• Ad Age, Friday, February 22, 2008 11:30 AM

Most of Procter & Gamble brands will be limited to "zero overhead growth" (or ZOG) where employment won't rise regardless of sales, and its lowest-priority businesses--including an unspecified number of brands P&G will look to divest--will aim for "negative overhead growth" (NOG), according to chairman-CEO A.G. Lafley.

The highest-priority businesses--such as China, Central and Eastern Europe, along with beauty care--will be limited to "half overhead growth" (HOG), where overhead costs can rise no more than half as fast as sales. The new austerity doesn't mean P&G will stop hiring, but it does mean it will "create additional attrition" of more senior employees, as CFO Clayton Daley puts it. While P&G will continue to hire entry-level marketers into its associate brand manager ranks, it may hire fewer than before. No layoffs are planned.

P&G's belt tightening is another testament to the legacy of former Gillette chairman-CEO Jim Kilts, who deployed ZOG and NOG at Gillette prior to its acquisition by P&G in 2005, though HOG is a kinder, gentler P&G formulation. ZOG and NOG has freed funds for a tripling of ad spending by Gilette in the past three years.

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