The company confirmed that Lafley will now take on the role of full time chairman from July 1, while McDonald has also been appointed to the board of directors.
Jim McNerney, presiding director of P&G’s board, described McDonald as “the most broadly and globally experienced CEO in P&G history”.
Strategic and systematic approach
Lafley added to the comments by stating: “He has a strong and consistent track record of business results and has been an integral member of my leadership team. He thinks strategically and operates systematically.”
The appointment of McDonald, marks the end of nine years of leadership under Lafley that has seen the company’s organic sales grow by an average of 5 percent a year and core earnings-per-share grow by 12 percent a year.
A Wall Street Journal article published on Monday said that McDonald would take on the position of CEO, a claim that P&G officials refused to deny or confirm.
McDonald has global executive experience
McDonald currently holds the position of COO at the company, where he has spent the last 29 years. He was appointed an officer in 2000, and has served as vice president of global operations as well as holding several key posts in the Asia Pacific region.
Industry experts had clocked McDonald as an obvious candidate to succeed Lafley because of his tough stance on financial matters and the fact that he has held such a diverse range of top jobs at the company.
Likewise, he is also credited as being a ‘co-architect’, working in unison with Lafley towards the company’s successful expansion and increased profitability.
Arnold's decision to retire made competition easier
The race for the position became less heated in March of this year, when Susan Arnold, head of the company’s global business units, made a surprise decision to announce her retirement.
Investors will be keeping a close eye on the appointment, hoping that the new CEO can help guide the company out of the tough times it has been experiencing since the advent of the economic downturn last year.
Although Lafley has been credited as a highly competent CEO, the company’s last two quarterly results have been hit hard by tough retail conditions in the North American market and the strength of the US dollar.
Recent results buckle under economic pressure
For its most recent quarter, ending 31 March, sales dropped to $18.42bn, from $18.9bn a year earlier, although the company pointed out that organic sales were up one percent, reflecting a six percent positive impact from pricing and mix, helping to offset the 5 percent fall in sales volumes.
P&G expects sales growth to hover around zero in the coming fiscal year as its prediction is in the range of up 1 percent to down 2 percent.
The company anticipates organic sales growth of 1 to 3 percent driven mainly by market share growth.