A.G. Lafley, president and CEO of Procter & Gamble, attends a session of the World Economic Forum in New York, February 2, 2002.
A.G. Lafley, president and CEO of Procter & Gamble, attends a session of the World Economic Forum in New York, February 2, 2002. - 
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Proctor and Gamble has a new CEO...sort of. The world’s largest consumer products company is pulling A.G. Lafley out of retirement to take the reins again.

Last month retailer J.C. Penney made the same move. So what’s up with that -- when big companies put old leaders in back in charge -- and what does it say about their pipeline of future talent?

J.C. Penney fired its CEO and re-hired his predecessor after big financial losses and a steep drop in sales. Tough to find someone new who’s willing to take that on. Bob McDonald is leaving Procter and Gamble amid complaints that he wasn’t adapting P&G fast enough to a more competitive global market.

“I think in both those cases there clearly were pressures from the outside,” says David Larcker, co-director of the Center for Leadership Research and Development at Stanford.  Larcker says putting the old guard back in charge can help stabilize a company. “The board says here’s people we know, they know the company, we’ve felt comfortable with them before. Buys them a little time to figure out what they want to do next.”

Including reassess the company’s talent pipeline. McDonald had been with P&G for 33 years. He worked his way up to chief operating officer before taking over as CEO four years ago, so the shake-up there came as something of a surprise, says Mike Tobin, a partner at Vantage Leadership Consulting.

“P&G has a wonderful talent management processes and is recognized as one of the top 10 leadership development firms in the world.  And so, you know, they stumbled, that’s all,” Tobin explains.

So what does it say about other wannabe CEOs at the company that Procter and Gamble pulled Lafley out of retirement to take over?

“The challenge that most organizations have in identifying a leader is finding the right person at the right time,” says Steve Meyer, general manager of the Corporate Executive Board Company. “Sometimes that’ll be a candidate who’s within their own walls and sometimes not.”  

P&G hasn’t said whether Lafley’s tenure is temporary, but the head of its board says he’ll be expected to manage the ongoing succession process, as well as boost the company’s performance.