INSIDE SMITHKLINE BEECHAM.DOC

1
INSIDE SMITHKLINE BEECHAM:
THE ORGANIZATION AND CULTURE
A Term Paper in IR 202
(Organization and Work)
Presented to
Dr. GERALDINE C. MAAYO
School of Labor and Industrial Relations, University of the Philippines
Diliman, Quezon City
In partial fulfillment of the requirements in
IR 202 First Semester
Academic Year 1999-2000
By
JAIME E. NOBLE, JR.
IR 202 / 6:00-9:00 p.m., Wednesday

2
October 14, 1999
Table of Contents
page
I. Introduction 1
II. The Company
a) Company’s History 2
b) The Philippine Operation 3
III. Corporate Culture: The Theoretical Approach 4
IV. The Corporate Culture
a) On corporate goals and values 5
b) On management style
6
c) On human resources 6
d) The "Simply Better Way 7
e) On labor -management relations and industrial peace 8
f) On workers participation 9
g) On productivity and CBA 10
V. Conclusion and Afterthoughts 11
Bibliography 13
I. Introduction

3
Corporate culture is one of the most important among subjects in
human resources management. It promoted the role of organizational
culture in corporate success. The people, the policies, and almost everything
about the place determine the realization of corporate objective.
To illustrate, if an individual although grows in the company for
years but seems to be unhappy with what happening around him, may
consequently result to turnover wherein the company will be adversely
affected specifically in its vision. Thus, cultural analysis is necessary if we
are to understand how new technology influences the entire organization
and us.1
This study generated two hypotheses, one coin viewed in two
perspectives. First, we can say that by having a strong culture the
performance of workers is dramatically better than companies with weak
culture because their goals may be fragmented. Similarly, on the other side
of the coin, having strong corporate culture the management can easily
impose control on the employees wherein conflict theorists support this
analysis.
Thus, the paper is written base on the two preliminary layout.
However, the study limits its discussion to present the actual view of the
company’s organization and culture in general approach. The analysis to
supplant the above hypotheses will be provided on the conclusion.
The purpose of this paper is threefold: 1) It will discuss briefly
company’s history and Philippine operation; 2) It will present the major
organization and culture of the company and discuss the issues and
problems the context of cultural analysis; and finally, 3) it addressed the two
1 Edgar H. Schein, Organizational Culture and Leadership, California: Josey Bass Inc., 1992, pp.
5.

4
assumption on organization and culture briefly as a conclusion and
interpretation.
This paper was written based on the research on SmithKline Beecham
corporation wherein I used to work. It is a transnational healthcare company
and one of the leading pharmaceutical industries in the Philippines. This
company has a very distinct culture worth studying.
The facts on this study are based on my personal experience in the
company and interviews with Lito de Guzman (Human Resources Director),
Bobby Sabater (Sandigan-President), and Marlon Pasia (Sandigan-
Boardmember). This was supplemented by published and unpublished
materials and data’s of the company.
II. The Company
a) Company’s History
SmithKline Beecham, a pharmaceutical company was created by the
merger, on July 26, 1989, of two industry’s most respected names:
SmithKline Beckman and Beecham Group. In just a few short years, it has
emerged as a global healthcare leader.
SmithKline began as a small chemical business founded in 1830 by
Philadelphia brothers in law, John Smith and John Gilbert. It became Smith,
Kline & Company when Mahlon Kline was named partner in 1875. Many
notable discoveries were made by SmithKline scientist, including research
that led to Tagamet by John Black. Tagamet was the world's first effective
ulcer treatment that led to the company’s first $ 1 billion products. For the
achievement, Black was awarded three Nobel prizes in 1989. Again,
SmithKline was the first to launch an effective mental health treatment,

5
Thorazine, a sustained- released medicine, Contac and Engerix-B, the
world’s first genetically engineered vaccine against Hepatitis B.
Beecham was incorporated in 1928, when it buys the Beecham Pills,
business that has been founded in 1842 by Thomas Beecham. The company
expanded greatly during the 1930’s then it bought the Macleans toothpaste
and lucozade energy drink. In the 1940’s when it established research
laboratories in Brockham Park in the U.K. Beecham scientist brought
worldwide fame to the Brockham Park facility in 1957, when they
discovered penicillin nucleus called 6-APA. That discovery made it possible
to create an infinite number of new penicillin’s that can be targeted at a pre-
determined range of bacteria.2
b) The Philippine Operations
SmithKline started its operation when it was granted a license on
September 25, 1963 to manufacture, sell, and export pharmaceutical related
products. It housed its manufacturing plant and office in Cainta with around
215 workforce.
On the other hand, Beecham Research started in 1966 management of
Zuellig Pharma Corporation based in Makati. It consists of around 90
employees mostly sales people. Its products were carried out by a third
party manufacturing, Interphil Laboratories in Sucat.3
Late 1980’s were crucial for both companies due to adverse economic
environment. A number pharmaceutical company has been declining its
local operation. They actualized their first round of structural adjustments
by strategic alliance to improve cashflow, increase profitability, and increase
market share in particular. Likewise, to increase productivity and global
2 Facts are gathered from press release on SmithKline Beecham’s history.
3 Ibid.

6
competitiveness in general. The merger of SmithKline Beecham in the
Philippines was formalized on January 16, 1990 after series of integration
meetings.
In 1996, the company initiated another round of adjustments, the
acquisition of Sterling Corporation and its products. This can be viewed as
an expansion in its Philippine operation to cover the Asia and the pacific
markets. SmithKline Beecham decided to acquire the said company to
accomplish one of its plans to come up with new consumer products and
consequently maintain the Sterling’s network markets.
Today, it boasts and maintains a manufacturing plant in Cainta that
manufactures premium pharmaceutical related products for local and Asia
pacific market. The company also manufactures product for Sanofi
Winthrop, also a pharmaceutical company. Likewise, Interphil Laboratories
was retained to manufacture other pharmaceutical products. Thus, it came
out with a promise of “Simply Better”4
ways as a corporate culture and
values.
III. Corporate Culture: The Theoretical Approach
The company’s corporate culture is very apparent. The general
message of the corporate culture literature is that the cultures of an
organization (values, beliefs, ethos, and way of doing things) influence its
performance and can be manipulated by the management.5
4 Simply Better is SmithKline Beecham worldwide slogan.
5 Williams, Bobson, etal. Changing Culture: New Organizational Approaches, 2nd ed. London:
Institute of Personnel Management. 1989. pp. 14.

7
The message also has prescriptive statement. Through a change in
management style and the use of mission statements. Here both
management and employees can advance together in one direction.
Likewise, the search for excellence becomes more a shared challenge and the
means in boosting profitability and productivity of the company.
The concept of corporate culture is most useful if it helps to explain
some of the more seemingly innovation aspects of an organization.6
One of
the common assumptions is that culture to contribute to performance, it
must possess distinctive traits and potent nature.7
This line of argument can
be found in different literature on the subject. It includes deeply ingrained
people oriented philosophy that is summarized as "respect of humanity".
This, combined with apparent autonomy of workers in the organization,
helps produce a sense of belonging or family feeling within the organization.
Thus, generating productivity and profitability through people.
IV. The Corporate Culture
a) On corporate goals and core values
Let me cite a part in the SmithKline Beecham’s promise, “At
SmithKline Beecham, the source of our competitive advantage is the energy
and ideas of our people, our strength lies in what we value: CUSTOMERS,
INNOVATION, INTEGRITY, PEOPLE, PERFORMANCE. We are people
with purpose, working together to make the lives of people everywhere
6 Edgar H. Schein, Organizational Culture and Leadership, California: Josey Bass Inc., 1992, pp.
8.
7 D. Levine, Reinventing the Workplace: How Business & Employee Can Both Win, Washington
D.C.: Brooking Institute, 1995, pp.11.

8
better, striving in everything we do to become The Simply Better Healthcare
Company”.
On core values, the success of the company depends on the
achievement of these five core values. This can be referred as survival
manual of the organization that equipped the employee's tools of reference
to guide their respective daily undertakings in the company.
First, the customers. The company in customer oriented. It provides
products and services of superior value to meet the expectations of internal
and external customers. Thereby, maintaining and increasing the company's
competitive advantage.
Second, is the idea of innovation. The company constantly strives to
be creative and innovative in all its endeavors. All the employees are
encourage to bring forth new and better ideas for improved performance
whatever the responsibilities.
Third, performance and quality. The company is performance driven
and continuously aims to improve in all activities. Likewise, the company
demands openness throughout its operations to engender trust and
integrity.
Finally, the company considers the employees as partners that work
together in the pursuit of the company’s mission and goals. Here, teamwork
is strongly valued and every employee is motivated to succeed. As
mentioned earlier training and team building seminars are regularly
conducted on labor and management side.
b) On management style
The management style of SmithKline Beecham can be attributed to
founders of the company on which they establish hands on management

9
and created a set of practices that grew up around the company. These
include informal meetings, dinner with employees, and out of towns.
The company that was created, became a transnational corporation
because of team commitment allied to philosophy of innovation through
people. In other words, it is a people-oriented company with the philosophy
of “Win-Win” environment.
The most notable aspect of the company approach to management is
the “Simply Better” Way, which stated the company’s basic values and
philosophy. This was put in writing and credited within the company as the
basis for its success and strong sense of employee's loyalty.
C) On human resources
SmithKline Beecham often uses credentialist system. Despite it is not
written formally in the corporate policy and claimed that the company is an
equal opportunity employer, the culture of the company dictates this
process. In fact, various publications analyze and interpret that the cultural
factor has a hand on this. Since culture influences what other members of
the organization, they interpret this situation and react to it are a significant
determinant of the of any undertakings being implemented.8
This
approach is apparently emphasized in the recruitment process wherein the
applicants are selected on the merits of the following parameters. First, the
educational level. The possession of a particular credential is characterize on
what level of education an applicant attained. In particular, the recruitment
people tend to classify the candidates for the job into undergraduate,
graduate, or postgraduate depending on the requirements of the job.

10
Second, is the prestige of the college or university. Applicants and
employees from reputable schools are given preferential treatment. Again,
let me reiterate that this is unwritten company policy. Of course, there is
always an exception, particularly on merit of the candidate and employees
productivity.
Third, the person’s capabilities are also taken into consideration.
These include past working experiences and qualifications. It depends on
how extensive one’s job and training. Basically, individuals who used to
work on large and prestigious companies are generally being considered.
d) The “Simply Better” Way
The employees live and work the “Simply Better” Way. First, the term
represents the corporate-wide culture initiative. It embodies all that
employees strive to be as company and individual.
Second, the term is a way of life. It a process of continuous
improvement aimed at attaining the company’s goal. The organization is
committed to develop individual skills for the transformation of employees
in more productive and competitive worker. In addition, it came out with a
“Mini MBA” program to develop continuing intellectual ability. Here, the
candidates for promotion and trained on basic and advance management
skills
Third, the phrase is more than just a framework of defining the
systems and processes by which the work is organized and the methods and
tools used to ensure consistent excellence. The company adopted a superior
way to satisfy customer needs through sustainable competitive strategy. It
embraces change and innovations by letting employees improve faster and
better, thereby optimizing opportunities for success.

11
In effect, the “Simply Better” way is a management by process. It is a
new way of managing the company that gives the employees the tools to
solve problems whether working as individuals or team members, thereby
making their jobs easier and freeing them to be more creative. Moreover, the
phrase along with the company’s products, has come to represent what
SmithKline Beecham stands for across the world.
e) On labor-management relations and industrial peace
The company’s labor-management relationship may be describe as a
partnership with willingness on both sides to embark on new approaches
based on mutual trust and drive for improved performance. The nature of
labor-management relation is not adversarial. We can characterize it as a
mutual social partnership committed both sides' welfare.
The recently concluded collective bargaining was very good example
of mutually beneficial relationships between management and employees.
This has set the climate for alignment between management and labor in the
organization through more active worker's participation. This has also
imbued a sense of pride and accomplishment in the company.
The sound management and labor relationship were manifested by
the following concrete signs. First, active labor and management dialogues
were existing within the company resulting to open communication. This
was a new concept that may be viewed as initially threatening. However,
due to the level of mutual trust was instead was supported by the union.
Second, unions are considered partners in carrying out company
projects. For 18 years of union existence since 1980, the company never
experienced any form of strike or any form of protest that resulted in work
disruptions.

12
Lastly, the company is supportive in the training and development
needs of the future leaders of union allowing them to take leave more than
what is prescribe in the CBA. Furthermore, core officers of the union were
trained on facilitation skills and have acted as co-facilitators in company
wide activities such as teambuilding program and other workshops.
With this, we can note that the essential variable was the relationship
that the team built with the labor group through constant feedback and open
communication to all concerned.
f) On workers participation and open communication
The attainment of the company’s goals can be attained through
corporate wide culture initiative that emphasized values and leadership
practices with employee's active participation. Workers were asked to share
in quest for continuous improvement.9
Consequently, both teams were very open in its communication
process that at no point was there a threat of a deadlock or need for a third
party to resolve the issued. The corporate climate of the company can be
notably considered as harmonious. However, conflict is inevitable within
the company itself. Nevertheless, what is unique in the organization is that
grievance address as early as possible and bring into proper forum which
are the HR and the Union to settle matters in utmost democratic judgment.
To further promote open communication the company also came out
with a program like “An Hour with the G.M. “ held regularly at the end of
each quarter. This aims to strengthen the communication lines particularly
between the general manger and the employees. In this session, the
employees are updated on highlights of the company regarding ongoing
projects, plans, and changes in systems or policies. Employers are also given
9 Gathered from SmithKline Beecham’s newsletter.

13
the opportunity to ask question, raise issues or concerns that may need
clarification. This program has been ongoing up to present.
g) On productivity and CBA
The policies and procedures, particularly those connected with
performance management systems, actually had a very large part to play in
the management of the organization which the case of SmithKline Beecham.
This was perhaps illustrated by the effort that management put into the
measurement of productive annually not only with the rank and file but also
the managers. In fact, the recently concluded CBA was a productivity based.
In the past, CBA’s, the traditional method of Collective bargaining
was used thus, creating undue anxieties caused by the heated discussion.
Differences in position during the negotiations were prevalent forming a
“Win-Lose” atmosphere. Apparently, this affects the morale and
productivity of the employees. To solve the problem the company came out
with a series of team building activities with the union. In addition, other
joint workshop paved the way for a new thinking for the union and
management side.
The establishment of the partnership shifts the paradigm of labor-
management negotiation process from traditional style where concerns of
labor are opposed to the directions of the management. It transposed to a
principle-centered style where concerns of both parties are resolved through
a problem solving approach and “Win-Win” principle. Here, the culture of
mutual participation not adversarial relations can easily be detected.
What is also significant to the organization is that the existence of
these measures clearly put the company in an adaptive mode in this period
of global competition. This therefore guarantees not only survival but also

14
competitiveness and growth of the company in the next wave of global
competition.
V. Conclusion and Afterthoughts
The paper presented a unique opportunity to know and examine
SmithKline Beecham’s organization culture. We can learn much of the
organization and culture on how they attained the company’s vision as an
individual and as a Human Resources practitioner.
As we have seen, culture is both an input and an output. The culture
of an organization therefore likely to be the product of past strategy.10
Culture influences what the employees attend to, how it interprets the
responses it makes to changes in external environment.11
In the case of SmithKline Beecham, organization and culture can be
look at two perspectives based on paper hypothesis. The functionalist view
is apparent that union and management because of the corporate culture are
determined to mutually work together (which is the essence of organization)
to achieve the corporate vision. We can also observe that the recent CBA was
to manifestation of this premise. Furthermore, the culture visibly provides
autonomy of the employees. In fact, auditing of employees on the spot or
without any prior advice from auditing party is not allowed although it is
not against the company policy of inspection. In return, the worker felt to
have a degree of autonomy over their work and performance. For the
management, this gives the worker the concept of responsibility and
accountability for the work the worker assigned to them.
11 Ibid., pp. 36.

15
Employees of SmithKline Beecham clearly know the goal of the
corporation and they are working to attain them. Both the worker and the
management in the company share only one goal, both are towards facing
the global challenge that requires labor and management to work hand in
hand.
On the other hand using Marxist paradigm, a strong corporate culture
acts a control over individual behavior, thus, allowing considerable
discretion without any connected cost for the company. Here, having strong
corporate culture the management can easily impose control on the
employees. An analysis using conflict approach on collective bargaining
provides us that the union was servile by choosing productivity-based pay
increase instead of the usual across the board. In productivity-based merit
increase can also be coined as profit-based wherein the management will
lose nothing because if the company’s operation is not profitable.
Therefore, although it is recognized that “Simply Better” Way does
buy a certain element of goodwill, they do not overemphasize it because of
the cost associated with isolating employees off by enforcing the culture in a
uniform manner. There is also evidence that points to important cultural
differences within organization (such as between division, departments,
staff groupings, and national operation) demonstrate that an attempt to
impose uniformity on these subcultures is often counterproductive. Thus,
we need to recognize in the implementation process of any program the
cultural perspective within the organization.
Lastly, an entity that represents the collective conscious and
unconscious of the organization and that forms the basis of influence on the
behavior of the organization. Thus, become significant determinant of

16
organizational performance.12
The Company’s organizational goals are
geared towards increase profit, increase sales, and increase productivity. For
both enterprise and their workers, there is a need to understand the
dynamics of organizational change under this new economic regime so that
both can hurdle the threats and maximize the opportunities.
Bibliography
Williams, Bobson, etal. Changing Culture: New Organizational Approaches.
2nd ed. London: Institute of Personnel Management. 1989.
Richard Hall. Sociology of Work. US: Prentice Hall. 1996.
William G. Ouchi, Theory Z, New York: Avon Books, 1981.
Various SmithKline Beecham Newsletters and Press releases, published and
unpublished
Watson Wyatt Worldwide Philippines. Tactics and Processes of Corporate
Restructuring:The Philippine Experience. A Survey Report in 1999.
Institute of Personnel Management. 1989. Pp. 37.

17
Edgar H. Schein. Organizational Culture and Leadership. California: Josey
Bass Inc. 1992. pp. 5.
COMMENTS

INSIDE SMITHKLINE BEECHAM.DOC

Recommended

Recommended

More Related Content

Similar to INSIDE SMITHKLINE BEECHAM.DOC

Similar to INSIDE SMITHKLINE BEECHAM.DOC (20)

INSIDE SMITHKLINE BEECHAM.DOC