Differences in Leadership Styles Between Procter & Gamble and Colgate Palmolive and Their Relative Effectiveness Term Paper

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Academic and Theoretical Foundations

Brief Histories and Organizational Backgrounds

Procter & Gamble

Procter & Gamble was established in Cincinnati, OH in 1837 by brothers-in-law William Procter, a candle maker and James Gamble, a soap maker, continuing to this day under the name of Procter & Gamble (Procter & Gamble, 2015). It began as a two-man partnership but by 1859, the partnership had 80 employees and annual sales exceeding $1 million, and then steadily grew through research, innovations and army contracts. In 1890, the partnership ended as Procter & Gamble incorporated to raise additional funds for expansion. In 1900, the corporation begins international sales in England and parts of Asia. In 1915, the corporation began manufacturing outside the United States, in Hamilton, Canada. In 1920, the company began using direct sales, with 450 salesmen selling directly to retailers. In 1930, the first non-family member, Richard R. Deupree, is chosen as company president, and the corporation establishes it first overseas subsidiary by purchasing Thomas Hedley & Co. Ltd. Commencing in 1935, the company expands into Asia by: the 1935 acquisition of the Philippine Manufacturing Company; the 1959 expansion into the Middle East; and the 1973 acquisition of Japan's Nippon Sunhome Company. In the 1940s and 1950s, the company expands into South America by building or acquiring manufacturing in Cuba, Mexico and Venezuela. In 1954, the company expands manufacturing into France. The company continues its acquisitions, including but not limited to Charmin Paper Mills in 1957 and Norwich Eaton Pharmaceuticals in 1982. The company also continues its geographic expansion, most notably expanding into Eastern Europe through its acquisition of a detergent manufacturer in Czechoslovakia in 1991, obtaining a hiring license in Saudi Arabia and opening Chinese operations in Guangzhou, Beijing, Shanghai, Chengdu, Tianjin, Dongguan and Nanping by 2013. Today, P&G's manufacturing and marketing is represented by approximately 145 nationalities and its stock is traded on the New York Stock Exchange as PG at $82.89 per share (Yahoo!Finance, 2016). Its corporate board of directors has general oversight per Ohio's General Corporation Law, P&G's Amended Articles of Incorporation and Code of Regulations, and the Board of Directors' By-Laws (Procter & Gamble, 2015).

ii. Colgate-Palmolive

William Colgate & Company was founded in New York City in 1806 by William Colgate as a candle, soap and starch factory, reorganized in 1875 as Colgate & Company. In 1898, B. J. Johnson Company developed the formula for soap made of palm oil and olive oil, called "Palmolive," which became so famous that the company was renamed Palmolive, and then merged with the Missouri-based soap manufacturing Peet Brothers Company. Palmolive-Peet acquired Colgate Company in 1928, eliminated "Peet" from its name in 1958 and became the current Colgate-Palmolive Company (Colgate-Palmolive Company, 2016). In 1930, the company was first listed on the New York Stock Exchange. Before and after its incorporation, the company has expanded through multiple product developments, acquisitions and international subsidiaries, including: Colgate toothpaste and Palmolive soap, predating incorporation; acquisition of Hill's Prescription Diet, Hoyt Laboratories, Softsoap, Murphy Oil Soap, Tom's of Maine and the Mennen Company; development of Ajax cleanser, Irish Spring soap, Protex bar soap, Colgate Plus toothbrush and Colgate Total; acquisition of a French subsidiary for fabric conditioner, a Mexican subsidiary for Caprice hair care, a Chinese joint venture with Hawley & Hazel and expansion into Central Europe and Russia. Today, Colgate-Palmolive concentrates on oral care, personal care, home care and pet nutrition, selling products in 200 countries with annual sales of more than $15 billion (Colgate-Palmolive Company, 2016). The corporation is currently traded on the New York Stock Exchange as CL at $69.91 per share (Yahoo!Finance, 2016). The company's corporate governance is headed by a Board of Directors, with general oversight per New York's General Corporation Law, the company's Amended Articles of Incorporation and Code of Regulations, and the Board of Directors' By-Laws (Colgate-Palmolive Company, 2016).

b. Key products/services, etc.

i. Procter & Gamble

In early 2014, P&G had approximately 165 products, with more than $83 billion in worldwide sales. However, in August 2014, the company announced its decision to drop approximately 100 brands and proceed with 65 brands that comprised approximately 95% of the company's revenue. Those products include: Always, Bold, Bounty, Crest, Charmin, Dawn, Febreze, Gillette, Head & Shoulders, Olay, Old Spice, Oral B, Pampers, Pantene, Swiffer, Tide, Tampax and Vicks (Procter & Gamble, 2015).

ii. Colgate-Palmolive

Colgate-Palmolive concentrates on 4 product areas: oral care, such as toothpastes, toothbrushes and mouthwashes; personal care, such as deodorant, body wash, liquid hand soap, bar soaps and toiletries; home care, such as dishwashing detergent, household cleaner and fabric softener; and pet nutrition, such as Hill's prescription diet science diet and ideal balance cat and dog foods (Colgate-Palmolive Company, 2016).

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c. External Environment

As international major players in the Personal Products Industry, Consumer Products Sector, both companies deal with strong competition from Avon, Estee Lauder, Revlon, Coty, Elizabeth Arden, Inter-Parfums, Inc., Unilever, Bic, Church and Dwight Co., as well as many smaller companies (Investopedia, n.d.). External stressors other than competition include multinational laws, taxation, cultures and political systems.

d. Internal Sociotechnical Systems

i. Managerial

ii. Structural Subsystem iii. Psychosocial and other Critical interfaces.

Part II - Practitioner Research and best practices

Over time, a number of theories of leadership have been proposed, including: Great Man Theory; Trait Theory; Behavioral Theories, such as the Managerial Grid, Theory X and Theory Y; Participative Leadership, particularly Lewin's leadership styles; Situational Leadership; and Transformational Leadership (IAAP, 2009). A brief review of each theory follows.

a. Great Man Theory

The Great Man Theory is a concept that leaders are born rather than made and that great leaders have traits that other people lack. These leaders "rise to the occasion" in difficult times to overcome difficulties and successfully lead (Web Finance, Inc., 2016).

b. Trait Theory

The Trait Theory measures consistency in a leader's behaviors, thoughts and emotions. The stability of his/her patterns over a period of time, their differences from those of other people and the way they influence behavior are all studied to reveal leaders and how their leadership works (Web Finance, Inc., 2016).

c. Behavioral Theories

i. The Managerial Grid

A managerial grid is a tool used to plot a leader's appraisal of a task's importance vs. employees' importance. If the employees' importance ranks higher, the leader is more of a team leader, while a higher task ranking may mean the leader is too dictatorial for the "team" concept (Web Finance, Inc., 2016).

ii. Theory X and Theory Y

Theory X and Theory Y are collections of assumptions leaders have about their employees that often become self-fulfilling prophecies. Theory X assumptions are:

(a) Most people dislike work and will avoid it as much as possible;

(b) Due to their dislike and avoidance of work, people must be pressured, controlled and threatened with penalties to accomplish work; and (c) People choose security, avoid responsibility and have little or no ambition.

Leaders with Theory X assumptions tend to use a restrictive, controlling stick-and-carrot approach toward employees (Web Finance, Inc., 2016).

Theory Y assumptions are:

(a) Most people find physical and intellectual effort natural and find fulfillment in work, depending on the environment;

(b) People are normally motivated, self-controlled, self-directed, creative and resourceful in working to fulfill their and the company's goals;

(c) People either pursue or accept responsibility freely; and (d) Most organizations fail to use people's full potential.

Leaders with Theory Y assumptions trust and empower their employees (Web Finance, Inc., 2016)

d. Participative Leadership (Lewin's leadership styles)

Participative leadership maintains control over final decisions but involves employees in setting goals, solving problems, and building teams (Web Finance, Inc., 2016).

e. Situational Leadership

Situational leadership maintains that an effective leader must be flexible, knowing and using different leadership styles subject to the situation (Web Finance, Inc., 2016).

f. Contingency Theory

The Contingency Theory holds that there is no master theory applicable to all businesses in all situations. In this approach, leaders address problems by determining the relevant issues and then addressing them based on their context and the business environment (Web Finance, Inc., 2016).

g. Transactional Leadership

Transactional Leadership sets clear objectives and goals and uses punishment or reward to obtain employees' compliance with those objectives and goals (Web Finance, Inc., 2016).

h. Transformational Leadership

Transformational Leadership involves determining the needed change(s), creating a vision inspiring employees and obtaining their commitment to bring about the change(s) through their dedicated work (Web Finance, Inc., 2016).

Part III - Practitioner Recommendations

The immediate temptation when faced with all the above leadership styles would be to simply choose one that seems likely, formulate a questionnaire based on that likelihood and use the questionnaire on Procter & Gamble and Colgate-Palmolive management and employees. However, attempting to fit either or both organizations into a predetermined theory could skew the results and lead to false conclusions. Consequently, reviewing practitioner recommendations, one should reduce all the theories to a series of innocuous questions that will reveal the true leadership style(s) used in either or both organizations. There….....

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