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The Challenge: Merging Two Global Healthcare Giants
In 1989, the merger of SmithKline Beckman (Philadelphia, USA) and The Beecham Group (London, UK) created SmithKline Beecham. The newly formed entity faced a significant challenge: blending two distinct corporate cultures, resolving post-merger integration issues, and establishing a consistent leadership planning process. The goal was to transform a "we versus them" dynamic into a unified, global "us."
Leadership also hoped a standardized approach would rebuild employee loyalty diminished by the merger and address industry-wide pressures to downsize and flatten hierarchies. By 1993, senior management tasked the human resources team with creating three company-wide initiatives:
- A succession planning process
- An executive development process
- A leadership competency model
The teams quickly realized these initiatives were interconnected, all serving the single goal of integrated leadership planning.
Diagnosing Cultural and Operational Differences
The two 150-year-old companies, though similar in size and age, had fundamentally different cultures and operational strengths. The merger was designed to be one of equals, combining complementary capabilities.
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SmithKline Beckman (SKB): Known for its strategic, R&D-focused approach and long-term planning. It was perceived as visionary and technology-oriented but also bureaucratic and inward-focused.
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Beecham: Known for its operational and tactical strength, particularly in marketing and sales with its over-the-counter products. It was pragmatic and results-driven but also hierarchical and rigid.
Both companies were described as paternalistic and risk-averse. To ensure a balanced integration, CEO Bob Bauman and Chairman Henry Wendt carefully managed leadership appointments to avoid a "score-keeping" mentality between the two former company groups.
The Assessment: Applying the Burke-Litwin Model
To guide the complex process of cultural integration, the company brought in an external consultant who used the Burke-Litwin Model for Organizational Assessment. This framework provided a holistic view of the organization, connecting high-level factors like mission and leadership with day-to-day operational factors.
Assessments included:
- Organization-Wide Surveys: To establish a benchmark of employee attitudes and perceptions.
- Individual Interviews: Conducted with the top 12 executives to gauge their views on the merger's progress.
- Myers-Briggs Type Indicator (MBTI): Used to help the top team understand their collective working style and improve interpersonal dynamics.
- Multirater (360-Degree) Feedback: Focused on nine specific leadership practices to align behavior with new company values.
The Strategy: Defining a New Mission, Values, and Structure
The integration strategy began with transformational factors, starting from the top of the organization.
Mission and Values
Chairman Henry Wendt drafted the "SB Promise," a mission statement emphasizing a global healthcare vision founded on science, high commercial standards, and five core values:
- Performance
- Customer
- Innovation
- People
- Integrity
To ensure these values translated into action, the leadership team identified nine corresponding Leadership Practices. For example, the "People" value was linked to practices like developing high-potential employees and providing quality performance feedback.
Implementation and Team Building
A "Merger Management Committee" (MMC) was created to oversee integration, allowing other managers to focus on daily business. The top executive team engaged in team-building activities using MBTI and 360-degree feedback results. This process helped them recognize their collective tendency to generate ideas without follow-through, leading them to adopt a more disciplined decision-making process.
Evaluation and Results
The first organization-wide survey was conducted in 1991, with a 73% response rate from nearly 4,900 managers. Key findings included:
- Strengths: Employees saw the company as having high standards and rated "performance" and "customer" focus highly.
- Weaknesses: The most significant problem identified was a lack of innovation. Other concerns included bureaucracy, waste, and underutilization of employees.
A follow-up survey in 1994 showed significant gains. Management was perceived as more effective in rewarding and utilizing employees, and alignment with the company mission had improved. However, challenges related to innovation and bureaucracy persisted. The evaluation process confirmed the success of the overall integration effort while providing clear direction for continuous improvement. '''