Managing change to avoid unwanted outcomes

Managing Change to Avoid Unwanted OutcomesThe process of change is difficult to manage. In this paper the authors investigate a planned organisational change involving a marketing department that did not reach its objectives and had several unwanted outcomes. The authors show how a multi-level model is helpful in understanding change processes, and suggest how change can be managed more successfully.

Ian Towers, Anabel Ternès

72 Marketing Review St. Gallen 5 | 2013

Schwerpunkt | Gestaltung von Veränderungsprozessen

A huge amount of literature has been produced about organisational change. Very often, however, it offers an undifferentiated snapshot picture of an organisational change and does not capture the complexity of the change process. Consequently, the process of organisational change is not fully un-derstood (Van de Ven/Poole 1995). The process is difficult and many change initiatives are at best only partially successful in terms of meeting their objectives (Pettigrew 1985; Collins 1998). Why is this so?

To answer this question, we followed for more than two years a major change in the organisational structure at PCo, the Montreal-based subsidi-ary of a large multinational pharmaceutical company. The change, known as the Bauplan change, which we describe in more detail below, was intend-ed to increase efficiency and bring the company closer to the customers. The groups that were most affected by it were those involved in marketing. Yet despite the great efforts that the company undertook to make the change process a success, stated goals were not reached. We found that there were

many unexpected, unintended and unwanted consequences for the organisation, for individuals and for the marketing function. This organi-sational change caused more problems than it solved.

According to Griffith (2002), change management involves a change pro-gramme (i.e., the change initiative), the specific actions to bring about change, and the set of skills to bring about these actions. Our objective in the present paper is to present a case study of a change programme and related actions at PCo to investigate how a planned change can have unex-pected negative outcomes at the organisational and individual levels. Cen-tral to our approach is a detailed multi-level examination of the relationship between individual and organisational change processes. How are change processes at these different levels interlinked? Then, building on an under-standing of a how a change process actually unfolds in practice, our aim is to develop some guidelines that can be used by managers to improve their change management skills.

To this end, we first present the background to the case study – we de-scribe PCo and provide an overview of the organisational change we were investigating, then we describe our methodology. Concentrating on how staff members working in marketing were affected by the Bauplan change, we show the degree to which one of the intended outcomes was reached and describe some unintended outcomes. We show why these outcomes turned out as they did, paying particular attention to the multi-level nature of change. We then provide some recommendations as to how managers can best manage the complex and difficult organisational change process.

Dr. Ian TowersProfessor of Management and Programme Director Business Administration at the SRH Hochschule BerlinE-mail: [email protected]

Dr. Anabel Ternès Professor of Management and Programme Director Communication Management at the SRH Hochschule BerlinE-mail: [email protected]

“Many change initiatives are at best only partially successful in terms of meeting their objectives. Why is this so?”

73Marketing Review St. Gallen 5 | 2013


PCo and the Bauplan Change InitiativeThere are over 700 employees at PCo in Montreal and the main commercial activities that are performed in this location are marketing new and existing pharmaceutical products, conducting clinical trials for new drugs, and get-ting and maintaining approval for drugs from Health Canada.

The Bauplan change initiative that formed the starting point of this re-search involved a change in the organisational structure. Having an appro-priate structure is key to good organisational performance (Mintzberg 1983). The change mainly affected the marketing function. Marketing is especial-ly important in the pharmaceutical industry; pharmaceutical companies spend 19 times more on marketing than on basic research (Light/Lechkin 2012) so an organisational change that involves marketing is clearly of great significance given the key roles marketing plays in internal and external pro-cesses (Bruhn 2009).

In the pre-Bauplan structure, PCo was organised by four functional are-as (Brand Marketing, Marketing Excellence, Clinical and Regulatory), rath-er than by product lines. Phase 1 of the Bauplan change created four Busi-

Main Proposition 1A key to successful organisa-tional change is taking into account the complex multi-level nature of organisations.

Fig. 1. PCo Structure After Phase II of Bauplan

BusinessUnits

SupportFunctions Business Franchises

SupportFunctions

Oncology

Transplant

Ophtha President

Sales

Head of General Medicines

Sales &Marketing

Capabilities

Medical

Regulatory

ABGH CV CNS Resp/Derm /ID

HR

Legal

HP & R

Finance

IT

Source: PCo



ness Franchises for the primary care drug portfolio, which was achieved by breaking up the existing Brand Marketing Team. The responsibility of the Business Franchises is to market the products for a specific therapeutic area: arthritis, bone, gastrointestinal, hormone replacement (ABGH); cardiovas-cular (CV); central nervous system (CNS); respiratory, dermatology and infectious diseases (Resp/Derm/ID). Two important support functions for the staff in the Business Franchises are (i) Sales and Marketing Capabilities, which carries out market research and provides market data, and (ii) the Medical and Regulatory Group which has the role of getting medical approv-al from the government.

The main innovation in Phase 2 of Bauplan was the creation of a COO-like position: Head of General Medicines, who was supposed to take over some of the work of the President and to improve co-ordination and com-munication between the business franchises. This new structure is shown in figure 1.

MethodologyWe follow Van de Ven and Poole (1995, p. 512) in viewing organisational change as

“an empirical observation of difference in form, quality, or state over time in an organizational entity. The entity may be an individual‘s job, a work group, an organizational strategy, a program, a product, or the overall or-ganization.”This definition implies the longitudinal, multi-level qualitative approach that we took to study this planned change initiative. Little research deals explic-itly with levels (Rafferty et al. 2013), even though organisational phenome-na inevitably involve levels (Klein et al. 1994). Rousseau (1985) and House et al. (1995) argue that single-level perspectives cannot adequately account for organisational behaviour. The fundamental argument for multi-level research is that it results in a deeper, richer portrait of organizational life (Klein et al. 1994).

We gathered a large amount of data – over 50 interviews – not least be-cause the change we were studying was a particularly complex one. In order to permit the analysis of change processes over time, first-hand accounts of change in the company were gathered from individual interviews (and com-pany documents) over two years. The selection of interviewees took into account hierarchical and functional groupings within the organisation. The interviews were transcribed, coded and analysed with the help of the quali-tative research software program ATLAS.ti.

Change OutcomesChange outcomes can be categorised in several ways. First, there is the in-tentionality of the change outcome – there are the intended outcomes that are presented as being the goals of the change initiative. However, the un-predictable and complex nature of change processes means that there will be outcomes which were not expected or intended – they are the side effects

Management SummaryThe pressure on every organisation to change is constantly growing and one of the biggest challenges facing managers is to be able to carry out successful change management. In the present paper we investigate an organisational change that profoundly affected a mar-keting organisation and show how and why intended goals were only partially achieved and unwanted outcomes emerged. Successful change manage-ment is possible if managers appreciate that organisational change is a multi-level phenomenon and that they need to consider the impact of any change at the level of the organisation, the group and the individual.



of the change and are often (but not always) unwelcome. Second, when a change outcome is classified as ‘intended’, its intended results may be achieved fully, partly or not achieved at all.

In this section we first consider the extent to which an important organi-sation-level intended outcome was achieved, then we describe two unintended individual-level outcomes.

Intended OutcomesThe intended outcomes of the Bauplan change were communicated to PCo employees by means of change management activities by PCo sen-ior management and are summarised in table 1. Interviews with senior management indicated that focus on the business was the most impor-tant of them.

The goal of “putting more focus on the business” was presented in inter-nal documents as being particularly important for success. During the interviews, two aspects of achieving this goal emerged: (i) increasing exter-nal focus by getting closer to customers and understanding their needs better, and (ii) decreasing internal focus by reducing the amount of time, effort and energy spent on activities that are not directly related to the busi-ness. In other words, the goal was better marketing.

One year after the implementation of the new structure more than half of the interviewees thought that there was essentially the same degree of focus on the business as before. This did not mean that they were satisfied with the degree of focus:

“Now, just as we have as long as I’ve been here, we spend too much time on what’s happening inside, not outside.” – Associate, Support Function

A second round of interviews was carried out a year later and this time two-thirds of respondents stated that there had been neither an increase in external focus, nor less time and effort being spent on internal, non-busi-

Main Proposition 2Unwanted outcomes can be avoided if managers pay attention to the interactions between change processes at the organisational, group and individual level.

Table 1 Expected Outcomes of Bauplan Classified by Level

Intended outcomes

Organisational level More alignment with PCo globally

Greater financial success

More focus on the business

Improved decision making

Group level Increased alignment and synergies between marketing groups

More efficiency between primary care and support functions

Individual level More job accountability and responsibility

Career progression



ness related topics. Marketing was not seen as having improved. When interviewees were saying that there had been no change, this did not in itself mean that the degree of focus on the business was acceptable:

“I haven’t seen any change there at all. We still are involved in a huge num-ber of navel-gazing activities.” – Middle Manager, Support Function

“More external focus? Not really – we talk about it, but nothing seems to be happening.” – Associate, Business Franchise

To summarise: the intended outcome of more focus on the business was not achieved, and so marketing was not able to get closer to the customers.

Unintended OutcomesSeveral unintended outcomes of the Bauplan change were identified: an increase in stress levels, an increase in workload, an increase in cynicism, a feeling of less empowerment, lower morale and worse work–life balance. This section reports on the outcomes which interviewees felt were the most significant: stress and the feeling of less empowerment.Stress. Just over fifty percent of the interviewees felt that their stress level

had increased with the introduction of Bauplan. There were three main themes to their comments about this topic. First, the introduction of a new structure and the resultant uncertainty was a contributing factor, being men-tioned by forty percent of the interviewees. Second, there was the nature of the new structure itself, which was being perceived as top-heavy. Interview-ees drew attention mainly to the workload, e.g.:

“So we are becoming very heavy at the top and leaner at the bottom, so the pyramid is turning upside down. Which increases stress and pressure – you know, too many bosses, too many chiefs, not enough Indians.” – Middle Manager, Support Function

Third, each Business Franchise had different ways of working and this was a cause of stress for staff in the Support Functions.Empowerment. Nearly half the interviewees believed that there was less

empowerment than previously because of Bauplan. Among the reasons advanced were that managers who were higher in the hierarchy were tak-ing decisions that the interviewee used to take, that there was a tendency towards micromanagement by top managers, that they were left out of the decision-making process, and that the structure was too top-heavy. Typical comments were:

“Let’s be honest. There are too many chiefs, so they keep hold of any decisions as much as they can so they can play their games.” – Middle Man-ager, Business Franchise

So the Bauplan change led to many employees feeling that they were less empowered than before, and to an increase in stress levels.

“Single-level perspectives cannot adequately ac-count for organisational behaviour.”



Linking Intended and Unintended OutcomesIt was shown that one intended outcome was at very best only partially achieved, and that among the unintended outcomes of the Bauplan change were an increase in stress and a loss of empowerment. This section inves-tigates how these outcomes came about and looks at the relationships between them.

The creation of the new position Head of General Medicines (HGM) at the organisational level in Phase 2 of Bauplan meant that there was a signif-icant change in the roles and responsibilities of the Heads of the Business Franchises (who were Vice Presidents). They had fewer strategic decisions to make and less work to do, because the HGM started to take these decisions himself and do some of the work that was previously done by the VPs. As a

Fig. 2. Bauplan Processes and Change Outcomes

Bauplan Phase llNew position created: Head of

General Medicines

VP moves down a level

VP has less power to make decisions

VP has less strategy work to do

Takes strategy work from director

Director has less strategy work to do

Needs to produce more reports, presentations

Needs to produce more justifications in form of presentations

Wants changes in presentation

Wants changes in presentation

Needs to go up a level for decisions

Needs to provide more justifications to VP in form of presentations

• Gets more involved in details

• Gets more involved in details

• Sends/resends presentations

• Sends/resends presentations

• Needs to have more justifi-cation before asking HGM for a decision, since cannot decide personally

• Needs to get more justifications

VP

Director

ManagerAnalystAssociate

Unexpected outcomesWorkload increases

Increased feeling by staffthat structure is not suitable

Morale suffersLess empowerment

More stress

Effect on intended outcomesNature of decision-making

changes for the worseJob responsibilities suffer

Career prospects of VPs affectedMore internal focus

Organizationlevel change

BF group level changes and individual level changes

Source: authors’ illustration



result, the VPs themselves started to get more involved in the work of the directors who reported to them, taking over the more interesting tasks and making some of the decisions that the directors had been making. The same process then applied to the directors, who in turn got more involved in the work of their staff, took over some of their more interesting activities and made decisions for them.

In short: the addition of an extra decision-making level meant that the VPs needed to provide justification to the HGM in the form of reports and presentations whenever they needed him to make a decision for them. These documents had to be prepared by the marketing staff in the Business Franchises and increased their workload. This meant they had less time to spend on marketing to their customers.

The creation of the position of HGM as part of Bauplan played a highly significant role in intended and unintended outcomes: •it increased the workload of the marketing staff, which had a negative

effect on their level of stress (unintended outcome),•it reduced the level of empowerment because decisions were being made

at a higher level in the hierarchy than before (unintended outcome),•it meant there was more focus on internal decision-making processes

rather than on the business (intended outcome, goal not met).The relationship between planned change and intended and unintended out-comes can be seen in figure 2. The figure also shows how what happens at one level during a change process has an effect on other levels – an organi-sation-level change (introduction of the position of HGM) changed deci-sion-making processes in the Business Franchises (group level). This then contributed to effects at the individual level – a loss of empowerment and increase in stress.

Understanding and Managing ChangeBefore managers can actually manage change, they need to be clear that change processes are multi-level processes. Organisational-level changes do not only affect organisational outcomes, but also what happens in groups and with individuals. So what does this mean for managers?

Be Aware of the Multi-level Nature of ChangeManagers should understand how complex change is and that there are always unanticipated outcomes. It was noticed several times during the research that senior managers did not appreciate that decisions they were making could have an indirect impact on others. An example of this at PCo was when senior managers assumed that the new position of HGM would

“A vital aspect of any change is how it affects the individual.”

Main Proposition 3Changes that are minor at the organisational or group level may be very significant for individuals and need to be managed accordingly.



only affect the VPs who were directly involved. The thought process was: “This organisational-level change is affecting A, because only she is going to have a new boss. No one else in her marketing group is affected because they continue reporting to A, so nothing changes for them.” Yet as was shown, this change led to more stress and less empowerment for marketing staff.

In order to avoid such negative outcomes, we suggest that managers spe-cifically take account of the multi-level nature of change processes. In this particular case, they should have asked questions like: •This organisation-level change is affecting A. What is she going to do dif-

ferently because of that?•And how will what she does differently affect the people who report to her?•How will that affect her group?If managers conscientiously think through what impact an organisational-level change will have on other levels, they are in a better position to man-age the change and communicate appropriately.

All Change is LocalEmployees are concerned by how changes affect their day-to-day working lives. It was found that every time PCo initiated and communicated about an organisational change, the first questions that came into the heads of the employees were: “What does this mean for me? How am I affected?”

Managers should pay particular attention to this when implementing a top–down, planned organisational change. Employees want and need to understand how a change affects their ability to do their jobs, and this should be a key part of any change management and communication plan.

Small Changes Can Be Big ChangesChange is constant in organisations and takes place at different levels, and each change has an impact on individuals. For instance, the appointment of a new senior market analyst is a relatively small change when viewed from the perspective of the organisation as a whole. At the group level, this would be an important change in a marketing department with fifty employees. For the staff who report to the new analyst, this would be a very significant and important change, because they have to get used to working with a new su-pervisor who may have very different ways of doing things and new de-mands. And it is obviously a very important change for the new manager.

The lesson to be drawn here is that change management is required for any change which has a substantial effect on an individual, even if the change is of limited importance at the organisational level.

“Before managers can actually manage change, they need to be clear that change processes are multi-level processes.”

Lessons Learned•Before carrying out an organisational change, thoroughly assess its potential impact by talking to and listening to the people who will be most affected by it, regardless of their position in the structure.•Before announcing a change, remem-ber that the first question asked about any change by staff members is, “What does this mean for me?” and be pre-pared to answer it.•As the change is being implemented, pay particular attention to unintended and unwanted outcomes, analyse why they were not predicted, and then take the necessary actions.



ConclusionThis research is a case study of a single organisation, which necessarily raises questions of generalisability. Nevertheless, the authors’ personal experiences and a review of the change literature suggest that there was nothing in the change processes at PCo that was so unique that what was observed there could never take place anywhere else.

The many interviews we carried out allowed organisation members to describe the changes that are important to them, which are not necessarily those which senior managers think are important. This allowed us to devel-op the concept that ‘all change is local’ and made clear to us that a vital aspect of any change is how it affects the individual. Managers need to be able to answer this question and then pose the same question about the other levels in the organisation. Change can best be managed by those who appreciate that it is a complex, multi-level phenomenon.

References Bruhn, M. (2009): Integrierte Unternehmens- und Markenkommunikation: Strategische Planung und operative Umsetzung, 5th Ed., Stuttgart.

Collins, D. (1998): Organisational Change: Sociological Perspectives, London.

Griffith, J. (2002): Why Change Management Fails, in: Journal of Change Manage-ment, 2, 4, pp. 297-304.

House, R./Rousseau, D./Thomas-Hunt, M. (1995): The Meso Paradigm: A Framework for the Integration of Micro and Macro Organizational Behavior, in: Cummings, L./Staw, B. (Eds.): Research in Organizational Behavior, Vol. 17, Greenwich, CT.

Klein, K./Dansereau, F./Hall, R. (1994): Level Issues in Theory Development, Data Collection and Analysis, in: Academy of Management Review, 19, 2, pp. 195-229.

Light, D.W/Lexkin, J.R. (2012): Pharmaceutical Research and Development: What Do We Get for All That Money? in: British Medical Journal, 345:e4348.

Mintzberg, H. (1983): Structure in Fives: Designing Effective Organisations, New York.

Pettigrew, A. (1985): The Awakening Giant: Continuity and Change in ICI, Oxford.

Rafferty, A./Jimmieson, N./Armenakis, A. (2013): Change Readiness: A Multilevel Review, in: Journal of Management, 39, 1, pp. 110-135.

Rousseau, D. (1985): Issues of Level in Organizational Research, in: Cummings, L./Staw, B. (Eds.): Research in Organizational Behavior, Vol. 17, Greenwich, CT.

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Managing change to avoid unwanted outcomes