Reference no: EM133025595

AW LTD.: MANAGING CHANGE 

In June 2013, Shiela Parmar reflected on her 52-week journey at AW Ltd. She remembered her discussion with her boss during her first day at the office in 2012; he had welcomed her and explained that her position as the general manager of organizational development and the change facilitator had been created to smoothly transition the company from a functionally organized, traditional business to a vibrant organization ready to embrace change and develop the highest quality of people processes in the pharmaceutical industry. Her boss had expressed confidence in her by stating that he believed she had the requisite qualifications and adequate experience for managing change because she had spent a large part of her professional career dealing with change in the automobile industry. Her progress at AW Ltd. had been tracked by many of her professional colleagues and by headhunters. Consequently, she had received two job offers with promising job profiles, but her own sense of failure in the tasks given to her at AW Ltd. had prohibited her from accepting these offers and influenced her to increase her efforts with the existing job. Now, she wondered what she could do differently to successfully manage change.

In 2012, Parmar had thoroughly researched AW Ltd. before accepting the offer. AW Ltd. was considered a top-ten pharmaceutical company in India. From 2000 onwards, the Indian pharmaceutical industry was rapidly globalizing and faced similar challenges to those faced by the automobile industry.

The industry was growing exponentially and went from a few companies to many, and new entrants were making a foray into the segment and growing. Both sectors had strong statutory and regulatory bodies. However, a major difference was that the pharmaceutical industry was largely family-owned, and many firms were managed like family businesses. Parmar discovered that AW Ltd. too had been founded by the father of the current chief managing director, Harsh Patwardhan, in 1962. Empowered by the Indian Patents Act of 1970, the firm had diligently worked to carve out a niche, both in Indian and global markets. Based on expertise in reverse engineering, a new process for manufacturing drugs at low costs, the firm had built competitive advantage over other firms of a similar size and stature. The firm was becoming more progressively professional under the guidance of leading consultants. Managing a human resource (HR) excellence campaign and developing state-of-the-art people processes in an industry that Parmar had never worked in appeared challenging, but the financial reward was good. When Parmar began working with AW Ltd., she felt that this could be an opportunity to advance her career.

Since 2007, AW Ltd. had been led by Patwardhan, who was a second-generation entrepreneur known for his aggressive, hands-on leadership style. Patwardhan introduced a policy of organic and inorganic growth. Organic growth steadily increased the customer base through new geographic locations and the addition of new formulations; inorganic growth was based on mergers and acquisitions where many strategically aligned businesses were acquired and integrated with the main business. In early 2012, AW Ltd. hired Pharmacon, a United Kingdom-based consulting agency, to improve the quality of the company's technical knowledge. In 2012, AW Ltd. had a consolidated revenue of 25 billion, with an earnings before interest, tax, depreciation, and amortization margin of 23 percent (which was above the industry average) and a profit after tax of 2 billion. The company had a presence in more than 15 countries and employed more than 8,500 employees. Interviews with Patwardhan revealed that the company prioritized research-led growth with the goal of making AW Ltd. a globally recognized pharmaceutical company.

To align the organization with this growth strategy, Parmar's role was to aid Patwardhan by aligning talent management. Accordingly, her mandate was to work with the HR department to (a) conduct an organizational excellence audit, (b) identify areas of improvement in HR processes related to team alignment and performance, and (c) execute a holistic change strategy in consultation with the vice president (VP) of Previously, Parmar had completed a certificate program in organizational development at the National Training Laboratory. She had worked as a consultant in the automobile industry on similar change management assignments and had a positive reputation as an external change agent. She was certified in several personality assessment tools and as a Confederation of Indian Industry-certified assessor of HR excellence. AW Ltd. was her first major assignment as an internal change consultant.

PHASE I: HR EXCELLENCE AUDIT AND DIAGNOSIS

In the first few months of joining AW Ltd., Parmar prepared a blueprint for an organizational excellence audit and consulted the VP of HR to discuss its development. Once her plans were in place, she began collecting the data required to assess the organization by conducting in-depth interviews with senior executives and surveys at all levels of the employee hierarchy, and by reviewing HR documentation. After six weeks, she had gathered the required data for analysis, which confirmed her plans for improvement.

Data suggested that the HR department was barely functioning and was doing only time-keeping jobs and ensuring statutory compliance. The relationship between the VP of HR and the VP of finance was strained because both VPs spent more time attempting to prove who contributed more towards organizational performance than undertaking valuable work. Inter-departmental liaising was weak, and all functional heads competed internally for their share of attention and recognition from the founding members of the company. Parmar also diagnosed role-related issues in the production department.

Ram Singh, the VP of production, was an old-guard employee who had been with the organization for 25 years, but he delegated minimal work to his juniors. His instructions were ambiguous, and employees did duplicate jobs and wasted time completing redundant documentation/processes. His leadership style lacked clarity and an understanding of reporting structures or job role systems, leading to overlapping roles and conflicts within the production team.

PHASE II: IMPLEMENTING CHANGE

In December 2012, Parmar identified the following key areas needing attention. First, HR needed to redefine its role by operating at a strategic level. A transparent performance appraisal and management system linked with the firm's strategy needed to be put in place. Second, role clarity needed to be established by developing clear job definitions for all managers and higher-level employees in the production department. She had a frank discussion with the VPs of HR and production to prepare and deliver a plan of action with a committed timeline and detailed activity schedule for these interventions. The VP of HR had worked for the firm for more than five years and advised her to go slowly by first aligning with the group norms, gaining confidence, and then changing the dysfunctional aspects of roles or task performance. He told her that she was new to the system and that her ideas, though relevant and of organizational interest, would meet resistance because they would challenge the contributions of existing employees. He recommended aligning with departmental heads to create an urgency for change and to identify supporters and opponents. He also informed her that the company employed an old, family-owned structure with several informal but powerful channels of communication and influence. The relationships between the owners and some employees were deep. He warned her to be careful during the implementation of any changes because, although her reports identified the need for change, which people would acknowledge and pay lip service to publicly, there were undercurrents of resistance, largely from old members of the firm who were also part of the cohort of the owners.

Parmar's own observations were similar during the excellence audit. She observed that AW Ltd. was a traditional organization with set processes and that earning the trust of the founders was the most important factor for the growth and promotion of employees. Articulating dissent was not common. The organization valued loyalty and traditional work methods, so compliance and respecting precedents were the norm. Older employees, such as Singh, were trusted and considered to be consistent performers. They worked through informal networks and provided innovative solutions. In particular, Singh was not comfortable with having clearly defined roles and responsibilities for everyone on his team because he believed that this would negatively affect departmental processes and performance. "We work as family here," he observed, "and any change would make us bureaucratic, allowing a 'let me guard my turf' mentality to creep into the system. This is not good for the organization."

During the entire period of data collection, from June to December 2012, Parmar realized that top management needed an intervention; therefore, she did not heed the advice of the VP of HR. She did not think that her team members would perceive her as a threat for doing her job and bringing about transparency and change. She trusted her data and audit findings and was convinced of her approach to the process even though she questioned if she should be more diplomatic or cautious. She failed to appreciate the rigidity and resistance of the VPs of HR and production, who she felt would not be able to create a vibrant organization if they did not challenge the status quo and implement new practices.

She concluded that drastic changes required drastic measures and chose to follow her original action plan. She explained this to the founding members, who were encouraging. The next step was to organize a meeting with all departmental heads and HR managers with the data she had collected, in order to urge them to participate in the change agenda and decide on the change process. She noticed that in most of these meetings only a few employees supported her ideas, with most remaining passive or opposing her ideas by questioning the data.

Although no one confronted her, most employees did not actively participate in her initiatives. The meetings she organized were either avoided or, if attended, led to arguments. Some employees mentioned founding members, claiming that they had been told not to act on her recommendations. Her team members were not cooperative and made subjective decisions based on past incidents rather than impartially considering the challenges and acting on them. There were verbal attacks on Parmar, including from members of Singh's team who had initially voiced their dissatisfaction with the inefficient working style of Singh himself. The same set of employees united against her to create a negative impression of her change process. Parmar realized that she was being ostracized by many of the company's employees.

Now, 52 weeks into her new and challenging assignment, Parmar was disillusioned. She believed that she was not adding value to the organization and considered reassessing her initial plans or accepting an offer from another company. Accepting a promising job offer from another company seemed lucrative, but she wanted to assert herself and be successful in what she had started.

The analysis should include:

• Problem statement
• Alternatives explain 3 alt ernatives
• Recommendations
• Conclusion