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By Kim S. Nash  |  Posted 2002-08-09 Print this article Print

Savings from hot-desks, huddle rooms and other breakaway work spaces help Procter & Gamble in its fight to right sinking profits.

&G's 'Organization 2005'">

P&G's 'Organization 2005'

Job security is a real worry at P&G these days; the company has said it intends to let go more than 17,000 of its 110,000 employees by the end of 2004. Sales for the past few years have only poked along, growing just a few percent per year since 1997. And profits have gotten stuck. The one-time growth company earned $2.9 billion last year—almost exactly its level of earnings six years ago.

The layoffs are part of a $5.6 billion, six-year worldwide turnaround plan started in 1999. The goals of "Organization 2005" are to rearrange business units, sell or shut down weak product lines, cut overhead, and cut spending by $2 billion. Workplace Services will help P&G reach these big targets. For example, the company aims to arrange itself no longer by geography but by product line—Clairol hair care, Pampers diapers, Folgers coffee, Pringles potato chips, and so on. Employees are now beginning to collaborate with colleagues in other parts of the world, and need the technology and facilities to do it. Enter Workplace Services, with routine telecommuting equipment, but also with document management tools, electronic white boards and network-equipped team rooms. Flexible work programs started in early 2000 are still bustling at P&G's Cincinnati headquarters and its main offices in Singapore and Brussels, Belgium.

"Their work style has shifted to virtual work style," says Bell of Gartner. As Workplace Services provided technology and revamped physical space to ease global collaboration, P&G realized it also could save money this way, Bell says. Last year, the company crowed that it had reduced overhead costs for the first time in five years, in part because of the work of Workplace Services.

P&G declined to be interviewed for this article, citing late-stage negotiations to sell most of its information technology function—including Workplace Services—to Affiliated Computer Services, an outsourcer in Dallas. The deal, said to be worth up to $8 billion over 10 years, is another part of P&G's plan to cut costs. It won't be until late this year that "we will have a clearer picture of this next stage of our organizational evolution," says Laurie DeMarco, manager of Workplace Effectiveness at P&G. However, a December report from MIT and Gartner shows that the mandate of Workplace Services includes:

  • Improving employee productivity. Help product developers work more closely with marketers, for example, to invent, make and market new health or food products faster.

  • Significantly cutting investment in physical property—buildings, mainly.

  • Reducing the time and costs to get new employees settled and productive.

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    Senior Writer
    Kim has covered the business of technology for 14 years, doing investigative work and writing about legal issues in the industry, including Microsoft Corp.'s antitrust trial. She has won numerous awards and has a B.S. degree in journalism from Boston University.
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