The organization I’ve been employed by for six years, a mid-sized pharmaceutical company, is likely to make significant changes in the near future. Our organization is planning to launch two new medications within the next six months. These impending product launches are contingent upon the necessary approvals granted by the United States Food and Drug Administration (FDA). Thus far, approval looks imminent, but it is never guaranteed. In fact, just two years ago, a product in which the company had invested millions of dollars and ten years of research and development was ultimately denied by the FDA. The unexpected denial set the company back significantly and forced executives to create a new business model. This new business model entailed a downsizing of 20% of the work force in June 2010. It is likely, in response to the upcoming product launches, that the company will reorganize the sales force. This has been done in the past when new products were added to the portfolio, so it is fair to say it may happen again, contingent upon the FDA approvals. This potential restructuring will need to be planned and implemented strategically by senior management in order to gain commitment and lead to success.
An organizational restructuring is likely to create new districts and new regions within the sales organization. In the past, the company has separated sales divisions by therapeutic area. One division was built around our neuroscience and rheumatology products, one was focused on our diabetes and cardiovascular products, and one only promoted the gastroenterology products. However, in June 2010, following the downsizing, the entire company was reorganized with the assistance of third party consultants. These consultants deemed it beneficial to the company’s future to align districts by geography, rather than by therapeutic area. Therefore, currently, within my district there are representatives that sell each of the different therapeutic areas. This structure works well now, but our company is only manufacturing and promoting a total of five products. Each manager is responsible for knowing every product and disease state inside and out in order to provide coaching and training to their team. Adding two new disease states and products to each district may prove overwhelming, and the company may be forced to conduct another realignment.
The new realignment will likely split districts once again into different therapeutic areas. It would make sense to create a “metabolic” sales force and a “gastrointestinal” sales force once the new products are launched. This set-up would provide each manager and team with a specific specialty, and members of the sales force would be better equipped to act as experts on their assigned products. Not only would the change improve management, but it could improve the effectiveness of sales representatives as well. Sales representatives would have the ability to focus their efforts on a smaller number of specialties, and call on the customers with the most potential. Currently, as a sales rep, I call on several different physician specialties, including psychiatry, neurology, rheumatology, nephrology, internal medicine, primary care, cardiology, and gastroenterology. My efforts are stretched thin, because I have three very different products to promote. A realignment based on therapeutic area would allow me to become highly specialized and therefore increase knowledgeable about my marketplace. This, in turn, could allow me to be more of a resource to my customers.
An organizational restructuring based on therapeutic area would affect many other aspects of the company, as well. The Marketing Department would need to be reorganized in order to plan and execute two consecutive product launches. Our professional strategies team would need to recruit new physician consultants to train as speakers for the new products. The organization’s patient strategies team would be restructured in order to give focus to creating new direct-to-consumer patient resources. In addition, the training department would most likely expand to encompass two brand-new disease states and medications. The training department would also be responsible for the widespread training of thousands of sales representatives once the products have been approved. The other main stakeholders in an organizational restructure would be the executive team, who would ultimately be responsible for the implementation and results of the transformation.
Of course, change is often resisted by the members of any given organization. This resistance is likely to occur, especially since our company underwent a major change as recently as June of last year. Research suggests that the potential negative effect on morale resulting from an organizational transformation is a deciding factor in the success or failure of a change initiative. Adcroft (2008), author of the article, A New Model for Managing Change: The Holistic View, calls what people believe has happened, rather than what actually happened, the “transformation myth” (p. 44). These highly personal myths surrounding the details of a transformation have the power to make or break a new initiative. Different people among various positions will have diverse perceptions of the change and will create their own unique myths based on personal experience (Adcroft, 2008, p. 44). Perceptions of job security can certainly have a significant effect on the transformation myths of employees. How well a person champions an organizational change can depend greatly upon their perception because as Adcroft explains, behavior is often directed by our view of events rather than the facts (p. 44).
I believe that my organization needs to keep the “transformation myth” in mind when restructuring for the product launches. Most of the sales representatives within the company have experienced several major changes since they’ve been hired. I, personally, have worked under five managers within my six years in the organization. In the pharmaceutical industry, that is considered a relatively high degree of organizational change. Many people might perceive the change as nothing but what they are already accustomed to. In fact, Adcroft (2008) contends that only organizations with a culture that embraces a striking change can hope to be successful (p. 42). Organizations on the verge of rolling out a major change need to keep in mind that, as Adcroft asserts, “The set of skills, competencies and tools required of a transforming organization are different from those required of an organization that either does not want to or does not need to transform” (p. 42). Our company has already successfully implemented several recent changes. Therefore, the organizational culture has most likely become one that embraces change, rather than resisting it. However, different people react to change in different ways, and some may indeed be resistant.
Reasons for resistance to change are numerous, including fear of the unknown, disruption of routine, and loss of status (Kinicki, 2009, p. 412). According to Ann Gilley and the other authors of the article, Change, Resistance, and the Organizational Immune System (2009), people are inherently resistant to change, and avoiding or resisting change is human nature (p. 4). Organizations, in fact, develop an immune system that rejects foreign objects, just like the immune system of the human body (Gilley, 2009, p. 5). An organizational immune system puts up barriers to change, even if the consequences of such a change could be positive. Gilley et. al. explains, “The individual’s response, like that of the cell is a visceral defensive move that ignores the overall well being of the system (the organization)” (p. 6). Many employees experience an immediate, self-protective response to change, and if this response is not overcome it can lead to ultimate rejection of the change initiative.
In order to prevent and overcome resistance to an organizational restructure, I would refer to Kotter’s steps to leading organizational change (Kinicki, 2009, p. 408). John Kotter, a renowned expert in leadership and change management, developed an eight-step course of action for organizational change based upon the most common management pitfalls. Kotter’s eight steps do not provide guidance in diagnosing what needs to be changed within an organization, but rather how changes can be successfully implemented (Kinicki, 2009, p. 407). Kotter’s research suggests that skipping steps within the eight-step process leads to ineffective change. Kotter also warns managers that successful organizational change is mostly based upon leadership (70-90%), and minimally based upon management (10-30%). It is recommended, based upon Kotter’s research findings that senior managers attempt to focus on leading through change rather than managing change (Kinicki, 2009, p. 408).
Kotter’s first step to leading organizational change is described as establishing a sense of urgency (Kinicki, 2009, p, 408). This step is required in order to convince employees that the reason behind the change is not only obvious, but compelling. In the case of my organization’s potential restructuring, senior management could focus on the changing needs of the company based upon two substantial product launches. As explained earlier, the company could benefit greatly from reorganizing the sales force into different therapeutic areas. The leaders of the organization could create a sense of urgency by expressing to employees that they recognize the limitations of the current system, and strive to create a more effective model.
The second step of Kotter’s process is creating the guiding coalition for a change initiative. Kotter recommends creating a “cross-functional, cross-level group of people with enough power to lead the change” (Kinicki, 2009, p. 408). I believe would be a crucial step in a restructuring of my company. Although for the recent changes in June 2010, the company utilized the expertise of a third party consulting company, I believe the organization could benefit from an internal “change coalition.” A select number of employees from various departments could be nominated and selected to provide recommendations for the change. Since our company has seen numerous previous changes, there are employees who could accurately identify initiatives that were executed poorly in the past in order to avoid repeating mistakes. Also, this step would allow the organization’s employees to feel more in-control of their own destinies, rather than pawns to every whim of the senior team.
Kotter identified the third required step as developing a vision and strategy. This includes creating a new vision for the company based on the changes coming into fruition, as well as a plan to guide the change process (Kinicki, 2009, p. 408). This step could be successfully fulfilled by the guiding coalition described in the previous step. The fourth step recommended by Kotter is to then communicate the change vision. He advises senior management to develop and execute a communication strategy. Kotter’s research suggests that the new vision and strategic plan for change should be consistently communicated. I believe this to be a very important step in the instance of a restructuring within my organization. The last major change, which included a 20% downsizing, was not communicated until the very last minute. In fact, a week prior to the announcement, our senior management team told all the regional sales directors that our organization was in a stable place. The regional directors communicated this news to their districts, only to discover that major lay-offs were already in the works. Many employees felt that the upcoming changes could’ve been communicated more openly and consistently; hopefully the organization has learned from this mistake.
Kotter’s fifth step to leading change entails empowering broad-based action (Kinicki, 2009, p. 408). This step requires eliminating barriers to change and encouraging creative problem solving. This step is when the change truly begins. Management takes the first steps into a new frontier, working toward a brand-new vision, and risk taking is encouraged during this time. Next comes the sixth step of generating short-term wins. This step entails creating short-term goals for improvement and recognizing the success of such improvements. This will be important during a major restructuring, since the company will be investing numerous resources into the launch of two new medications. During a launch period, the achievement of short-term goals will need to be rewarded and recognized so that employees are not daunted by the overwhelming task of bringing new products to market.
Kotter’s seventh proposed step for change leadership moves into consolidating gains and producing additional change. This step is guided by the change coalition, whose members use the credibility created by short-term wins to create more change. In the case of the pharmaceutical company I work for, leadership would refer to reaching or exceeding early sales goals and/or positive results from market research. Part of this step involves bringing additional personnel into the change process, in order to reinvigorate the change initiative (Kinicki, 2009, p. 408). At this point, one sales representative within each district could be deemed the champion for change. It would be their responsibility to reflect the effects of the changes back to the organization, as well as energize their fellow team members.
Finally, Kotter’s eighth step for successful organizational transformation is to anchor new approaches in the culture. Kotter describes this ultimate step as reinforcing the changes. This reinforcement can be done by connecting the new processes to successful outcomes, and drawing attention to these connections. The change coalition at my organization could connect the restructuring to any of several positive outcomes, including increased sales goal attainment, improved results from the annual all-employee survey, increased productivity, opportunities for advancement, and firsthand accounts of teamwork and collaboration.
The organization I work for, like many pharmaceutical companies, has undergone many changes throughout its existence. This is due to the nature of the pharmaceutical industry; after a patent expires, a drug goes generic and each company strives to develop new pharmaceutical products to replace the old. My company is planning for two major product launches, and this will most likely require a restructuring. The organization must be prepared for resistance to change, especially since many employees have already experienced countless previous changes. I believe that if my company follows Kotter’s eight steps to leading organizational change, they could potentially gain widespread commitment from employees and maximize the success of the upcoming product launches.
No comments:
Post a Comment