Managing change in organization, student name: Heba Mostafa Ali, University of Wales, Cardiff - UK. ..............................

1. Master of Business Administration
Managing Change in Organisations
Assignment
Name: Heba M. Ali
Prof.: Dr. David Newton
Word count: 4000
Date for Submission: 24 October 2011
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2. Table of Contents
Date for Submission: 24 October 2011.....................................................1
Question 1:...............................................................................................................................3
Introduction:.........................................................................................................................3
The Need for Change................................................................................................................4
PESTEL analysis.....................................................................................................................4
Question 2:...............................................................................................................................6
Management Objectives.......................................................................................................6
The Process of Change..........................................................................................................7
The Purpose of Change: .......................................................................................................8
Clear Shared Vision...............................................................................................................9
Establish the Capacity for Change.......................................................................................10
The Actionable First Step....................................................................................................11
Question 3:.............................................................................................................................13
Effective Management of Change.......................................................................................13
Resistance to Change..........................................................................................................15
Question 4:.............................................................................................................................17
The Success of the Change Process.....................................................................................17
Recommendation:..............................................................................................................18
Conclusion..............................................................................................................................19
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3. Organizational Changes
Question 1:
Introduction:
In the last decade, many organizations have undergone organizational change in order
to take in to account the change economic environment. The advent of the internet
marketing and other technological advancement has lead to the need for change. One
such organization has undergone organizational change due to the changing market
environment is the GlaxoSmithKline (GSK). According to Datamonitor (2005),
GlaxoSmithKline is one of the 20 FT Global 500 organizations in the world. Further,
this is among the world’s 5 best pharmaceutical companies. GlaxoSmithKline has
branches in over 116 countries in the world and markets its products in more than 125
countries.
GlaxoSmithKline was formed after the merger between SmithKline Beecham and
Glaxo Wellcome in 2000. This change has had a great impact on the structure,
culture, strategy and stakeholders of the company. The objective of this change is to
make the organization the ultimate leader in consumer health and pharmaceutical
industry. As such, the management embarked on a change process that emphasized on
the need for creativity and innovation in the company. These aspects were identified
as the driving forces that would help the company achieve its goals. The change was
further necessitated by the growing competition and the expiry of many patents held
by the company. The new CEO identified R&D department as part of the company
that needed change.
The R&D department underwent transformational change from an autocratic form of
leadership to democratic style. It was divided into seven small centres of excellence
for drug discovery (CEDD) which were mandated to carry out research on new drug
molecules. This introduced competition in the department which was a caused major
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4. Resistance to change from scientists. But proper management of change and
communication of the need change led to successful transformation in the department.
The Need for Change
There were several drivers of change that made GSK to merge. Some of the internal
drivers that made the change necessary include the need for innovation and creativity.
Before the merger GSK had little innovations of new drug molecules. This was
brought about by the fact that they had patents to most of the drugs that they were
producing. The need to have new drugs in the pipeline can be considered as one of the
drivers of change in the R&D departments of GlaxoSmithKline. Lack of creativity is
also highly related to the lack of new drug molecules in the company. The new CEO
saw the need to instigate a change that would incorporate these two virtues in to the
company’s cultures. However, there were other external factors that led to the change
in R&D department. These external factors can be adequately analyzed using the
PESTEL analysis.
PESTEL analysis
Political
GlaxoSmithKline also experienced an increased competition from generic drug
manufacturers. Further, with the changing economic and political environment in the
world, GSK had to come up with new drugs that would compete in the market. With
China ending its quota systems in different segments of the economy (Datamonitor,
2005), GSK had a chance to expand its market the more than 1.3 billion people in
China. Moreover, with the inclusion of Baltic and Eastern European states to the EU,
many pan-European distributors were looking for manufacturers with competitive
supply prices.
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5. Economical
In economical front, the market for pharmaceutical products was estimated to grow at
6% annually since 2004 (Datamonitor, 2005). According to the HM Treasury (2005),
disposable income had risen by 14% over the last five years. Other external factors
that led to this change include cost, competition, decreasing innovation and stringent
laws.
Social
Further, GSK had an opportunity in the healthcare industry as National Health Service
had projected a constant growth in healthcare spending at a rate of 7%.
Technological
The increasing power prices have lead to increased spending in packaging materials.
This has caused an increase in polythene prices which are used to make sheets and
PET packaging by medical companies.
Environment
The company experienced pressure from the animal rights activists who were against
the use of animal in testing new chemical molecules. This is an important step in drug
discovery since it helps scientist to know the effects of the drug before using it on
humans.
Legislation
Since the enactment of Hatch-Waxman Act in 1984, competition from generic drug
manufacturers has increased throughout the world. Despite this legislation being
passed in the US, its effects were felt the world over since generic drugs are produced
soon after the expiry of the patents. Further, price controls have been a great
hindrance to research-based companies as they limit the amount of revenue generated.
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6. Question 2:
Management Objectives
The main objectives of change in the R&D department were to enhance innovation
and creativity. With the increasing competition from generic manufactures and many
of its patents expiring, GSK was faced with a daunting task of coming with a new
structural organization that would enhance innovation and creativity. The R&D
department was the segment of the company that would be greatly affected by this
change as most of drug discoveries were supposed to be done here.
Further, the management wanted GSK to remain competitive in the pharmaceutical
industry and the only way to do that was by establishing an elaborate R&D
department. In addition, the leadership style was to be changed from autocratic to
democratic. The management wanted to streamline organizational culture to be
performance focused. The change can be explained as planned transformational
diagram (GSK, 2004):
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7. The Process of Change
The best way to articulate how the managers planned the actions required to achieve
their objectives is by describing the change process itself. As it has been noted before,
change at GSK introduced seven CEDDs to R&D department. The change
management team had to come up with ways to make this necessary change work
within the department. In addition, the scientists, who were key players in that
department, were opposed to the change. Therefore, the management had to motivate
the scientists and keep them informed and satisfied for smooth transition. However,
on overall, the change process enjoyed considerable support.
Considering the market requirements that had necessitated the change, the
organizational culture, strategy, and leadership were the other issues that would affect
smooth transition in the company. Despite motivating other managers to accept the
change, the new CEO had a hard time convincing other staff of the need for change.
Therefore, the company had to come up with a process that would keep staff
motivated. A contingency plan was also important in case the change failed.
According to Atkinson (2005), the management should have concentrated on strategy,
people empowerment, team building, introduction of processes and tools, or
reconstruction. To determine which one is good for this company, GSK adopted a
four step approach which would introduce the new culture. To fit the situation at
GSK, the force field analysis process presented by Lewin (1951) was modified.
Kotter’s Change Model
The company used a modified Kotter’s model of change to effectively bring about
change in the company. The diagram below shows the process followed (Mind Tools
Ltd 1995):
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8. These steps covered the following points:
The Purpose of Change:
By creating the necessary pressure, the management ensured that the people involved
understood the need for change. According to Chorn (2004) and Atkinson (2005),
building pressure is important for the change programs to be effective. Accordingly, a
sense of exigency to establish the seven CEDDs was created which initiated cultural
change.
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9. To create urgency in the creation of the seven CEDDs the company did a stakeholder
mapping. Stakeholders were categorized as peripheral or core to the change and
grouped together to ensure effective change management. To establish urgency in the
R&D department, analysis was carried out to identify the competitiveness of the
company in the market. This analysis showed that the company lacked
competitiveness since it had been unable to produce new drugs. Further, it was
established that due to the expiring of many of its patents, the company needed to
rejuvenate and make new drugs that would propel it into the future.
Clear Shared Vision
The top management has to create the philosophy and vision that could serve as
guidance to those people involved in change plan. This is one way of demonstrating
to the organization that the top management is eager to support change plans towards
improving R&D department (Mind Tools Ltd. 1995).
It was paramount for the management to have a clear vision and to clearly
communicate this vision to all the people involved (Lewis, 1951). Atkinson (2005)
posits that in the absence of a clear vision, the change processes start quickly but do
not last long because people are unaware of their responsibilities. Since changes to the
R&D departments made managers insecure about their jobs, change management
team established several strategies that would cater for all different stakeholders and
ensure a smooth transition.
Some of these strategies involved establishing a list of push forces that existed in the
company. From different stakeholders, the pushing forces were established as
financial, territorial, social, and environmental. With different stakeholders involved
who included scientists, shareholders, doctors, distributors, consumers, regulators, and
pressure groups; the company had to establish each groups concerns and deal with
them accordingly.
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10. This segmentation of stakeholders allowed the company to successfully communicate
the vision and the purpose of change (GSK, 2004).
Establish the Capacity for Change
In terms of financial capacity of the organization and capability of employees, it can
be considered that they are ready for change. The company has sufficient resources to
implement employee motivation strategies. The employees have the capability to
adapt to the needed change, though they should be convinced first regarding the
benefits of that change.
When introducing cultural change in an organization, it is vital that organizational,
departmental, and individual capabilities are put in place for change to be realized. If
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Key Stakeholders Impacts
Scientists Financial & Territorial
Shareholders Financial
Doctors & Consumers Social
Distributors Financial
Regulators Social & Environmental
Pressure Groups Social & Environmental

11. the necessary requirements are not put in place when contemplating change, then the
change process may bring frustration and anxiety among the staff in the organization.
In GSK, it was established that the people wanted to change but they were in a denial
state since they did not have the proper means to facilitate change.
The management made clear the results that were required from every member of
staff; this enabled them to establish the right behaviour needed to accomplish these
goals. The right behaviour in turn helped them to identify the required competencies.
By analyzing the department’s capacity to change, the management was able to
establish the different support levels portrayed by different stakeholders. The
scientists were the least supportive group of stakeholders while the shareholders had
the highest. Distributors had to position on the issue. The overall support of the
process was identified as positive hence validating the effectiveness of the strategies
taken by the company.
The Actionable First Step
The management has to have an action plan that outlines what should be done to get
the process of change started (Andrew, 1995). GSK provided clear guidelines that
were to be followed by all the stakeholders involved in the change process. Taking the
advice of Andrew (1995) and Chorn (2004), the effectiveness of change is determined
by the programs set in place to initiate the change itself. The vision was of change
was well communicated and divided into different parts that were SMART: Specific,
Measurable, Achievable, Rational, and Time specific. The whole transformation was
set in specific framework.
The following diagram shows the important actions taken on each step during the
change process (GSK, 2004).
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12. These four steps comprise the techniques used by change management team at GSK.
However there are other techniques that could have been used to completely adhere to
Kotter’s change model. These techniques include establishing empower action; short-
term wins, keeping the pressure to perform, and making change stick.
Empower Action
Removing obstacles towards change requires identification of leaders who will lead
the change plan. The top management should also look on the organizational
structure, job description and compensation structure in order to ensure that they are
aligned with the intended vision. This will then be followed by identification of
people who resist change and communicate with them regarding their concerns and
make actions that could remove barriers (Mind Tools Ltd. 1995).
Create Short Term Wins
Creating short-term wins could further motivate people involved within the change
plan. For instance, the company should have been engaged in acquiring customer
feedback and those feedback can be analyzed every month so that the top
management would be able to determine whether they are starting to achieve their
goals—customer service improvement. Meanwhile, if the customer feedback is good,
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13. The top management should give bonus to those employees that provided better
results so that they could feel the sense of victory (Mind Tools Ltd. 1995).
Don’t Let Up
For every short term wins, the human resources department should examine what
went right and what aspects that requires improvement. They should establish specific
objectives in order to create further momentum and should conduct research for
consistent improvement (Mind Tools Ltd. 1995). In addition, the best way to keep
employees working in the vision without stop is informing them of the company’s
success also keep the motivation in high level.
Make Change Stick
In order to make the change stick, this must be integrated to the corporate culture.
This could be done through changing the mission vision statement of the company in
order to reflect the change (Mind Tools Ltd. 1995). The employee compensation
should also support R&D department improvement; for instance, the CEDD that
receives the highest score in terms R&D should receive specific bonuses such as extra
vacation leave or monetary bonus. Change plan should be incorporated when
recruiting and selecting candidates; for instance, candidates should have a good
experience in R&D department. R&D will also be incorporated to the performance
appraisal and it will also serve as criteria for promotion.
Question 3:
Effective Management of Change
The success of a change process is dependent on the way the organization has decided
and formed its figures. After the merger, the R&D department changes can be noticed
as transformational. This is because the outcome of change fulfils the key factors of
transformational change which changed the operations media and formed new
leaders. Further, the roles of individuals and teams in the R&D department we
affected by this change.
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14. In order to carry out the required change, the R&D department was divided into 7
CEDDs. These groups introduced competition among the scientist. This brought
resistance among scientist as they felt like they were being treated as sales people.
However, to cope with this resistance, the company introduced democracy in the
groups. Where it ensured that every member was heard and their views were taken
into consideration. This led to the change of leadership style from autocratic style to
democratic one. The change in leadership style successfully lured the scientist into
accepting the change that was happening.
Further, the company had an elaborate plan of introducing the change smoothly and
how to cope with any eventualities that may arise. As such, proper mapping of the
stakeholders in GSK was done to determine who the stakeholders in the change
process were. The analysis showed that the core players in the change process were
the scientists and the company’s shareholders; other peripheral stakeholders in the
change process included the patients, doctors, who comprised of the customers.
Pressure groups which represented the society were also identified as peripheral
stakeholders. Regulators and distributors were considered as business partners who
had an influence in the change process. The identification of these groups helped the
management to cater for the different needs and concerns that these groups had about
the change taking place (GSK, 2004).
Identifying these groups was just the first part of effectively managing change in
GlaxoSmithKline. The other process was to establish the influence of each group on
the change process. According to Lewis (1951), it is important to list the pushing
forces during the change process. The company determined the different impacts on
each stakeholder group and identified the proper methods of dealing with any
resistance. This enhanced smooth transition of the company.
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15. By analyzing the department’s capacity to change, the management was able to
establish the different support levels portrayed by different stakeholders. The
scientists were the least supportive group of stakeholders while the shareholders had
the highest. Distributors had to position on the issue. The overall support of the
process was identified as positive hence validating the effectiveness of the strategies
taken by the company.
Resistance to Change
For any change to be successful, resistance to change must be well tackled. GSK
ensured that the resistance from several stakeholders was reduced by properly
following a five step process. Some of the resistance came from the managers who
thought that their job was at jeopardy were the changes being carried out to succeed.
This resistance was dealt by ensuring that the purpose of change was well understood
Through clear communication of the vision and mission of the change. Change
managers at GSK ensured that all the necessary plans were in place to ensure that
pressure for change was well initiated and executed. Further analysis of the situation
in the company was carried out and it was established that many stakeholders were in
denial. Many of them wanted change but they did not know where to start.
To ensure that every group in the company was well catered for, the company
performed an analysis of the push forces in every group of stakeholders. Proper
mechanisms to deal with respective resistance from each group were put in place.
Scientists were considered as core stakeholders in the transformation. The impact of
change on scientist was identified as financial and territorial. For share holders the
impact was identified as financial and for doctors and consumers as social.
Distributors would be affected financially while regulators and pressure groups’
concerns were social and environmental.
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16. To cope with these challenges, GSK grouped regulators and scientist as the
stakeholders who had to be kept satisfied all the time through the change process.
Shareholders were supposed to be managed closely while pressure groups,
distributors, doctors and consumer were considered to have little influence on the
Change but high interest. This meant that they had to be monitored with minimum
effort but kept informed (Emerald, 2004).
For scientists who were more reluctant with the change, the company established a
democratic leadership style which replaced the autocratic leadership style that had
prevailed in the company. This gave scientists a sense of ownership of the process
which led to a smooth transition. Further, GSK established a new mission statement
which captured the new organizational culture. This helped to clearly communicate
the vision and purpose of change which is vital in dispelling any fears that might be
associated with the change.
These strategies were able to significantly reduce resistance in the company. The
management of resistance at GlaxoSmithKline can be posited as successful since all
players in change were kept informed and managed properly to ensure a smooth
transition in the R&D department.
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17. Question 4:
The Success of the Change Process
According to Pettigrew (1985), the content, sequence, and operation of change in an
organization should be evaluated to determine the performance, worthiness,
accessibility, properness and economically effects of the change. In GSK, this
assessment should be carried out to validate the successfulness of the change.
The only way to know how successful the change process was is by comparing the
performance of R&D department before and after merge. The objective of the change
was to establish innovativeness and creativity in the department. Analyzing the
company’s pipeline performance, costs, and operation efficiency before and after the
change will give a clear picture of how successful the change was. The appointed
CEO pointed out that the objective of transformational change this department aimed
to increase the productivity since the company had no drugs in its pipeline (Emerald,
2004).
Considering that the process of developing drug molecules is a long one, the results of
the changes made started to show after four years. By the year 2005,
GlaxoSmithKline had the largest pipe lines in the pharmaceutical industry. It had 140
projects that were in clinical development with 88 of these projects being new
chemical molecules. Further, the change had resulted to 32 new product line
extensions with the discovery of 20 vaccines (Datamonitor, 2005).
Today, GSK has one of the strongest pipelines in the pharmaceutical industry. This is
estimated to generate healthy outflow in the company making it one of the best
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18. Innovators of drugs. This will have achieved the objective of being creative and
innovative. The change process has also introduced new drugs in to the market hence
Making the company competitive. The appropriateness and accessibility of the change
can therefore be seen as a success.
According to GSK (2004), the company has invested heavily on the R&D department;
however, there have been a reduced sale since 2002 to 2005. Datamonitor (2005)
forecasted that R&D would produce less than 5% of total revenue of the company by
2007. This is an indication that the economy of the change would be weak. For the
first four years since the change, the company encountered reduced sales but
continued to invest heavily on the change programs. Continued investment in the
change programs is crucial for long term but for the short term the change was
uneconomical and expensive.
Recommendation:
With the changes made in the R&D department, there need to make considerable
changes in other areas of the company. To make sure that the new drugs produced by
the company are well received in the market, the company needs to conduct thorough
product awareness campaign to introduce the drugs in to the market. Further, there is
need to upgrade the production plants in order to produce the new drugs. With an
Expected 140 drugs in the pipeline, the company need to add the number of factories
manufacturing the drugs. This can be done through acquisition of the existing
factories from other companies or through joint ventures with other companies.
Other related changes that are needed are in marketing department, which would have
to change its marketing strategies in order to remain competitive in the market. In
addition, changes in the marketing department are important as the department needs
to market the new products being developed. Another department that would require
change is the supply department as the new products would require new raw
materials. The department would have to change to cater for the new products as well
as the new market.
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19. Customer service would also have to change in order to be aware of the new products
and be educated on all aspects of the new drugs. This would help them to cater for any
questions that patients and doctors would have about the new drugs.
The top management would also have to communicate their vision through
conducting special meetings and through presenting those visions to employees’
newsletters. The top management should also require the human resources department
and other managers to communicate that vision to each employee within their
Department. Communications should also address people’s concerns and issues
regarding the said change. For instance, the staff could approach their immediate
supervisor regarding their concerns about the action plan. The top management, the
human resources department and other relevant leaders should lead by example (Mind
Tools Ltd. 1995).
Conclusion
To conclude, it is pretty clear that the whole change process conducted by
GlaxoSmithKline has been extremely successful. In the last few years, the company
has made tremendous success and has seen its profits and sales being grown to the
new heights. By 2007, the company made its sales totalled to £22.7 billion which
comprised a profit of £7.8 billion. Since then the company has continued to acquire
new infrastructure as a bid to expand its production and marketing.
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20. Reference
1. Atkinson, P, 2005 ‘Managing resistance to change", Management Services,
Spring 2005; Vol. 49: Issue 1, p14 - 19, 6-p
2. Andrew, M, 1995, "Creating a culture of change" Hospital Material
Management Quarterly; May 95, Vol. 16 Issue 4, p30
3. Chorn, N., 2004, " Strategic Alignment ", Richmond
4. Datamonitor, 2005, " Company profile – GlaxoSmithKline ", Datamonitor
Europe
5. Emerald, 2004, " Innovation at GlaxoSmithKline: Is it the Safest Way "
Strategic Direction; Vol. 20, No. 7, pp. 16-18
6. Glaxo, 2004, " Annual Report 2004 – GlaxoSmithKline ", www.gsk.com
[Accessed: 6th October, 2011]
7. HM Treasury, 2005, " Fiscal Policy in UK ", www.hm-treasury.gov.uk
[Accessed: 6th October, 2011]
8. Lewin, K., 1951, " Field Theory in Social Science ", London, Harper
9. Mind Tools Ltd. (1995). Kotter's 8-Step Change Model. Viewed October 09,
2011 from http://www.mindtools.com/pages/article/newPPM_82.htm
10. Rosenhead, J., 2001; " Rational analysis for a problematic world revisited:
problem structuring; Methods for complexity, uncertainty and conflict " 2nd
ed., Wiley, c2001
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