harry Weyrich, now an Executive Office $1,500 in 1870 was excessive'.' mark for the first time during the past partner, recalls his professional fiscal year. Sales moved past $2 billion contacts with the company when he was A critical piece of good fortune came only six years ago and exceeded in the Cincinnati office working on the to the company in 1878, when it was $.1 billion only fifteen years ago. P&G engagement: "When you deal with already making 24 varieties of soap. Earnings last year were about four them, you feel you have had Someone in the factory (his name is times the level of fifteen years ago. your day in court. They listen to you. lost to history) left a batch of white During this fifteen-year period, They are always receptive to what you soap in the blending machine longer earnings per share have grown at an think. You don't always find this than usual, and the revolving blades average rate of 9.4 per cent. in other companies." stirred tiny bubbles into the mass. When the mixture was made into bars What is the of P&G success? The P&G story began 134 years ago when and then sold, it surprised users by Many a management consultant would a shrewd Scotch-Irish chandler named floating. Customers who received the dearly love to find it, then package Alexander Norris persuaded his two accidental batch called for more of and sell it. But the vital element in sons-in-law to go into partnership to "that floating soap "Thereafter the the Procter & Gamble success story is manufacture soap and candles for the company whipped air into the mixture elusive, and probably is a compound of thousands of settlers streaming through and floating soap became a regular P&G several things —inventiveness, hard Cincinnati heading for the South and product. It was not yet called Ivory. work and a long history of advanced West. William Procter, a molder of One Sunday, Harley Procter, son of the scientific inquiry, combined in more candles, and James Gamble, who boiled founding Procter, was inspired in recent years with sound management, soap, signed an agreement "to become church by a passage in Psalms 45:8 consistent merchandising and copartners together in the art & trade referring to the fragrant smell of the

18 Huge hydrolizer storage kettles filled with base soap holdup to 10.5 million pounds of materials that go intolvory, Camay and other brands. Kettles extend down through three floors of Ivorydale building, which was builtin thel880sand intended to last. garments of women from "out of the ivory Delicately balancing a column of palaces." He quickly sold his miniature Ivory soap bars by exerting colleagues the name Ivory for the just the right pressure, inspector white soap that floats. checks them visually before putting themon wrapper line. At Ivorydale PirG In 1882 the younger Procter shipped packs Ivory, Camay, and Safeguard mini samples of Ivory to a number of bars in the wrappers of several chemists, asking each of them for an hotelandmotelchains. impartial analysis. When their findings were put together, it was discovered that Ivory was "99 44/100% pure," only a part of one per cent being made up of so-called impurities. Shortly thereafter two slogans-"It floats" and "99 44/100% pure" —had swept the country.

Shipments of animal fats and vegetable oils to P&G's Ivorydale plant in Cincinnati (which is but one of the company's soap-making facilities) each month is measured in the hundreds of railroad tank cars. This material, basic to the manufacture of soap, is put through a hydrolizing process in a vertical tower 65 feet high, with stainless steel sides four inches thick. The heavy jacket is necessary to contain the steam under very high pressure that is run into the tower from the top at a temperature of 480 degrees Fahrenheit. The fatty acids used in soap making separate from glycerine in the hydrolizer, and after other processes they are run into storage tanks in a form called basic soap — to emerge later purified, mixed with other ingredients, perfumed and ready to be shaped into bars.

Elsewhere at Ivorydale and in its other plants Procter & Gamble workers are

19 making detergents (which fall like snow P&G is not relaxing on its past from spraying devices in large heated successes by any means, as shown by its cylindrical towers); turning out paper capital expenditures-of more than $400 goods such as tissues and towels; million over the past three years. mixing, testing and tasting the Duncan Recently opened or under way are a new Hines line of prepared baking mixes; food products plant in Tennessee, paper roasting green coffee beans to make products plants in California and vacuum and instant coffees; compounding Georgia, a pulp mill in Alberta, household cleaning products and pouring Canada, and a new research and them into boxes and j ars by the millions. development center in Cincinnati. At the pulp and paper products plant near When its many dozens of products go to Mehoopany, Pennsylvania, on the market, Procter & Gamble usually Susquehanna River, P&G invested $10 introduces them with marketing efforts million in an environmental control emphasizing: "NEW — fromProcter& system for treatment of waste water and Gamble." Then after a while, each product materials. And on a national scale the is left to float or to sink on its own, company is laying stress on its under its own brand name, with P&G's responsibility, along with other name de-emphasized. But long before industrial enterprises and public good portion of those who complete the the company's network of 3,000 salesmen agencies, to protect the country's course. Another program, for both men place a new product on the supermarket water and air resources. and women, is designed to train shelves of America, P&G has taken it laboratory technicians. Here again the through a detailed program of laboratory P&G has been recognized for a long company has enjoyed a gratifying success, research, testing and consumer time as having one of the best employee as proved by the number of trainees surveying. In short, the company tries to benefit programs in American industry. who finish the course and qualify for determine just how much consumers The company profit sharing program was employment at P&G. would want — and would buy — a product introduced in 1887, and has been in it proposes to manufacture. continuous operation since that date. Like all modern, growth-minded "Dividend Day" is celebrated in companies, Procter & Gamble is an One source of strength in the company Cincinnati each summer and winter. active recruiter of talent, has been the unusually high calibre of Winter sessions have always featured particularly on the university campuses. its top management. Following William a party or show of some kind, while It seeks intelligent, ambitious men A. and have come: summer celebrations have been given and women from many disciplines for its over to picnics and family outings. research laboratories, offices, sales Richard R. Deupree, who was president At the first celebration in 1887, force —even psychologists for opinion from 1930 to 1948, chairman of the attended by 300 people, President research on its products, and writers board from 1948 to 1959, and now is William Cooper Procter personally to answer more than 100,000 pieces of honorary chairman of the board. distributed $9,027 in dividends, with consumer mail that flow in each year. checks ranging from $14 to $280. In Neil H. McElroy, who was president comparison, Cincinnati employees and Adhering to its policy of promoting from 1948 to 1957 before taking a two- their families in 1971 saw "Holiday on from within, P&G refrains from looking year leave of absence to serve as Ice" at Cincinnati Gardens, with more for accounting talent among the Haskins Secretary of Defense. He returned to than 25,000 people attending the three & Sells auditing staff. But 44 years P&G in 1959 and was elected chairman special performances. Total profit sharing ago, in 1927, it came close to doing so. of the board that year. He is now chairman benefits to P&G employees in the U.S. In the spring of that year, a young of the executive committee of during 1970 reached $29,100,000. accounting major from the University the board of directors. of Illinois was seriously considering Procter & Gamble has entered seriously an attractive job offer from P&G, and Howard J. Morgens, who served as into a program to open up more job he visited Cincinnati to be interviewed. president from 1957 to 1971 and is now opportunities for urban minorities. After careful reflection, however, he chairman of the board, continuing as In Cincinnati it has been running a chose instead to go with Haskins & chief executive of the company. clerical training program for Sells —where, as he looks back on it underqualified high school girls, now, he found his true calling. Edward G. Harness, who is now consisting of an intensive twelve-week president of P&G. course designed to raise their clerical It is interesting to think what might skills to the point where they can get have happened if John W. Queenan, H&S Few organizations in this country have and hold office jobs. P&G furnishes the managing partner from 1956 to 1970, the depth of management experience and instructors, pays the trainees for had accepted that offer in strength at all levels that P&G does. their training time and has hired a Cincinnati so long ago. •

20 Volunteer tasters judge flavor and Hextural properties" of PirG food products in flavor panel room at WintonHillTechnicalCenternear Cincinnati. Shielded from distractions, this panel concentrates on devil's food cake prepared from a Duncan Hines mix.

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