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Mr. Clean
John Pepper used to run Procter & Gamble. Now he’s revamping Yale’s administration. Can Fortune 500 culture work in the Ivy League?
by Richard Conniff '73
March/April 2005

In a meeting room in an office building on Whitney Avenue, 16 people, half union members, half management, sit at a ring of tables working to create a new era in the messy household business of making Yale University run. Despite a rich history of bitterly combative labor relations, the mood is a giddy mix of hope and anxiety.

When a union member notes that an in-house publication, Working At Yale, has seldom acknowledged that such a thing as a union exists, an administrator promptly invites the unions to nominate a regular editorial contributor.

When they discuss the mandate in the new contract to develop “best practices” throughout the university, union members do not dwell on the likelihood that finding smarter ways of doing business may eliminate some jobs. “We’re not going to back off from words like ‘improved productivity’ or ‘improved efficiency,’” Bob Proto, president of Local 35, declares with evident enthusiasm. “We’re committed to this and we shouldn’t be afraid to come up with things that will improve the way we work.”

Even when they come to sticking points—the large number of furloughed workers in the interim employment pool and the troubling reluctance of some faculty researchers to hire them—they are careful to focus on finding solutions together. Under the terms of the university’s current labor contract, which runs into 2010, the two sides have an unusually long opportunity to heal their relationship, starting with this group. Their stated mission is to develop “innovative initiatives” in the ways people work together at Yale, and they share a dread of sliding back into finger pointing and other divisive habits. “Shame on us, all of us, for having put Yale in this position,” one of them has declared, in an almost Dickensian outburst, shortly before the meeting.

But wait. Could this be Yale we’re talking about? Yale University? Where raucous strikes (’68, ’71, ’74, ’77, ’84, ’96, ’03) and maladroit management have become almost as tenacious a tradition as Handsome Dan, the Yale bulldog?

Something is improbably right with this picture.

On one side of the room, between an account assistant and a vice president, sits a slight, unprepossessing man, his head canted to one side, always listening, and also often pushing to make things happen better, smarter, sooner. John Pepper, who graduated from Yale in 1960 with a degree in history, is midway into one of the stranger odysseys in the annals of modern management. Apart from a tour in the Navy, Pepper has spent his entire career at Procter & Gamble, one of the 30 largest corporations in the world. He has served as president, CEO, and chairman there, leading more than 100,000 employees in dozens of countries. He is also a corporate director at companies including Motorola, where he helped hand-pick the new CEO. And until recently he was the senior fellow on the Yale Corporation, effectively the university’s top non-executive officer.

But in January 2004, at the instigation of Yale president Richard Levin, Pepper went back into the ranks as a mere vice president, in charge of Yale’s finance and administration. It’s a job that involves overseeing just 1,800 employees (in finance, administration, facilities, human resources, auditing, procurement, and business services improvement) and a university budget roughly equal to what P&G spends on research and development alone. Moreover, Pepper took the job in the face of a projected $30 million deficit in the 2004-05 operating budget, and in full knowledge of Yale’s colorful history of internal squabbling. He gave himself just two years to bring modern professional standards to Yale’s troubled administrative culture and turn it into “the finest support organization for the best university in the world.”

For Pepper, who is 66, this odyssey is unlikely enough in personal terms. It entails long stretches away from his home and family in Cincinnati, 12-hour workdays (weekends often included) at drastically reduced pay, and a willingness to befriend union members who have at times stood outside his door chanting his name and protesting Corporation policies.

“In no way is this enhancing his lifestyle,” says Jeffrey Sonnenfeld, a School of Management professor. “He is one of the very few people who didn’t come to Yale for the added prestige.” Sonnenfeld cannot name another top corporate leader who has stepped back in rank in the “much smaller sandbox” of a university; the closest he gets is a former head of McKinsey & Co., the corporate consultants, who served until recently as treasurer at Harvard but not as a full-time employee. Sonnenfeld introduces Pepper to an audience of Yale employees as a “revered” corporate leader. “Don’t applaud,” he jokes, “or he’ll think we’re sucking up.”

What Pepper is doing seems equally unlikely on an institutional level. Procter & Gamble, which manufactures Tide, Crest, Ivory, Pampers, and other household brands, is among the most admired and intensely competitive companies in the world. People who work there—often, like Pepper, for their entire careers—call themselves “Proctoids” and proudly subscribe to a scrubbed-clean, buttoned-down culture with a paternalistic reputation for nurturing individuals but discouraging individuality. One Yale professor has described the company as “the IBM of diapers.”

Could any institution be less like Yale? More to the point, could Procter & Gamble teach anything a high-minded, not to say snooty, institution like Yale would be willing to learn? Would the Yale community accept a business leader who refers to eminent faculty, students, and fellow staffers as “customers,” whose favorite word seems to be “delight” (as in “delight our customers”), and who quotes, of all people, Sam Walton (some sort of merchant; no relation to Izaak)?

The announcement in December 2003 that P&G was coming to help Yale straighten its house caused a cloud of dread to sweep over the campus. Employees who had spent their careers avoiding the corporate life drew back into their doorways and trembled. A year or so later, they are still crawling out into the light, blinking and bewildered to discover that John Pepper may be just what they wanted all along.

In a handsome office in the nether reaches of “the field” (an employee term for Yale schools and departments—as opposed to the vaguely Kremlinesque “central,” meaning central administration), Louisa Cunningham, finance director at the Yale Art Gallery, works at a desk neatly stacked with budgets and memos. There’s a book nearby about the semiotics of ownership, a reminder that she has not abandoned old intellectual pursuits. She holds out a little blue wallet card with the cover line, "Saving Time, Saving Money, Working Smarter, Enjoying It More … FOR A STRONGER YALE." It’s a John Pepper handout for managerial staff, describing “Our Values” on one page, and “Our Mission” on the other.

“When I was given this,” she admits, “my stomach turned over, because it looked so corporate and it’s such a corporate idea. Early on, they were talking about ‘the customer.’” She shudders faintly.

Then, with her reading glasses down low on her nose, she studies the wallet card. “‘We are open and honest.’ Well, that’s great, because I don’t think that’s been true with some . ‘We embrace change.’ Well, I’m not sure how much we’ve embraced it; we’re an institution with tenure. ‘We seek excellence.’” Her voice grows reflective now. “Good to be reminded of that. ‘We value people and recognize the contribution of every individual.’ I don’t think I’ve heard anything like that in 25 years at Yale. Not that simply, and to the point.”

She turns to the other side, and by now a note of wonder has crept into the literary analysis: “Just the nuance: ‘We encourage the women and men of Finance and Administration to develop and operate as empowered leaders.’ Who took the time to put women first? That’s nice. There are a lot of us.”

She is impressed, she says, that John Pepper “is a man who listens.” She is delighted, even, by all the good ideas he is rolling out. “I like that he is the kind of person who fixes things quickly.” She wonders if he can fix an entire university. Yale is a large and complicated place, a culture of islands and castles, all of them set in their individual ways, and some of them fiercely defended. Still, she admits for the first time in years to “a real feeling of hope.”

One day early last year, when he had been on the job little more than a month, Pepper got into an early-morning discussion about a proposal to outsource maintenance of the Yale golf course. It made sense on paper. The course, part of a forested 750-acre parcel on the outskirts of New Haven, had become an embarrassment. Golfweek had described it in a headline as “a landmark gone askew.” Agronomic conditions were “just short of atrocious,” according to a Golfweek columnist, and the challenge of fixing the course was complicated by “a nightmare scenario of a demanding union that grieves almost every minor transgression to the point of absurdity.”

Outsourcing the work would mean switching from union employees earning $20 an hour plus benefits to a top golf-management company where workers earn half as much. Not only would conditions on the course improve, but at a potential annual savings of about $300,000. Almost any other finance officer would have grabbed at the opportunity. But first Pepper wanted to know: “Is this the right thing to do?” (A mantra at Procter & Gamble.) And then: “Have we talked to the union?”

Next day, Pepper was standing in front of a group of union leaders, describing the outsourcing proposal. (“If this is a new beginning, I don’t like it,” thought Pete Gagliardi, a 40-year-old shop steward who has been a gardener at the course for 15 years.) Pepper told them he didn’t want to outsource the work. His mission wasn’t just to save money but “to build a climate around this place that will lend itself to improved productivity and customer service.” He couldn’t do that if everybody thought their jobs were about to disappear to the lowest bidder.

Gagliardi and others argued that problems at the golf course had to do with mismanagement and unsuitable equipment at least as much as with union rules: Nobody listened to workers. Nobody treated them as a resource. And they were beating the greens to death with heavy triplex mowers, when doing the job right required lighter walk-behind mowers. Pepper asked them for a list of the equipment they needed. Then he offered to hold off on outsourcing for a year to see if labor and management could work together to achieve comparable results with the university’s own employees.

“That was a good meeting,” union leader Bob Proto told Gagliardi afterward. The threat of outsourcing was undoubtedly real. The new golf course superintendent, Scott Ramsay, had made a career “de-unionizing” college golf courses. And under the terms of the university’s previous labor contract, Yale had begun outsourcing some routine custodial work in campus buildings. The unions were grappling with the idea that they might not share in the university’s rapid growth. (“I’m in a business that represents workers,” Proto said later, “and it is smart to want your bargaining unit to be productive, effective, and efficient, and to feel pride in the work they do. The reward, the added payback for us, is that we keep the work here in our bargaining unit.”)

Labor and management at the golf course quickly met, along with athletics director Tom Beckett. The number 23 went up on a blackboard. Ramsay figured that in season he needed that many “pairs of boots on the ground” to run the place right, instead of the nine union workers currently doing the job. But the university wasn’t prepared to create any new full-time positions, and the union didn’t want to relax work rules limiting seasonal help. “We didn’t want to give them a little,” says Gagliardi, “and have them see that as a ticket to take as much as they could.”

The meeting turned ugly, in the venerable Yale tradition, with both sides rehearsing decades of mutual recrimination. It wasn’t until the third meeting that things began to change. The threat of outsourcing concentrated peoples' minds. Pepper wasn’t at the meetings, but his quiet example began to infect the group. The mere fact that “a vice president would listen to rank-and-file members,” says Gagliardi, was something new at Yale. Beckett was also listening. Ramsay, too, had turned out better than workers expected. “He respects us,” one of them told Pepper, “and he knows how to grow grass.” They began to develop what Gagliardi calls “a feeling of inclusion and trust” sufficient to talk about changes they could make together.

In the end, the union agreed to let student workers and idled dining hall staff handle much of the routine maintenance in summer, freeing them up to do the more specialized work. The university agreed to involve workers in decisions about how to use the temporary help and also how to maintain the course. (In fact, this sort of collaboration is now mandatory throughout the university. Under the terms of the October 2003 contract, both labor and management are obliged to work together in “best practice” committees seeking ways to “substantially increase productivity, efficiency and satisfaction .”)

Soon after, Pepper called to say Yale would spend about $250,000 to buy the entire list of new equipment workers at the golf course and the Yale Bowl had said they needed. Word spread in the workforce that there was somebody at the top who not only listened, but also delivered.

Golfers began to see changes in the course. In September, Golfweek moved Yale back up to second place in the nation on its list of college golf courses. When the columnist who had called the course “atrocious” went back to play there, conditions were “fantastic,” he says now. It showed in the details: “The sand in the traps was raked by somebody who cared. You could tell.”

Standing in front of a town hall-style meeting in the Hall of Graduate Studies, Pepper does not look like a titan of industry, or a managerial miracle worker. He could pass for a college professor. He wears glasses, shirtsleeves, and a tie. He is not a particularly dynamic speaker, just open and affable, stooping a little, smiling a lot, as he lays out his ambitious plans. He seems to know many people in the room by name and they seem in turn to resonate with him. He manages, if such a thing is possible, to be charismatically modest.

Pepper’s approach to achieving rapid cultural change at Yale—changing “the smell of the place,” as he puts it—is a curious blend of the ingenuous and the artful. He is boyishly open about the testimonials he expects Yale to earn: “From professors, ‘I never thought I would get this level of support.’ From employees, ‘I’m a lot happier, I get a lot more done, people listen to me.’” From other universities, “I’ve got to get over to Yale to see how they’re doing this.”

The art is in his strategy for racking up quick fixes to show demoralized employees that they can make the Yale experience better for everyone, and often save money at the same time. To build “buy-in,” he makes a point at his frequent town-hall meetings of celebrating the golf course and other small victories achieved by Yale employees over the past year.

For instance, shuttle buses used to take 40 minutes to travel the central campus. But analysis showed the buses were spending 25 percent of their time in a neighborhood where they picked up just one percent of riders. The revised route now takes 30 minutes, with a maximum ten-minute waiting time between buses. Ridership rose 30 percent in the first month alone.

Another quick fix addressed the almost comically misguided practice of different departments having separate contracts for pest control, sometimes with the same company and for the same building. “The dining halls would call the company in and drive the mice and roaches into the custodial side,” says John Bollier, associate vice president for facilities, “and custodial would call the company and drive them back.”

“When the issue came up several years ago, nobody cared,” says Robert Young, the head of custodial. “I mentioned it again a few months ago, and it’s not being talked about—it’s done. What John has brought is a sense of urgency. Things matter now.”

Instead of leaving people to bicker over our vermin versus yours, the new pest control contract covers the entire campus. The savings of about $50,000 a year is trivial in the $1.74 billion university budget. But Pepper’s staff also combined 1,500 cell phone contracts into a single university-wide contract and saved $385,000. They knocked $330,000 off long-distance rates. They consolidated elevator maintenance contracts to save $100,000. Sooner or later, as they say, it starts to add up to real money. By centralizing such purchases and by using new reverse-auction software to drive down bids, as Procter & Gamble would do, procurement boss John Mayes says Yale can cut purchasing costs by $25 million to $40 million a year within three years. In an early test of the reverse-auction process, the university beat down the cost of lightbulbs and electrical switches alone by more than $100,000.

And if small fixes are possible, surely larger ones will follow? Anyone who talks with Yale employees learns first that they love the place, and quickly thereafter that they have been living for years in a busted culture. It wouldn’t be too surprising to hear this from union employees; their complaints have been the focus for decades of strikes, student protests, grandstanding by political candidates, mass arrests, faculty debates over whether to cross picket lines or move classes off campus, and embarrassing national headlines. (As a sophomore in 1971, this writer was arrested in a union protest. As a freshman in 2003, this writer’s son had union protesters outside his window every morning at 7 chanting, “Wake up!”) But the talk of a busted culture comes at least equally from supervisors. Words like “apprehension” and “malaise” turn up in every conversation.

Partly the cultural problem is a byproduct of the woolly, unstreamlined nature of great universities. At times, Yale feels less like a single institution and more like a loose confederation of 200 or so reluctant duchies. Individual schools and departments run by highly intelligent people like to go their own way, with an acute focus on teaching and research. Getting all affected parties to achieve consensus on a new building or policy can be maddeningly cumbersome. Meanwhile, routine business decisions tend to just happen. Until four years ago, Yale did not even offer a real orientation process to help new employees find their way in this sprawling university culture. On arriving at Yale, says one manager, “I was told where my office was. And I had to find it.”

When things went wrong in the resulting confusion, people often blamed one another. Alice Oliver, director of finance and administration at the graduate school, describes the difficult Y2K shift to a new computer system. Every expense suddenly required something called a PTAEO number, 30 digits long. Oliver’s unit had 400 PTAEO numbers, “and if you didn’t put in the right number, or if you didn’t put it in the right place, or if somebody reversed two digits, or if the number had expired, then the whole thing bounced.” Checks failed to go out and anger echoed down the hallways.

“Nobody ever went to the deans or the provost and said, 'Give these people a break.' Nobody from central ever said, 'They can’t do their work because they don’t have the time or the training.' In fact, they did the opposite. They said, 'These people just won’t change.' It got to be that, inside Yale, having Yale experience was a liability. Nobody wanted to hire these old, tired people who wouldn’t change.”

 How long did what she calls “this dark period” last?

“Till John Pepper got here,” she says.

Then she adds, “I don’t think people needed to change. What needed to change was people’s perception of how their university viewed them.”

The other part of the cultural problem, seldom talked about out loud, is the sense among many non-faculty staff at Yale that they inhabit the wrong end of a caste system. Another senior manager starts out—typically—talking about the pleasure of working with the best faculty and the brightest students in the world. But then she adds that faculty often “feel they can do what they want because they won the Nobel Prize, or they’re the great cancer researcher.” So they pay little attention to the expectations of the university around them, or they treat those expectations mainly as an impediment. Misunderstandings often ensue: an assistant asks for a receipt on an expense report, knowing the reimbursement won’t go through promptly without it, and the faculty member says, “Why are you questioning my integrity?” Yale is an easy place to feel a slight and let it harden into a grudge, and it is human nature to pass these ill feelings down the hierarchy. Staffers sometimes end up, the senior manager says, feeling like “peons who make things work for these exalted groups.” A study commissioned by the university in 2002 reached the same stark conclusion: “Those not directly involved in intellectual or pedagogical pursuits feel consigned to an underclass.”

A cultural turnaround is clearly what Yale president Rick Levin is looking for. “The point about John Pepper,” he says, “is not the short-run savings, but the long-run transformation of the whole non-academic side of the university. How do we manage the university support mechanism? How do we transform it so that it has aspirations like the rest of the place? We strive to be the best in the world in quality of research, teaching, faculty, students. Why not have aspirations for managing the university that are at the same level?”

Pepper manages to seem undaunted by the challenge. Administrative staff will start to get more respect, he suggests, as faculty wake up and notice things improving all around them. The improvements will come from giving staff the tools and training to do their jobs right and from paying attention to their ideas about better ways to work. People react to results, says Pepper. “When they see custodial support being more responsive to needs in one of the colleges, when they see that purchasing has become much simpler, they will react in a way that says, ‘These people know what they’re doing.’ I mean, it’ll be that simple.” He laughs. “It’s gonna be, ‘These folks, they’re professionals.’”

For instance, the university will soon launch a better travel website, enabling employees to compare all available flights and fares on one screen. It has switched to a single credit card, to consolidate expense billing, and it is developing web-based expense reporting to minimize the need for paper receipts. The idea (in addition to cutting travel costs by $2 million a year) is to minimize the tedious focus on individual transactions and free faculty and staff to do more creative or strategic work.

A few administrators worry about changing so much so fast. Every unit at Yale is already working flat out at its core mission, says one department head, and yet also feeling “pressure to reduce staff and at the same time increase the rate of change. Things happen so quickly that we bypass that moment of reflection and jump into the action mode.” But he also acknowledges that the changes so far look good.

Indeed, Pepper somehow wins support and even affection from his likeliest critics. In the basement kitchen at Berkeley College, Mike Schoen is finishing up a tray of baked apple slices. Schoen has been a chef at Yale for 26 years and served on Local 35’s team negotiating the current contract. He talks about “the crust” managers sometimes bring to the relationship with workers, and he sums up the recent history of labor relations at Yale in a phrase: “If you treat adults like children, they’re going to act like children.” But Pepper, he says, “is a perfect model of management listening to workers,” who has at times even shown up in the kitchen on a Saturday morning to say hello and show the place off to friends. “I don’t want to knock his predecessor,” says Schoen, “but I never saw him in the kitchen.” The staff at Berkeley was so taken with Pepper that they created a dish for him, “Sgt. Pepper’s Pierogies,” and made it a regular item on the menu. It’s characteristic of Pepper that he knows not just who cooked the dish for him, but also where the pierogies come from.

“Wozniak’s on Grand,” he says, and it’s as if they were old friends.

Trying to explain the John Pepper effect, people resort to language not often used about ordinary living mortals, and particularly not about former CEOs. “When you talk to him,” says the graduate school’s Oliver, “there’s no .” She presses her lips against her teeth for lack of the right word, and passes the spread fingers of one hand back and forth in front of her face. “What’s that, like a veil? There’s no secret agenda. He’s not hiding anything. I trusted him immediately.”

“He does not have a visible ego,” says Wolfgang Berndt, a long-time P&G colleague in Austria, now retired. “He doesn’t feel slighted. If something happens that another person would react to with anger, or by thinking, 'I’m going to get even,' he doesn’t. He stays totally focused on the issue.” It gives him, says Berndt, a remarkable ability to overcome barriers and disarm antagonists.

In the 1990s, for instance, People for the Ethical Treatment of Animals was campaigning against animal testing at Procter & Gamble. The group distributed leaflets to Pepper’s suburban Cincinnati neighbors describing him as “Mr. Mean.” Twice protesters hit him in the face with a pie at public events. The group’s leader, Ingrid Newkirk, had made a reputation as one of the less reasonable people in modern American life. But Newkirk recalls now that Pepper “extended himself nicely by calling me.” He was “upset” and told her how difficult it was to be targeted so personally. But he also initiated a dialogue between protesters and P&G’s vice president of research, she says, “that continues to this day, that has its ups and downs, disagreements and agreements, but that has resulted in some major changes and reduction in the number of animals used by the company.” The dialogue still involves protests, but no pies.

Says Berndt: “A lot of people at the top crash because they lose touch with reality. John does not make it difficult for people to disagree with him or give him bad news. There’s never a witch hunt if something goes wrong. You pick yourself up and you learn how you could have done it differently.” He stops to think about Pepper. Words seem to fail him for a moment.

Then he says, without a hint of embarrassment, “There is a saint-like quality about him.”

Pepper grew up in Pottsville, Pennsylvania, in a Catholic family of moderate means. His mother, a piano teacher and performer, believed ardently in education, and midway through high school she took him out of the parochial school system and sent him away to Portsmouth Priory, a Catholic prep school in Rhode Island. “I never would have gotten into Yale if she hadn’t done that,” says Pepper. A math teacher there, Father Andrew, “conveyed extraordinary expectations of what I should be able to achieve, in a very warm and tough way. One time, he wouldn’t let me go home for Thanksgiving. I was number one in my class, but he said, 'You’re not doing well enough. You should be doing much better.' He wanted me to work on some paper. It made an enormous impression on me. His belief.”

Pepper came to Yale on a Navy scholarship and with a predilection for doing the right thing. His classmates at the Daily News, where he became advertising manager, later joked that he wanted to publish “an eight-page supplement on the Moral Qualities of News advertisers.” A happy encounter with a class taught by Howard Lamar on the American West, combined with a daunting experience in freshman physics, persuaded Pepper not to major in engineering. Another professor, David Potter, taught him historical analysis, and Pepper spent two years working on a 200-page senior thesis about slavery in Texas.

Pepper, who has remained an avid history reader, dismisses the paper now as “bloodless” and “devoid of any recognition of the human impact of slavery.” But it was an early glimpse into experiences beyond his own all-white background. Later, the NAACP Legal Defense Fund would single him out as a CEO for his commitment to racial and gender diversity. He also became a driving force behind the National Underground Railroad Freedom Center, which recently opened in Cincinnati.

At Procter & Gamble, Pepper made a reputation as the embodiment of company values. Union leaders at Yale interpreted this at first to mean a regimen of cost-cutting, outsourcing, and layoffs. Their fears seemed to be confirmed when, soon after his arrival in New Haven, Yale began a planned across-the-board cutback to reduce the budget deficit; 220 positions were eliminated and almost 80 workers laid off. The unions protested outside his office. “This falls right in line,” one leader warned, “with the history of John Pepper as the CEO of Procter & Gamble.”

In fact, Pepper had exactly the opposite reputation at P&G, where workers respected him for his decency, consensus-building, and concern for their well-being. He was if anything “too nice,” some critics said, and in the early 1990s, the company bypassed Pepper to choose as CEO an executive with a fiercer reputation. A restructuring followed in which 13,000 jobs disappeared. At a company meeting, the CEO got polite applause from the crowd of 15,000 employees. Pepper got a standing ovation. “It was embarrassing,” a colleague says now. But he smiles fondly at the memory.

When Pepper became CEO in 1995, the job losses continued, but at a lower rate. Where his predecessor had boasted about cutting down “deadwood,” Pepper went out of his way to make the process as painless as possible, even when it involved an inefficient plant in a location as out-of-sight-out-of-mind as Novomoskovsk in Russia. His retirement in 1998 marked a return to hard times, with the new CEO slashing 15,000 jobs and leaving the company in disarray. The P&G board sacked him after just 18 months and called Pepper back as chairman, to rally the dispirited workforce.

Asked why P&G workers repeatedly gave Pepper standing ovations, the colleague says, “Because his principles were so fantastic. Everything he did was absolutely principle-based.” In mid-2001, for instance, executives discovered that company spies had gone beyond the bounds of normal competitive intelligence-gathering, by dumpster-diving for confidential information at rival Unilever. Pepper fired the three executives involved. Then he revealed the episode to Unilever, an act Fortune magazine described as “almost unheard of in corporate America.” At the time, P&G was deeply unfashionable among stock analysts, and it had lost $85 billion in market value. But Pepper agreed to pay Unilever $10 million in compensation and to refrain from using any of the illicitly acquired information. The company was honored in a Fortune “Best & Worst of 2001” article for its candor. P&G has excelled since then under current CEO A. G. Lafley.

If there is such a thing as “the smell of the place” about an institution as varied as Yale, then there are signs that the smell is changing. People who would once have blanched at comparing the place with P&G now sometimes make the comparison to suggest ways Yale could be doing better. P&G, for instance, has a greenhouse gas emissions goal. Yale doesn’t, though it recently developed a working scorecard on energy use so it can say for the first time whether it’s doing better from one period to the next. P&G fills about 90 percent of jobs from inside the company, versus just a third of jobs at Yale. Human Resources director Rob Schwartz has now set a goal that by 2007 to 2009, the university will increase the rate of internal hiring to two-thirds. (“We have to start now,” Pepper gently reminds him.) At P&G, finally, minority groups hold 19 percent of managerial jobs; at Yale it’s just 12 percent, an issue Pepper has on his list.

The question often asked around Yale now is: what happens when John Pepper goes away? Is the improved smell of the place permanent? Or is it just the temporary efflorescence of a managerial saint passing through? “How is this training initiative different from the last training initiative?” a manager worries, aloud. “How is this reorganization different from the last reorganization? There’s no real answer. When you’re with John Pepper, he’s really inspirational. But he’s only going to be here two years.” Another manager adds, “That scares me, because he’s such a breath of fresh air. But each of us has to catch the fire .”

Pepper himself argues that younger leaders and new systems already put in place will keep Yale moving in the right direction: “Can you imagine anybody experiencing a better procurement system and saying, ‘Let’s go back to the old way?’” Part of his strategy is to leave behind procedures that give managers the data to make changes with confidence instead of fear.

Early last November, for instance, a small group, including key members of the Yale Corporation, met in a conference room on Whitney Avenue. Yale was less than a year away from breaking ground for a new building just up the street to house the department of molecular, cellular, and developmental biology (MCDB).

In the past, says Levin, design and construction at Yale were “too often an ad hoc process.” According to others who have been through the experience, staffers sometimes failed to put forward reasonable alternatives out of fear of being second-guessed. Missed steps in the planning stages caused costly stops-and-starts in mid-construction.

The MCDB meeting included a newcomer named Jerry Warren, who spent 30 years supervising construction projects around the world for Procter & Gamble. Warren looks like a Yale professor’s idea of a Proctoid, in a button-down white shirt and a butch haircut. He also talks the talk. The towers and domes of the campus are “brand equity,” he says. “A lot of people send their kids here because of these buildings, believe it or not.”

Warren’s mission is to take the ad hoc out of the construction process at Yale and make it more professional. His department has developed the university’s first step-by-step handbook for planning new buildings, with “standard work processes, standard deliverables,” and benchmarking against the costs of comparable buildings at other organizations. The aim, he says, is to provide the data at every step so people understand what it is they are actually deciding.

For the MCDB building, some people wanted an L-shape, with a traditional Yale courtyard; others wanted a more compact bar shape. The debate was intense and emotional. But the difference from past meetings of this sort was that Warren’s staff had prepared a detailed analysis of both alternatives. An architectural animation study showed that the L-shape would loom eight stories high along 300 feet of Whitney Avenue. Not only did the bar-shaped building avoid this overpowering effect, but it would also cost millions less to build. And there would still be room for a courtyard. In the past, says Levin, the university would eventually have come round to the obvious choice. But the new way of doing business got them there quicker and on a sounder footing.

The best thing, says Tom Pollard, an MCDB professor, is that the people who will use the building ended up with the design they wanted in the first place. Molecular biology is a fast-paced, highly competitive field, and researchers wanted a compact building so they could run into one another in the halls and try out new ideas.

“I am a huge fan of Jerry Warren and John Pepper,” says Pollard. “They really have the right idea of how to make this work in a timely fashion. I can’t wait until all their ideas get implemented at Yale.”

If this makes him sound like a delighted customer, Pollard does not seem to mind at all.  

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