I wasn't surprsied when Procter & Gamble
My time as a "Proctoid"
I was pretty surprised when I did a Google search on "Proctoid" and found only 737 results for P&G employees' favorite term for themselves. When I started at P&G in the 1990s, I was pretty impressed with the associate director who offered me my job. He was dressed in a sharp Brooks Brothers suit and said that I would have a job for life. P&G is one of the few Fortune 500 companies left that promotes from within. It's a true family atmosphere, with many referring to the company as "Uncle Procter."
Fast-forward a few years and I learned the cruel reality of corporate America: It's all about the bottom line. After living through a plant closing and a voluntary separation program, it was pretty clear to me that P&G was going to do whatever it takes -- including job cuts -- to keep profits at a strong level.
Productivity and Procter
OK, so what does my life as a Proctoid have to do with your portfolio? Well, as an investor, you need to be able to trust that your stock's management team will make the right business decisions, even if it hurts.
P&G employees deliver an above-average corporate net income per employee of $80,645. That's compared to key competitors Kimberly-Clark
P&G treats its employees pretty well, with strong base compensation, highly ranked benefits, and a great retirement program that puts the typical corporate 401(k) to shame. Even though people always need diapers and paper towels, Lafley said that rising commodity costs have the potential to put a damper on P&G's profits. While some of this is passed on to the consumer (in my offhand calculations, diaper prices have grown as much as 20% in the last two years), overhead is one area that is "easy" for companies to control.
Proactive versus reactive management
P&G isn't the only company looking to maintain (or cut) overhead costs. Starbucks
In comparison, P&G's stock is about 11% off its 52-week high. Despite the tough economic environment, Procter says that it expects "double-digit core earnings growth" through fiscal 2009. Delivering double-digit toothpaste and soap growth means that Procter must be meticulous about cost control, and P&G has signaled once again that it will proactively manage its business to success.
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