The managing of an organisational change

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The pharmaceutical industry enjoyed great prosperity, strong and consistent growth is expected in the global pharmaceutical market. Worldwide sales are estimated to reach $335 billion in 2006, up from 2005 sales of $310 billion, (World Health Organisation, 2002). Key factors driving this projected growth include long life expectancies, strong demographic expansion in older segments of the population, a rising standard of living in developing countries.

Another major factor fuelling the continued growth of the industry is the introduction of breakthrough drugs. The new products are especially in the areas of heart disease, cancer, arthritis, diabetes and HIV. The pharmaceutical industry has a history of mergers, acquisitions, and buyouts that are not limited by national boundaries. The pharmaceutical industry today, as with many other industries, is under intense pressure to meet ambitious growth objectives, (World Health Organisation, 2002).

"Health care is not only a significant industry in any economy (Folland et al., 1997) but it is also a field where knowledge workers make up the vast majority of the workforce".

To see the future of healthcare, technology continues to transform the medical industry. The quickening pace of advancement in drugs, devices and medical procedures is transforming healthcare faster than ever. The manager of Cavendish Laboratories, Kate Adie should be aware of developing environments and for that information holds the key to improving productivity and organisational structure. Management of Cavendish Laboratories should put much emphasis on the need to collect, transmit and store a variety of information which is central to the operation, operations including financial planning, pricing and underwriting, provider capitation and profiling, quality measurement and medical management.

Several trends are making information systems (IS) and IT a playing decisive factor in the pharmaceutical environment. Debates over cost, access and delivery will continue to evolve and as solutions are put in place greater efforts to manage quality, affordability, and longitudinal care will present new challenges for healthcare and as well as Cavendish management.

For Cavendish Laboratories two types of organisational changes can be use full, the incremental and radical change. "Incremental change has been defined as the sort of ongoing change that is routinely necessary for any organisation to adapt to its environment", whilst radical change can be seen as the "sort of change that necessitates a thoroughgoing re-examination of all facets of an organisation" (


Change management can be a systematic approach to dealing with change, both from the perception of an organisation and on the individual level. Change management has at least three different aspects, including: adapting to change, controlling change, and effecting change and Kate Adie should look these factors for her organisation. A proactive approach to dealing with change is at the core of all three aspects. For an organisation, "change management means defining and implementing procedures and technologies to deal with changes in the business environment and to profit from changing opportunities" (Jackson, 1995).

"Successful adaptation to change is as vital within an organisation as it is in the natural world. Just like plants and animals, organisations and the individuals in them certainly encounter changing conditions that they are powerless to control. Adaptation might involve establishing a structured methodology for responding to changes in the business environment" (Jackson, 1995). We can say that its organic mode of organisation change.


"Organisational change re-aligns organisational systems and processes with the factors prevailing in the external environment of an organisation. A change is effected to overhaul the internal systems of the organisation" (

What counts as organisational change? From the point of view of an individual in an organisation, a new job description or a new post may be seen as change, whilst from the perspective of higher management this may seem insignificant. Even changes which higher management feels to be important may from outside the organisation appear relatively minor (McNamara, 1998).


We will see the different elements that influence the changes; we consider the following essential elements for successful organisational change and Kate Adie should consider all these elements while bringing change in her organisation:

1. Involve the people who will be affecting (and affected by) the change. Employees are a valuable source of information for management decision making.

2. Communicate a good reason for the change. Human beings can change quickly when they see a way to maximise benefits and minimise threats.

3. Provide training, new skills, behaviours, and values. If workers fear a loss of competency, they will resist change.

4. Reward people, acknowledgement, praise, new job assignments, or additional decision-making authority can be more powerful motivators than cash. In every successful organisational change, people are the essential factor.

All these elements of changes can influence Cavendish Laboratories to implement changes. Additionally, pharmaceutical industry and hospital are prototypical models of what Mintzberg (1997) described as the "professional bureaucracy", being dependent on the skill and knowledge of the operation professionals to achieve outcomes.


"Organisational structure refers to the way that an organisation arranges people and jobs so that its work can be performed and its goals can be met, it is these decisions that determine the organisational structure" (Coghlan, 2001).

Mintzberg (1983) proposes organisational structure as the sum total of the ways in which its labour is divided into distinct tasks and its coordination is achieved among these tasks. Organisational structure is the formal decision-making framework and formalisation of framework is the extent to which the units of the organisation are explicitly defined and its policies, procedures, and goals are clearly stated."

"In an organisation of any size or complexity, employees responsibilities characteristically are defined by what they do, who they report to, and for managers, who reports to them. The best organisational structure for any organisation depends on many factors including the work it does; its size in terms of employees, revenue, and the geographic distribution of its facilities; and the range of its businesses" (Coghlan, 2001).

There are multiple structural differences that organisations can take on, there are several organisational structures which are relevant to Cavendish Laboratories and in this section we will discuss the different organisational structure and try to suggestion the best option for Kate Adie.


Traditional organisational structures focus on the functions, or departments, within an organisation, closely following the organisation's customs and bureaucratic procedures. The traditional organisation is a pyramidal structure. For Kate Adie this structure would not suitable as agility is not there and today business environment need agility from organisations.


In a matrix organisational structure, people have to report to two bosses, one being the head of the department in which they are working, and the other being the leader or coordinator of the project on which they are working, which is the combination of two or more different structures. ( The advantage of a matrix structure is that it facilitates the use of highly specialised staff and equipment. The disadvantages of a matrix organisation occur from the dual reporting structure.

This structure can or can not be work for Cavendish laboratories as it has dual reporting system and it is more appropriate for multinational organisations.


All the structures described above focus on the vertical organisation; that is, who reports to whom, who has responsibility and authority for what parts of the organisation, and so on. Such vertical incorporation is sometimes necessary, but may be barrier in fast changing environments. In any organisation, the different people and functions do not operate completely independently. "One approach is to flatten the organisation, to develop the horizontal connections and de-emphasize vertical reporting relationships" (Bowers, 2001). The rapid rise of technology has made organisations boundary less, where managers, technicians, suppliers, distributors, and customers connect digitally rather than physically (Bowers, 2001).


The term "organic" suggests that, like living things, organisations change their structures, roles, and processes to respond and adapt to their environments. "Organic structures are appropriate in unstable, turbulent, unpredictable environments and for non-routine tasks and technologies" (Burns, Stalker, 2001). For organisations coping with such uncertainty, finding appropriate, effective, and timely responses to environmental challenges is of critical importance. Organic organisations are characterised by:


flexible, broadly defined jobs.

interdependence among employees and units.

multi-directional communication.

relatively few and broadly defined rules, regulations, procedures, and processes.

employee participation in problem solving and decision making, (Burns, Stalker, 2001).

For Kate Adie, this structure would be suitable as its emphasis on effectiveness, problem solving, responsiveness, flexibility, adaptability, creativity, and innovation. Such an organisation is able to respond in a timely manner to environmental change because employees are empowered to be creative, to experiment, and to suggest new ideas.


"An organisation that learns and encourages learning among its people. It promotes exchange of information between employees hence creating a more knowledgeable workforce. This produces a very flexible organisation where people will accept and adapt to new ideas and changes through a shared vision". (Pedler 1996).

The Learning Organisation is a concept that is becoming an increasingly common philosophy in modern organisations, from the largest multinationals to the smallest ventures.


The communication of information plays a strategic role within the medicines industry. Effective communication supports the development of positive relationships with the stakeholder and can be utilised to influence attitudes and behaviours within the wider environment.


The principal stakeholder in medicines industry is the general public, health care professionals, the pharmaceutical industry, national government, media etc. "Stakeholder is an important element in the establishment of a communications strategy. In order to communicate effectively organisations should clearly define their goals" (Ranchhod and Gurau, 1999).

Important reasons to communicate include the development of trust, social responsibility, market transparency and professional ethics all of which support the overall goal of protecting public health.

In summary the reasons for communication with stakeholders are

Rapid communication of appropriate, quality information

Information sharing

Informed decision making

Improved relationship with stakeholders

(Ranchhod and Gurau, 1999)

Communication with stakeholders must be apart of the life of the organisation, with well developed communication routines. In practice, for Cavendish laboratories communication is a strategic tool for the organisation to gain a competitive advantage.


According to Hammer (1996), "Change process is a related group of tasks that together create a result of value to a customer" or "a black box that effects a transformation, taking in certain inputs and turning them into outputs of great value." The commonly used horizontal and vertical structures and the basis for grouping activities may be altered, the decision systems or policy and resource allocation mechanisms may change from individual and directive to collective and consensual, or the criteria used for recruitment, appraisal, compensation and career development may change. The main concern of organisational design is consequently how responsibilities and authorities are differentiated and integrated vertically and horizontally", (Greenwood and Hinings, 1993).

"The structure of every organisation is unique in some respects, but all organisational structures develop or are consciously designed to enable the organisation to accomplish its work", (Greenwood 1993). Typically, the structure of an organisation evolves as the organisation grows and changes over time. Changes in values, beliefs and human behaviour in terms of relationships to social rules and practices. For instance, the recently developed cultural diversity management (Milliken and Martins, 1996) argues that "multicultural organisations" should be created, thereby encouraging more creativity, better problem-solving and flexible adaptation to change, and keeping the company ahead of the competition through mutual learning among organisational members. According to Pascale et al. (1997), organisations achieve real agility only when every function, office, strategy, goal and process are able to rise to every challenge.

"Changes in power distribution and the way organisational issues are influenced" (Pugh, 1978; Morgan, 1986; Kanter et al., 1992; Pfeffrey, 1993). This view sees organisations as coalitions of interest groups in tension. For example, management versus workers, production versus sales, accounting versus research and development, head office versus production location, and so on. The organisation is therefore a balance of forces, which are continually subject to modification. However, despite this diversity, these different perspectives on organisational change are nevertheless interconnected (Burns, 1992; Lancourt, 1994). "Change is a dynamic process, with change in any one dimension often resulting in compensatory change in others", (Leavitt, 1964; Nadler, 1988):

"Successful organisational adaptation is increasingly reliant on generating employee support and enthusiasm for proposed changes, rather than merely overcoming resistance", (Piderit, 2000). However, changing culture is often the most difficult part when trying to improve an organisation's performance (DiBella, 1995). "An organisation's culture is built on the basic, sometimes unconscious, assumptions its members make about what they are trying to accomplish and how they should go about accomplishing it. In many organisations people operating out of the traditional model often assume that change starts at the top" (Piderit, 2000).

"Across global, patients, payers and governments are increasingly concerned about the quality of health services. Different approaches are being used to ensure and improve quality", (Edvardsson et al., 1994).

Currently in pharmaceutical industry pressing need for such transformation, which is stemming from the environmental turbulence that is rendering the current organisational practices valueless. To respond, managers must transform their organisations in order to achieve and provide added value for all organisational stakeholders. "According to Pascale et al. (1997), will create a landmark shift in an organisation's operating state or culture by significantly altering the way people experience their own power and identity, the way they deal with conflict and learning".


To face the changes in Pharmaceutical industry, Kate Adie should respond to the pace of change, she should adopting flatter, more agile structures and more empowering, team-oriented cultures. We recommend kate Adie to implement Learning Organisations process in Cavendish laboratories and for this solid foundation can be made by taking into account the following:


Organisations must be aware that learning is necessary before they can develop into a Learning Organisation. Once the company has accepted the need for change, it is then responsible for creating the appropriate environment for this change to occur in.


Centralised, mechanistic structures do not create a good environment. Individuals do not have a comprehensive picture of the whole organisation and its goals. "This causes political and parochial systems to be set up which stifle the learning process. Therefore a more flexible, organic structure and flatter structure must be formed. The flatter structure also promotes passing of information between workers and so creating a more informed work force", (Senge, 1994)


Leaders encourage learning to help both the individual and organisation. It is the leader's responsibility to help restructure the individual views of team members. The amount of resources available (money, personnel and time) determines the quantity and quality of learning.


Any organisation that wants to implement a learning organisation philosophy requires an overall strategy with clear, well defined goals. Once these have been established, the tools needed to facilitate the strategy must be identified. Unless a team can learn, the organisation cannot learn. To create a shared vision, large numbers of people within the organisation must draft it, empowering them to create a single image of the future. All members of the organisation must understand, share and contribute to the vision for it to become reality.

There are three strategies that can leads Cavendish laboratories into Learning Organisation. These initiatives are described by Peter Senge's in his "Five Disciplines of Learning Organisations" (Senge, 1994). The three strategies are:


For many organisations, adopting a learning organisation philosophy is the second step to achieving this Holy Grail. They may already be taking steps to achieve their business goals and that fits with the framework for implementing a Learning Organisation. This is the accidental approach,(Senge, 1994).


The subversive strategy differs from an accidental one in the level of awareness; but it is not secretive! Thus, while not openly endorsing the Learning Organisation ideal, they are able to exploit the ideas and techniques, (Senge, 1994).


The other option is the declared approach. This is self explanatory. The principles of Learning Organisations are adopted as part of the company ethos, become company "speak" and are manifest openly in all company initiatives. (Senge, 1994).

Why Learning Organisations Work for Cavendish Laboratories


A Learning Organisation encourages its members to improve their personal skills and qualities, so that they can learn and develop. They benefit from their own and other people's experience, whether it be positive or negative,(Senge, 1994).

People are appreciated for their own skills, values and work. All opinions are treated equally and with respect. This encourages creativity and free-thinking, hence leading to novel solutions to problems.


People learn skills and acquire knowledge beyond their specific job requirements. This enables them to appreciate or perform other roles and tasks. Flexibility allows workers to move freely within the organisation, whilst at the same time it removes the barriers associated with a rigidly structured company. It also ensures that any individual will be able to cope rapidly with a changing environment, such as those that exist in modern times (Senge, 1999).

There are more opportunities to be creative in a learning organisation. There is also room for trying out new ideas without having to worry about mistakes.

Cavendish Laboratories are in a business where people skills, innovation, technology and ever changing environment are imperative, so for this a agile structure like organic and learning organisation is best fit model for Kate Adie.


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