For more than half a century, Schazoo Laboratories has been working to advance health care for people nationwide. Founded in 1951, Schazoo Laboratories has evolved into a diversified health care company. Schazoo Lab. gave birth to two new companies in Dec 2004, Schazoo Zaka (Pvt.) Ltd. & Schazoo Pharmaceutical (Pvt.) Ltd. This was a major transition for the company. Part of the management also changed. Since then the company has moved to a new premises. The new plant conforms to all the requirements of WHO and FDA. The work environment for the employees has improved drastically but the new plant required major outlays of money and the company still suffers from financial problems.
Schazoo Zaka is a family run business. The board of directors consists of close family members. Four of the directors are involved in the day to day running of the company. The hierarchy of the management has been depicted in the organogram (see Exhibit 1). Since Schazoo Zaka has evolved recently and has been faced with the numerous problems of constructing and moving to the new premises, along with division of assets with the sister company, we have decided to analyze the role of the leaders especially the executive directors in the running of the company.
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The manufacturing plant of Schazoo Zaka is located near Lahore. The company has ten major departments; Administration, Human Resource, Accounts, Marketing, Planning, Maintenance, Quality Assurance, Manufacturing, Quality Control and Research and Development. Products of Schazoo Zaka are sold throughout the country. At present there are almost 200 highly trained field force personnel working across the country providing updated information regarding Schazoo Zaka's products and services to medical professionals. Schazoo Zaka has five marketing teams on the basis of therapeutic categories headed by well professional business unit managers; Infectious Diseases Team, Respiratory Team, Consumer Health Care Team, Lifestyle Team and Orthopedic team.
The pharmaceutical industry of Pakistan has almost 400 companies and presently Schazoo Zaka falls in the top 20 national companies. Schazoo Zaka was the sixth largest pharmaceutical company of Pakistan in 1968 according to IMS (International Medical Statistics). The company however has been unable to maintain its ranking and performance. The management also feels that the company has not attained its full growth potential. Among the many problems that the company faces include a high employee turnover which continues to be a pressing issue.
The company aims to provide quality products in compliance with international and regulatory standards, at affordable prices ensuring customer satisfaction. The management of Schazoo Zaka is also embarking on the program to become a respected & strong multinational company in the healthcare area. Such ambition can only be recognized through strong leadership, motivated employees and a healthy work environment. We thus aim to examine and critically analyze the prevailing leadership, culture and employee motivation plans within the organization and advocate improvements which shall better equip them for success.
MOTIVATION AND CULTURE
The management of Schazoo Zaka appreciates the need for motivated employees. The management feels that the employees can be motivated primarily at two levels: incentives and acknowledgment. It is interesting to note that according to the senior marketing manager interviewed, Mr Zahid, monetary compensation dominates the preference of employees as most employees prefer perks like foreign travels to be encashed. This is in consistency with Maslowï¿½s Hierarchy of Needs Theory; lower order needs, including physiological and safety needs, must be satisfied before proceeding to esteem and social needs which compose of higher order needs. In order to achieve this, in addition to salaries and bonuses, the management at Schazoo Zaka recognizes the relatedness and growth needs of employees. Hence cash prizes and certificates and letters are disbursed to deserving employees when performance appraisals are conducted.
The management at Schazoo Zaka has an open door policy. This is what distinguishes the culture at Schazoo Zaka from other pharmaceutical companies. As per the HR managers, Ms Samia and Mr Amir Zia, any employees can walk into a senior managerï¿½s office with any problem which he or she faces. The usual hierarchy in this regard however is that officers report to assistant managers who is turn report to the department and unit managers. The open communication channels serve as a motivating factor which is consistent with Mc Gregorï¿½s Theory Y which assumes that higher-order needs dominate individuals and approaches such as participative decision making, responsible and challenging jobs, and good group relations maximize an employeeï¿½s job motivation.
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However, open communication channels between management and employees is not translated in the same manner in the case of business plans, made at the organization level, which are formulated at the beginning of the year. As per the marketing manager, Mr Zahid, the setting of marketing plans and business plans is essentially a top-down process because the substance of the people at the lower level lacks at considering the organization wide implications of the proposed plans; employees tend to focus on advancing career goals instead of organization goals. For instance, there is lateral communication between the accounts marketing and procurement department; the procurement budget is approved by the CEO and hence the business plan is implemented further on. Moreover, each unit head discusses the proposed budget of each unit with the respective divisional manager and subsequently targets are allotted to each individual employee. Hence participative management is not practiced. This is in conjunction with goal setting theory which states that specific and difficult goals, with feedback, lead to higher performance; however, the approach negates management by objectives theory which strongly advocates the issue of participation by stating that objectives at one level of the organization should be linked to those at the next level.
In terms of communication regarding complaints, the procedure is streamlined and documented in accordance with the provisions of ISO 9000. The nature of complaints is operational complaints and technical complaints. However, for personal complaints there is no presence of an organized structure. This suggests an absence of an important component of whistle blowing in a culture which otherwise appears to be marked with openness and honesty. However, as per an estimation of Mr Zahid across 160 medical reps throughout Pakistan on an average 3 to 4 complaints of a personal nature are expected to occur. Hence, the costs associated to streamline this process do not justify the benefits.
As per the HR managers interviewed, conflict resolution takes place through communication: the HR department arbitrates to resolve the conflicts, by facilitating a one-on-one setting, between department heads and lower level workers. It is interesting to note in this regard that senior management is independent of HR. The heads of each respective department and HR work in collaboration to help employees achieve their full growth potential. This is in consistency with the concept of self-actualization.
Recruitment, Appraisals and Turnover:
The functions of Human Resource Department in Schazoo Zaka are clearly divided along the lines of HR Plant and HR Marketing and Sales. For effective personnel recruitment and selection, worker and officer criteria and job specification is clearly defined. (See Exhibit 2) Alongside this, Key Performance Indicators are clearly determined which vary from job to job. For instance, the quantifiable bases upon which the production personnel are assessed is different from employees in the department of quality control. Internal promotions opportunities within the organization are also used as a motivating factor for employees. According to Ms Samia, of 40 managers at the department and division levels, 20 are internal promotions.
Another integral aspect which distinguishes the culture of Schazoo Zaka from other pharmaceutical companies is that intensive training is offered to employees. There is a need analysis post hiring, for each individual employee, and subsequently training is imparted to employees based upon the training needs assessment. The culture at Schazoo Zaka is therefore both, a job and person specific culture. This practice complements Mc Clellands need for achievement theory and Herzbergï¿½s view of satisfaction motivators, which includes the need to motivate by enabling them to attain personal growth, recognition, responsibility and achievement.
Performance appraisals take place on a quarter, semi annual and annual basis. The two types of parameters which are taken into consideration include personal attributes and professional attributes. Performance is measured in relation to target achievement: for instance, as in most cases, whether 90% or 100% or beyond 100% achievement has occurred. The appraisals are conducted on an individual basis. Employee rewards are based on the appraisals. Bonuses are awarded to employees in the Sales department. However, the targets of the employees are not updated concurrently because of which they are not simultaneously informed of their performance in terms of the percentage of the target which has been achieved. The process of appraisals is transparent because of controls which are exercised in the organization. For instance the performance of individual employees is evaluated by the immediate officer and subsequently the department manager. For sales representatives, a clear territory is marked in order to avoid confrontations, for example one sales rep is allocated to DHA. In addition to this, sales invoices and contracts drawn with customers are reviewed by the respective department manager. The transparency in the allocation of rewards in turn motivates employees because, as per the equity theory, they believe that they can compare their job inputs and outcomes with a referent of other-insider; that is another individual or group of individuals inside the employeesï¿½ organization.
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The industry turnover rate for pharmaceutical companies is approximately 15 %. For Schazoo Zaka it hovers between 12% - 13%. The higher extrinsic rewards offered in multinational pharmaceutical companies, including Novartis and GSK, in terms of pay scales, insurance, pension and medical benefits, is primarily the cause behind employees who resign from Schazoo Zaka. However, as per both the HR managers, the strong culture of honesty and trust at Schazoo Zaka and the presence of a career growth parameter, has more often than not led to employees applying to be re hired by the company. The growth potential which exists in Schazoo Zaka, being articulated as ï¿½to grow globally and be recognized respectfullyï¿½, in terms of introduction of new products and entry into new market segments increases the potential of development for each individual employee.
Alternative Work Arrangements:
Schazoo Zaka provides a very safe and comfortable environment for females to work in. A large proportion of the total employees at all levels consist of females. However, in recent years there have been a lot of resignations from working mothers as they find it extremely difficult to manage their jobs and family simultaneously. The company has not taken any action to retain such employees by offering them flextime, alternative work arrangements or the facility of day cares at the office.
The workers at the lower level, especially those who work in the packing halls and stores, observe periodic job rotations. These rotations are within the department and are carried out according to the preference of the workers. This keeps the lower level staff motivated and reduces boredom. However, at the officer level there is no concept of job rotation. Employees are subjected to the persistent monotony on a daily basis because as per the HR managers there the organization cannot risk the chance of the system collapsing due to any deficiencies or lags which may occur during rotations.
In order to motivate employees it is essential to have a participatory process for target setting. Even though the senior management at Schazoo Zaka values the advice of its employees, it should strive to inculcate a higher level of top-down and bottom-up approach.
Schazoo Zaka allocates a major portion of its resources to train its employees. Therefore, the high employee turnover greatly adds to the expenses of the company as it is translated into further costs associated with hiring and training. A major reason for employees to resign from Schazoo Zaka is the relatively lower pays and fewer employee benefits. We would suggest the management to increase the budget for bonuses, rewards and increments; as long as the gains from profitability per person exceed the costs. These extrinsic factors would not only motivate the employees to be more productive but they would also help the company to retain its key employees and thus lower employee turnover.
The company should give alternative work arrangement options, especially to the working mothers; Establishing a house day care center and giving the option of flextime and job sharing to women would help in retaining female employees, increasing productivity and reducing absenteeism and turnover.
A state of the art system should be installed by the company so that the sales representatives have constant updates of their performance in terms of the percentages of their targets achieved. This would help in elimination of any ambiguities which may exist on the part of the employees and motivate them to improve their performance by the provision of a constant feedback, in terms of figures, generated by the software.
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