2014 EMEA EXPATRIATE MANAGEMENT CONFERENCE CONSUMER GOODS, FOOD AND RETAIL BREAKOUT 3-4 APRIL, BUDAPEST, HUNGARY Kate Fitzpatrick, Principal London, UK Agenda What We Will Cover Today • Proctor & Gamble Case Study: Managing International Mobility in a VUCA World • Consumer Goods Industry Future Trends: Impact on Mobility • Q&A MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE April 4, 2014 1 1 Section 1 PROCTOR & GAMBLE CASE STUDY MANAGING INTERNATIONAL MOBILITY IN A VUCA WORLD Leonid Davydov Senior HR Manager Expatriate Compensation & Policy EMEA MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE April 4, 2014 2 Agenda The case study will cover: • P&G (Procter & Gamble) global business and global talent • International Mobility Programme and its evolution • Facing the challenges of 2008-2013 • Key learnings and Q&As MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 3 3 Our Heritage - More than 175 Years of Growth The Company was founded in Cincinnati in 1837 by William Procter and James Gamble, a candle maker and a soap maker who started a small business that has grown into one of the world’s most admired companies and includes brands that have become household names, used and trusted by consumers every day in nearly every part of the world. MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE P&G at a Glance Countries of Operations ~70 Countries Where Our Brands Are Sold 180+ Consumers Served by Our Brands 4.8 billion (Approximate) Financial Highlights NET SALES ($ billions) 13 $84.2 12 $83.7 11 $81.1 10 $77.6 09 $75.3 Fiscal years ended June 30 2013 Net Sales BY BUSINESS SEGMENT 20% 24% 9% 32% 15% Beauty Grooming Health Care Fabric Care and Home Care Baby Care and Family Care *Results exclude net sales in Corporate, fiscal year ended June 30, 2013 2013 Net Sales BY GEOGRAPHIC REGION 15% 10% 39% 18% 18% North America Western Europe CEEMEA Latin America Asia 2013 Net Sales BY MARKET MATURITY 39% 61% Developed Developing Leadership Brands Global Beauty 2013 NET SALES GLOBAL BUSINESS UNITS CATEGORIES LEADERSHIP BRANDS Beauty Care Antiperspirant and Deodorant, Cover Girl, Max Factor, Olay, $ Cosmetics, Personal Cleansing, Old Spice, Safeguard, Secret 20 billion* Skin Care Hair Care and Colour Hair Care, Hair Colour Head & Shoulders, Herbal Essences, Nice ‘n Easy, * This reflects an estimate. Our historical Pantene, Rejoice financial data will be restated to reflect the new structure in fiscal year 2014. Prestige Fragrances, Prestige Skin Care Gucci, Hugo Boss, SK-II Salon Professional Salon Professional Wella Global Baby, Feminine and Family Care 2013 NET SALES GLOBAL BUSINESS UNITS CATEGORIES LEADERSHIP BRANDS $ Baby Care Baby Wipes, Diapers, Pants Luvs, Pampers * Family Care Paper Towels, Tissues, Bounty, Charmin, Puffs 22 billion Toilet Paper * This reflects an estimate. Our historical Feminine Care Feminine Care, Incontinence Always, Naturella, Tampax financial data will be restated to reflect the new structure in fiscal year 2014. Global Fabric and Home Care 2013 NET SALES GLOBAL BUSINESS UNITS CATEGORIES LEADERSHIP BRANDS Fabric Care Bleach and Laundry Additives, Ace, Ariel, Bold, Bounce, Dash, $ Fabric Enhancers, Laundry Downy, Gain, Tide 26 billion* Detergents Home Care Air Care, Dish Care, Cascade, Dawn, Febreze, Surface Care Mr. Clean, Swiffer * This reflects an estimate. Our historical financial data will be restated to reflect the P&G Professional P&G Professional — new structure in fiscal year 2014. Personal Power Batteries Duracell Global Health and Grooming 2013 NET SALES GLOBAL BUSINESS UNITS CATEGORIES LEADERSHIP BRANDS $ Braun and Appliances Beauty Electronics Braun * Oral Care Toothbrush, Toothpaste, Other Oral Crest, Fixodent, Oral-B 17 billion Care * This reflects an estimate. Our historical Personal Health Care Gastrointestinal, Other Personal Care, Prilosec, Vicks financial data will be restated to reflect the Rapid Diagnostics, Respiratory, new structure in fiscal year 2014. Vitamins/Minerals/Supplements Pet Care Pet Care Eukanuba, Iams Shave Care Blades and Razors, Pre- and Post- Fusion, Gillette, Mach3, Shave Products Prestobarba, Venus Worldwide Operations Developed Markets Western Europe Japan North America SALES % OF TOTAL P&G VOLUME % OF TOTAL P&G MARKET DEVELOPMENT ORGANISATION (MDO) North America % % Western Europe 61 55 Japan Worldwide Operations Developing Markets Central & Eastern Europe Middle East Africa Asia Latin America SALES % OF TOTAL P&G VOLUME % OF TOTAL P&G MARKET DEVELOPMENT ORGANISATION (MDO) Asia (excluding Japan) % % Central & Eastern Europe, Middle East & Africa 39 45 Latin America Procter & Gamble Case Study Managing International Mobility in VUCA world INTERNATIONAL MOBILITY PROGRAMME AND ITS EVOLUTION P&G International Mobility Programme Journey from1990s to 2010+ Differentiation of transfer packages • RIM/IM 14 types of transfers Evolution and fine tuning of Policy • Basic Comprehensive Compensation Data • Multiple sources One vendor Technology • Basic processes Integrated solutions Relo & Expat Services Operations • In-house BP Outsourcing Relo Vendor MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE April 4, 2014 18 International Mobility Programme and its Evolution Talent Mobility Drivers • Grow/promote From Within – Recruit from Universities – 95% of Management from within P&G (or acquisitions) • Top Talent / High Potential – Strategic Expat assignments, 3-5 y., Director/GM/VP career path, across sectors/business units/regions • Early Career Development – HQ assignments, 2-3 y., return to home country to bigger jobs • Developing/Emerging Markets Expansion – China, India, Africa, Russia, Latin America – project assignments (short term expats, extended business trips), startups, critical skills and knowledge transfer MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE April 4, 2014 19 International Mobility Programme and its Evolution Talent Mobility Drivers • Co-location with key global customers – e.g. METRO, CARREFOUR – rotational assignments focused on capability building • Evolving Geographic Footprint – New regional/global centers (e.g., Geneva, Singapore) and hubs – temporary assignments to foster collaboration/organisation – Shifting manufacturing and R&D capabilities – permanent moves with localisation • Talent Retention (career/life planning & flexibility) – Personal request temporary transfers (dual careers) – Personally initiated localisations MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE April 4, 2014 20 P&G Globally Mobile Talent 3,000+ Temporary Transfers/Assignments Like-Location Package Dual Career 1% 7% Net Salary Package 5% Temp Training 1% Personal Request 1% Early Career EXPAT 27% 58% MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 21 21 P&G Globally Mobile Talent 600+ Permanent Transfers/Localisations Personal Request 23% Local to Local 50% Expat to Local 27% MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 22 22 Procter & Gamble Case Study Managing International Mobility in VUCA world FACING THE CHALLENGES OF 2008-2013 MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE Facing the challenges of 2008-2013 P&G business in VUCA world • VOLATILE – Commodities prices – Currency ex rates – Political/social instability • UNCERTAIN – Economic recession (US, Western Europe) – Hard-to-predict emerging markets • COMPLEX – Local/regional laws and regulations – Product customisation requirements – Increasing organisation complexity • AMBIGUOUS – New trends – consumers, customers & distributor channels, online vs offline – Competition, traditional and new (private labels) MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 24 24 Facing the challenges of 2008-2013 P&G business in UCA world • Challenge for HR – Innovation – Productivity – Workforce flexibility – Engagement • Challenge for Talent and Global Mobility Management – Right people, assigned to a right job, at a right time, at a right cost – Balance of short/mid term needs for Talent with long term career development – Drive out unnecessary costs of expatriation/relocation, reinvest in key areas with maximum ROI – Deliver Expatriate/Relocation programme with excellence, maximise employees engagement MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 25 25 Facing the challenges of 2008-2013 Cost Saving Opportunities • One-time Relocation Support – Top 10 COSTS TO BE REDUCED/OPTIMISED % of total Cost Saving Opportunity 1 HOUSEHOLD GOODS MOVE 26% limited 2 TEMPORARY LIVING (TEMP ACCOMODATION, RENTAL CAR) 17% yes 3 DESTINATION SERVICES 7% limited 4 IMMIGRATION SERVICES/COSTS 7% no 5 MISCELLANEOUS RELO ALLOWANCE 6% yes 6 CAR AND TRANSPORTATION SUPPORT 6% limited 7 LANGUAGE TRAINING 5% yes 8 EN-ROUTE TRIP 5% no 9 HOME FINDING 4% no 10 FAMILY RELO RESOURCE PROGRAMME (SPOUSAL ASSISTANCE) 2% yes MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 26 26 Facing the challenges of 2008-2013 Cost Saving Opportunities • Ongoing Compensation & Support -Top 10 COSTS TO BE REDUCED/OPTIMISED % of total Cost Saving Opportunity 1 HOUSING ALLOWANCE 38% limited 2 COLA 19% limited 3 SUPPLEMENTAL ALLOWANCE 7% limited 4 INTERNATIONAL HEALTHCARE INSURANCE 7% no 5 UTILITY COST 6% no 6 LOCATION (HARDSHIP) PREMIUM ALLOWANCE 5% limited 7 DUPLICATE HOUSING 4% limited 8 HOME LEAVE 3% no 9 BELOW HOUSING MAXIMUM INCENTIVE 3% limited 10 HOST DIFFERENTIAL ALLOWANCE 2% limited MERCER 2014 EXPATRIATE MANAGEMENT CONFERENCE 27 27 Facing the challenges of 2008-2013 Key Interventions • Expatriate Compensation – Tight control of host housing maximums (esp. in regional centers e.g. Dubai, Singapore, Geneva) – Host Housing Norms adjusted/increased (more realistic) – Caps on certain expatriate allowances, e.g. hardship