EFFECTIVE LEADERSHIP FOR EFFECTIVE CHANGE

Authors : Saikat Banerjee, Akash Bandegiri, Tamatur Cardozo, Jude Ericson,

Goa Institute Of Management

Industry : Contract Research Organization

Region : Kolkata, India

Abstract:

This case was written to trigger an interesting discussion over a simple, yet thought-provoking concept- It is imperative to hire or appoint managers with the apt skills and competencies to meet the changing demands of an organization and to ensure long term success. Established in 2003, Chemgen Pharma International strived towards delivering high quality chemicals in the field of chemistry. Under the leadership of its director Dr. Anil C Ghosh, the company had emerged as an organization known for developing and delivering high quality research chemicals. Backed by the performance of its four Group leaders Chemgen had presented itself as a result driven organization. However in 2007 the top management of Chemgen decided to add three new teams, offering research in the scale of kilo. Additionally to ensure high quality performance, the top management decided to hire new Group Leaders, team leaders and team members possessing relevant scale up knowledge and experience. However these new teams failed to live up the desired expectations. The inability to adjust to the demands of their new roles hampered the performance of the teams. Additionally, education from reputed institutes combined with work experience in renowned organizations, added to the superiority complex of these new team leaders. Owing to the ego clashes with the new team leaders, even the existing teams started faltering in their targets. Dr. Ghosh who was supposed to guide these leaders failed to find an appropriate solution to the problems at Chemgen. Will Chemgen be able to revive its declining performance? Is replacing Dr. Ghosh the apt solution for this ailing company?

Objectives:

To understand the role and responsibility for a manager To analyze what qualities and competencies must be considered in choosing a manager To debate on whether a manager’s role affects the performance of an organization

Methodology: Using the principles of OB to the relevant case of “Chemgen Pharma” to find the organizational pitfall thus leading to the down slope of production & effect on interpersonal relationship. The study would base on team building & leadership, organizational culture, job attitude, conflicts management, managing the change, persuading communication. The study would thus explore the possibility of solving leadership inefficiency & thus fostering towards maximum benefits to the organization.

The end result is Win-Win institution for both the leadership of the company & the individual employees.

Background

Organizations perceive change as very important for its survival and prosperity in today’s most competitive environment and new business challenges. They make change initiative to keep up the pace with changing environment and new challenging competition. The success and performance superiority of organizations are very much dependent on its ability to align its internal arrangement with the demand of external world. While studying the change literature, the concept of change and its differentiation/types seem very ambiguous and it was very difficult to understand the overall picture of change from the scattered literature. As different authors have defined change, based on their differentiation, in different manners, e.g. Schien defined change as it can be natural evolutionary, planned and unplanned change, Leavitt expanded the technical-social (technical & social change) framework, by adding structural change (Leavitt, 1965). We will try to present somewhat clear and complete picture of organizational change based upon the literature and empirical study, which according to our point of view is very important for understanding change and its major problem i.e. employees resistance to change (the main area of this study). Our empirical study is based on a company operating in a developing chemical research, which was under severe pressure from external environment and internal problems, and made it very important for its survival to introduce a major change program. Change as an important factor has been discussed by different authors as, ‘change is the only constant’ and very important for the firm. But managing change is very challenging & complex and great amount of care should be taken while making change. One of major problems/threats to organizational change is employees’ resistance and has usually very unpleasant and negative implications for organization. The firm understudy proposed a change program but it was severely resisted by its employees and the change brought very negative results, opposite to its demands. Looking at the possible solutions discussed in the literature of change management, every measure has been applied by the experienced management of the company to overcome resistance, but failed.

Purpose

The purpose of this study is to understand goal conflict between Company (owners) and individuals (employees) and how it contributes to employees’ resistance to change as a major potential cause/antecedent. Different authors have discussed the importance of causes/antecedents of employees’ resistance to change to know the right problem and develop strategies to overcome it. According to Mintzberg, the cure might actually prove to be just more of the cause (Mintzberg 1998 p. 324). After understanding the causes/antecedents of employees’ resistance to change in the literature, we have got an opportunity to add another potential but major cause of resistance, that is, goal conflict between Company(owners) and individuals (employees). Different theories has been discussed which provide sound basis for understanding and also providing solutions to decrease the negative effects and intensity of the goal conflict. It will enable us to provide management with recommendations for possible solutions to employees’ resistance in the firm understudy. Our empirical study helps us understand, how

‘change’ increases the magnitude and intensity of goal conflict and how it contributes towards employees’ resistance to change.

Introduction to empirical study:

Effective leadership in the change management process is particularly important because of all the factors involved in organizational change. According to McShane and VonGlinow (2004), a leader must be able to “influence, motivate and enable others to contribute toward the effectiveness and success of the organization.” Stabilizing the organization after the change process begins is critical to continued success.

Chemgen Pharma International was founded on 2003 by Dr. Anil.C.Ghosh. Prior to establish Chemgen he was CEO of Chembiotek International which was under great industrialist Mr.Purnendu Chatterjee. Because of some problem with Mr. Chatterjee, Dr Ghosh resigned from Chembiotek and established Chemgan Pharma with the help of a NRI Dr.Kalipradip Chaudhuri.

Dr.Ghosh started recruiting the best Scientist of Chembiotek and offered them a huge salary to attract towards a new establishment. As a result, 13 scientists from Chembiotek joined at Chemgen mostly with higher posts. All others had taken from good universities or good industry.

To manage its business Dr.Ghosh has a clear strategic framework and one important element ofthis is having the right people with the right skills in the business. It is Dr.Ghosh core belief thatits people make the difference and enable the business to be the leader in its chosen markets.It aims to have motivated people all working together as one team across its business unitand functions in support of its vision to ‘achieve the exceptional’.To deliver exceptional value, Chemgen focuses on five big goals which are clearly defined andeasily remembered as the mnemonic ‘DREAM’:

1. Develop markets - and grow by working closely with key customers2. Reduce costs - and be well positioned for the future3. Engage employees - to work as one team and each achieve its full potential4. Act responsibly - and be safe in everything that is done5. Manage assets - to get the most out of its investments.

Each goal has a few targeted strategies. Each strategy has clear actions, targets and measures in order to be relevant to employees and described in a way that is understandable by all. For example, Chemgen targets and measures a reduction in waste sent to landfill as partof its sustainability strategy in order to reach its goal to ‘Act responsibly’. It wants allemployees to bring their expertise, enthusiasm and commitment to the activities that willdeliver most value in support of the company’s objectives.

Organisational structure, roles and functions

Chemgen has set in place an organizational structure that provides clear lines of control,responsibility and communication. In a business of medicinal CRO as Chemgen, there aremany different jobs. Its structure is complex, so to help individuals within the businessunderstand their roles and responsibilities, Dr.Ghosh has a set of Business Principles that

demonstrate its commitment to operating ethically and responsibly. This helps everyoneunderstand where his or her role contributes to overall performance and enables the wholeworkforce to work together to achieve the business’ aims and objectives.

Business Units Function in each business Unit

Head Office support business function

Contract ResearchOrganization,Kolkata

OperationsTechnical

ChemistryIT

Commercial Finance

Health,Safety,Environment(HSE)

HR

Recycling Procurement

Roles:

1. Principle Scientist - organize and plan their departments to exceed the expectation of internaland external customers. They interact intimately with other managers across the different companies to promote Chemgen’s competence, including: Continuous research with different chemical reactions Continuous process improvements Improving accuracy Reducing the need to repeat work Driving up efficiency year on year.

2.Group Leaders - work with PS to ensure that Scientists apply procedures andpractices consistently. This involves using best practice to create value-added servicesacross the research and business.

3. Scientists - are responsible for day-to-day operations of the research. This is the level atwhich a university post graduate might enter the organization in order to learn all aspects of theresearch. The role requires knowledge, accuracy, efficiency and a high level of individual responsibility.

The Operations Research function at Chemgen is key to overall business performance. This is where a number of processes come together to make the products and services to satisfy customer needs. However, the research function needs the support of services in:

• Finance - to manage the flow of money across the business. Finance managers producefinancial and management accounts not only to ensure legal compliance but also tocontribute to the strategic decision-making process by forecasting financial performance.Budgets enable Operations to have the resources (raw materials, equipment and people)to carry out processes.

•Human Resources (HR) – This includes planning and forecasting staff requirements andmanaging recruitment and selection. The HR team ensures that managers apply HRpolicies and procedures consistently across the business. The development of staff is a keypriority within the Chemgen business. Without the right people, chemistry research may not be able to achieve targets.

Additionally, Chemgen also needs the services of:

• Marketing – by understanding customer needs, the marketing function can inform theoverall business strategy and ensure that the Chemgen image and brand reflect its highquality. Marketing and business development is the key factor of CRO business.• Procurement is the acquisition of goods and/or services at the best possible price. WithinChemgen this function secures cost effective contracts and establishes long term partners toensure business continuity.

• IT services install equipment and applications, manage databases and computer networksto provide the business with strong and effective information and communication channels.

It is essential for Chemgen to have the right people in place in order to achieve competitiveadvantage. It recruits post graduates and fresh doctorates into key roles across the business andspecifically within Research Chemistry:

• A post graduate would join Chemgen as a Project Fellow and would gain the relevant job skillsand experience during their two years fellowship.Once qualified, progression within the business is steady ensuring that the employee hasacquired the right skills and knowledge before moving to the next challenge or role.A Business Developer role is critical and includes managing operational performance acrossseveral levels and within a large geographical area. A Business Developer needs to understand all aspects of the business in order to meet and improve targets for cost, quality, delivery, safetyand business integrity shown in agreed key performance indicators (KPIs). All staff in thezone need to understand their roles in helping to meet these KPIs.

It is the Business Developer’s job to help get the best performance from the team by:

• motivating the team through coaching and leadership• identifying priorities for continuous improvement• encouraging and rewarding staff who contribute improvement ideas and actions• emphasizing the importance of developing skills and capabilities.

Chemgen’s long-term aim is to develop high performance teams who work within a culture ofquality and continuous improvement. Chemgen employees have the opportunity to contributetheir ideas on how to achieve results. They can do this through the employee suggestion schemeor by presenting ideas to managers to discuss within development teams. This helps individualsfeel part of the wider team, allows them to gain a greater understanding of the business andstrengthens employee engagement and commitment to the organization.

Due to very good business condition, additionally to ensure high quality performance, businesses have to respond to rapidly changing markets and conditions in order to remain competitive and

grow, in 2007 the top management of Chemgen decided to add three new teams, offering research in the scale of kilo.. Developments in technology, competition from new or emerging markets, changing demands, and changes to the law can all affect a business.

Chemgen has put in place a program of Change Management to respond to these issues and to improve performance and motivate staff. To make this happen, the top management decided to hire new Group Leaders, team leaders and team members possessing relevant scale up knowledge and experience. Chemgen trained the new managers to move from an autocratic (or top-down approach) to a coaching style of management.• An autocratic manager tells people what to do and how to do it. This may be necessary if a jobis urgent or needs to be done in a particular way, for example, for health and safety reasons.• A coaching manager focuses on developing employees to manage themselves rather thanmanaging every task. This means that they can find a way to achieve results and learn from theexperience. This makes employees more motivated and better able to deal with future situations.

However, these new teams failed to live up the desired expectations. The inability to adjust to the demands of their new roles hampered the performance of the teams. Additionally, education from reputed institutes combined with work experience in renowned organizations, added to the superiority complex of these new team leaders. Owing to the ego clashes with the new team leaders, even the existing teams started faltering in their targets. This diversified behavior of the two teams ruined the organizational culture. Dr. Ghosh who was supposed to guide these leaders failed to find an appropriate solution to the problems at Chemgen.

Truly, revolutionary change in both activities and culture tends to be far more difficult for existing leadership than for new. This is because the existing leadership often has itself absorbed the organization’s culture and has difficulty even conceiving of anything but minor modifications of the status quo as solution to the organization’s problems. However, in the leadership of organizations this can be dangerous, and it often prompts a cry for new leaders. It is standard practice in industry to replace old leaders with new ones when a radical change in direction is necessary.

Case Analysis:

McShane and VonGlinow (2004) outline seven competencies to effective leadership. Those competencies include emotional intelligence, integrity, drive, leadership motivation, self-confidence, intelligence and knowledge of the business. Leaders with this set of competencies and skills should be effective in their leadership ability regardless of the leadership style that they favor.

Selecting the Right Leadership Style

Selecting the right leadership style to influence the effectiveness of change is important if large organizational change is to be successful. Different leadership styles to consider include visionary/inspirational leaders, commanding leaders, situational leaders, people-oriented and task-oriented leaders. The right leadership style might change as the situation changes within an organization. A visionary/inspirational leadership style should be used when a leader is trying to

move people towards a shared dream. However, a coaching leadership style might be used to effectively connect what a person wants with organizational goals. A commanding leadership style gives clear direction and is useful in cases of emergency. The situational leadership model suggests that leaders change their style of leadership based on how ready their followers seems to be.

When drastic organizational changes are involved, having leaders who are people-oriented as opposed to task-oriented will be better able to anticipate the needs of the employees as they motivate and enable them to change. Also, by using Kurt Lewin’s three-stage model for change which involves initiating change (unfreezing), managing the change (changing) and then stabilizing the change (refreezing), a leader can effectively manage the change process and the employees involved in the change.

Steps for Leading Change

Kreitner and Kinicki (2004) outline John Kotter’s eight steps for leading organizational change as another model to follow when attempting to manage the change process. Kotter suggests establishing a sense of urgency, empowering groups of people to lead the change, and developing a vision or strategy. Kotter also recommends eliminating barriers to change, generating short-term successes, reinvigorating the change process and finally anchoring or stabilizing the new approaches.

Leadership theories of the past are still highly relevant when considering leadership challenges today. Effective leadership in the change management process is particularly important because of all the factors involved in organizational change. As situations shift, leaders must be able to adapt and motivate employees to reduce fear, uncertainty and loss of employee morale. Anytime an organization goes through major changes, using the most effective leadership style can directly impact the success of the change and impact to the organization. Before the situation go from bad to worse, the owners and top managers of the Company decided to implement a major strategic change program. Severe efforts have been done by the experience management of the firm to act according to book (the formal and specified way to deal with this problem), and work that best suits its situation. Based on the firm’s severe need for change, a situation of ‘sense of urgency’ has been created to provide a compelling reason to change and make employees support it. The implementation of this change program was done step by step, based on a period of six months, to make it easy for the employees to absorb change. The main focus of the firm was to survive in its competitive market (its primary goal), for which it was very important to maximize its profit. Supporting goals has been designed towards quality control, product development, increased productivity, and cost minimization, to help achieve its primary goal. Functional teams have been made which served on two basis, one is to increase the productivity of employees (which is one of the supporting goals of the firm), and second is to guide employees towards the change. The Company’s primary goal (which is its survival) and supporting goals (which are cost minimization, quality control, production development & innovation, and productivity increase) has been set clearly & shortly, to communicate a clear vision which according to kotter is very important for a successful change program. Also the

specification of primary and support goals are important to make employees understand firm’s priorities and also to make the firm gain small victories which create momentum for bigger change. Moreover structural and cultural change has been introduced to empower and change the behavior of employees. Changing the behavior of the employees help the firm to make the change stick and durable. Subsequently, this change program included changes in firm policies regarding employees work and salaries, technology, structure, and culture of the firm.

Mainly, if the crisis facing the organization is acute and there is little time to spare, mandating change unilaterally may be the only avenue open to leadership. Same way, Chemgen’s owner Dr.Kali pradip Chaudhuri also did the mandatory change of leadership to promote an evolution of both activity and culture that spirals away from the present culture towards the new culture the organization needs to survive.To get remedy from the current state of affairs, Chemgen top management endorsed Dr. Raghunath Singha as a new leader of Chemgen, who is having very clear vision of future. And vision is recognized to be of central importance in successful organizations. The motivation for working to build a vision is an acute awareness of the organization’s cultural imperative, of its strengths and weaknesses of the threats its faces, and of opportunities that are available. Whether these are analyzed in a purposeful, careful manner or remain only vague impressions, they define the issues the vision’s builders must address and they constrain what can reasonably be entertained as an agenda for the future. The trick, of course , is recognizing that the trouble exists or that a threat or an opportunity is imminent, understanding it, and then having the creative vision that is required to deal with it successfully.

To implement his vision to change the environment he tries to identify various possibilities in vision building depends upon the willingness of people to attempt visionary thinking as well as upon their willingness to tell each other about what they think. To motivate scientists to give the creative ideas he has broken the process in two parts. The first part is for generation of ideas. The second part is for their evaluation. Absolutely no criticism is permitted during the first part of the process. The point is to generate lots of ideas.

The introduction of structuring and evaluation marks the beginning of planning because one criterion for including an idea in the vision is whether it reasonably might be accomplished. So the groups begin to move from building the vision to designing a plan for the emerging vision. Indeed, his planning consists largely of making the vision more concrete, more in touch with reality. But he has also taken care through out that the vision is not wholly reduced to practicalities- a little impracticality must remain to inspire, motivate and challenge.

Implementations of these new methodologies impact the members of the organization in two major ways. The first impact is a need for communication about the implementation-communication to them about what is expected of them(and why), and communication from them about the success of their efforts, the barriers they have encountered, and the surprises they have experienced. The second impact is a need for help in coping with the changes that come about both in aid of implementation and as a result of implementation. Whether the plan succeeds or fails, their lives will be affected, often radically. They will need to learn new skills on the job or through training. They will need to work compatibly with new people who hired as a result of implementation. In

some cases not all that much is required; if people know what to expect and have time to digest it, they usually adjust.

Implementation of Dr.Singha’s plan marks the beginning of movement toward realization of the vision. As such, it necessarily brings about change within the organization, in addition the changes it makes in its environment of Chemgen.

Two common organizational changes are

(1) Formation of new task groups to accomplish specific tasks and(2) Establishment of new communication channels both within the task groups and from the task groups to the monitor.

Failure to make these organizational changes puts the accomplishment of the plan in jeopardy. Making one change without the other is not sufficient. There must be clear cut responsibility for task accomplishment and there must be ways to communicate progress to some central monitor, or the plan will lack the precision and coordination that is necessary for its success.

Dr. Singha’s main goal is to mix the scientists of two different streams. So the kilo scientists start working under basic chemistry research leader and vice versa. The advantage of this plan is that with the new jobs people are more motivated and started working together.

A major consideration in implementation is the degree to which the organization possesses the knowledge and experience to do the tasks required by the plan. This means that it controls the outcomes to a greater extent that it would if it had to acquire skill through training or hiring skilled people or can mix up both, what Dr. Singha did. The good site of having knowledge and skills is that it often permits the plan to be more clearly articulated and the requisite task is more clearly or distinctly defined.

Conclusion

It is obvious that making the right decision requires understanding. From this, it follows that one must obtain that understanding wherever possible. The full study based on learning from people in the organization. In addition when decision arises, one must take advantage of the power of analytical tools from operations research, decision theory, finance, and all the rest-because they help you understand. So, too, one must discuss the decisions with other people, perhaps using task forces and planning groups because they help you to understand. And one must read voraciously and keep up with developments in one’s field in order to know what is going on in one’s organization’s environment because it will help you to understand. There is no end to it; understanding is what one thought one had before one got more understanding. Because one’s decisions can never be better than one understands, the key to make right decisions is to constantly increase one’s understanding.Is that all that matters? Or how else should one be visit the case for better solution?

References

Making the right decision: Lee Roy BeachEssentials of organizational behaviors: Stephen P. RobbinsManagement mistakes: Hartley R.FThinking about implementation: journal of management, 12, 43-60The Journal of behavioral and applied management-jan-2006; vol7, no2

Appendix

Chemgen Organization Chart

Skills used by Dr. Singha

1. Planning, organizing & controlling 2. Team building & leadership Formation & building up of self driven team Can do approach & focus on must win Common understanding & dividing the responsibility People involvement , participatory approach, liberating potential, Challenging people, motivating analytical thinking, driving people for the improvements Selection of team members based on potential Training, other’s development & trust to expand the power of the team Appreciation, gives credit, Allowing the people to work as partners cross functionally Facilitating the development of the people Internal customer focused Managing change, Inspiring people to succeed Decisive & disciplined

3. Interpersonal skills Convincing, persuasiveness Effective communication Negotiating win –win situation

CEO

Principal Scientist

Group Leaders Group Leaders

Principal Scientist

Group Leaders Group Leaders