Separation Management in GlaxoSmithKline - Case Study Example

05-06-2007 Separation Management in GlaxoSmithkline GlaxoSmithkline (GSK) is one of the biggest pharmaceutical company having corporate headquarter in the UK and with operations based in US. It has been estimated that GSK have almost 7% of the world's pharmaceutical market share. It is a research based strong pharmaceutical company. GSK employees over 1,00,000 people in 116 countries. GSK turnover at the end of 2006 was $23.2 billion, which is 9% up from the previous year (Annual report, 2006). GSK have over 15,000 people working as research team to discover new medicines. Company have a challenging and inspiring mission to improve the quality of human life by enabling people to do more, feel better and live longer. It is the only pharmaceutical company researching both medicine and vaccines for the WHO's three priority disease HIV/AIDS, tuberculosis & Malaria. As a company with strong foundations in science developed many drugs and spends heavily on R&D. GSK produces medicines that treat 6 major disease areas-Asthma, Virus control, infection, Mental Health, diabetes and digestive conditions. With the merger of top two British companies Glaxo & Smithkline in 1998, GSK increasing leaning's to the US in style and markets due to large US pharmaceutical markets. This merger and restructuring results in almost, 15,000 jobs loss of global workforce. Almost 300 Sr. Managers has been made redundant. Spencer Stuart, an international recruitment consultancy, was brought into look into areas of potential overlap between business units rather than the universe of managers at the new corporation, and would leave the vital R&D and marketing teams intact. By bringing in a recruitment consultancy to carry out a management audit, to executives once again expected to develop a level playing field so that few key individuals were lured away. This fear was further supported by anecdotal evidence, which suggested that the most valuable executives were likely to jump ship to competitors before the merger process was over. It has been evident that a well-planned separation management has been the part of GSK since its inception. GSK has spread over 116 countries but its policies and management of people/employees has always been based on the value of stringing for a balanced workforce and is committed to the principles of equal opportunity, equality of treatment, and creating a dynamic climate where diversity is valued as a source of enrichment and opportunity. All phases of employment relationship-including recruitment, hiring, training, promotion, compensation, benefits, transfers, separation and leaves of absence- will be carried out by mangers without regard to race, color religion, gender, age, sexual orientation ethnic or national origin, disability or (in US) status as a disabled veteran or veteran of war exist. GSK workplace environment force every employee to treat one another with equal respect and dignity, comply will all relevant employment laws and regulations in the various countries in which it do business and encourage employees to report immediately to management or HR any incidences that are in consistent with their policies so that the GSK could be able to take corrective measures including separation from employment. GSK treat their employees with respect and dignity, encourage diversity and ensure fair treatment through all phases of employment. GSK provide safe and healthy environment, which support employees to perform to their full potential. GSK is committed to conducting its business with honesty and integrity and with ethical behavior and compliance with applicable laws and regulations. As we know GSK operations has been spread across 116 countries and each have its own employment laws to follow, GSK has established a corporate ethics and compliance department to look into every aspect of employee business conduct and serious violation of code results in separation from services. GSK employees have the responsibilities to comply with local legal requirements as well as GSK Policies & procedures. Employees must avoid any activities that could involve or lead to involvement in any unlawful practices or harm to GSK's reputation & image, actual or potential conflict of interest with GSK & providing any information which is confidential, to other parties with whom GSK doing business or compete. Employees have the legal responsibilities for promptly raise concern for misconducts of fellow employees, consultants, contract & temporary employees. GSK employees have an environments in which harassment based on race, color ethnic or national origin age, gender, real or suspected sexual orientation, religion or perceived religions affiliation disability or other personal characteristics have been completely prohibited. GSK prohibits the use of illicit drugs or alcohol at workplace and which affects the performance on the job results in serious violation of code of conduct and amount to disciplinary action against employee. Employees of GSK may not accept entertainment and gifts, which may influence judgment and may create conflict of interest and harm GSK's reputation and relationships with other parties. This amounts to violation of code of conduct and may result in disciplinary action. Employees should not pass on any information at any time to any person, which may directly or indirectly harm GSK. GSK employees or relatives (family members) who have inside information due to their nature of job may not deal with GSK securities. Every employee of GSK must have accurate information and have the responsibility to maintain books & records. Employees of GSK, involved in international business must comply with the US Foreign corrupt practices Act the UK anti terrorism Crime & security act of 2001 and other nations anti bribery laws (Corporate Social Responsibility report, 2006). Employees should not make offer or authorize payment or inducements to political candidates, legislators, political parties, Govt. officials etc. GSK employees have the legal responsibility to operate business, which prevent any kind of environmental pollution. So we have seen that employees of GSK perform under various legal responsibilities as well as ethical and moral responsibilities and any kind of breach or violation of these legal responsibilities amounts to disciplinary actions up to dismissal from the employment. GSK's corporate ethics and compliance department monitors and tracks allegations and suspected cases of legal, ethical policy infractions. This department always ensures that these allegations are appropriately and thoroughly investigated and necessary steps have to be taken by GSK. In year 2006, 1089 employees were disciplined for policy violation, of these 284 were dismissed or agreed to leave the company voluntarily (knows as separation). Other disciplinary actions included documental warnings (850) and financial penalties. The 1089 disciplinary actions included 381 cases of employee breaching sales and marketing codes. These 381 cases resulted in 49 dismissals or separations from the company. All other 332 cases resulted in documental warnings (Annual report, 2006). This represents that GSK has a well establish system & procedure for separation/ termination process and employees including managers has been deliberately made aware of its policies related to maintenance of discipline and adherence to company policies & practices. Current processes related to code of conduct for employees have been well established and any form of violations lead to forced separation from employment. Employee Guide to business conduct for all employees forced them to act with integrity, comply with law, avoid conflicts of interest and report any violations of the laws or GSK's policies or any unethical behavior. It is one of the best-established employment processes in any of the current organizations world over. GSK voluntarily adopted comprehensive compliance program that is in accordance with the U.S. Dept. of health and human services, office of inspector generals (OIG) that includes policies for complying with pharmaceutical Research and manufacturers of America "Code on interactions with Health care professionals" (PhRMA code). OIG compliance guidance outlines basic elements for effective compliance program includes Designation of a compliance officer (CO) and compliance committee implementation of written policies and procedures, conducting education and training programs affected employees, developing lines of communication between the CO and all employees through hotlines or other means, conducting internal monitoring & auditing, enforcing standard through disciplinary guidelines, responding promptly to detected problems and undertaking corrective action. GSK generally Audit and monitor the employees behavior consistently and detecting any behavior inconsistent to high ethical standard and any breach of policies, appropriate disciplinary action including dismissal has to be taken. This compliance program of GSK is dynamic and the program is reviewed and enhanced as needed to meet existing compliance requirements. GSK established a well-planned mechanism to enforce standard and commitment to high standard to proper conduct. Corporate compliance officer directly reporting to CEO has managed the whole process. GSK summarizes its corporate ethics and compliance policies including code of conduct through its Employee Guide to business conduct. Almost all the areas governed through corporate policies. GSK provides training and education program to make sure every employee must understand its policies and comply with law and standard of behavior. Employees have been provided various lines of communication with the compliance officer. Employees are encouraged to report suspected cases of misconduct through line management, or through integrated helpline or corporate Ethics and compliance officers off site post office box. All GSK employees may report to company actual or potential violations of the code of conduct corporate policies or legal requirements. The integrity helpline is a confidential, toll free available to all GSK employees callers to the integrity helpline will be provided anonymity if desired. The company is not providing information about the originating phone numbers or locations. It has been observed that employees who are reporting may face retaliation, retribution or harassment. GSK is providing proper protection to these employees and take disciplinary action against those managers, supervisors' and employees, who engage in retaliation, retribution or harassment and may terminate them. Finally GSK's corporate ethics and compliance department after getting information ensures that allegations and suspected cases of misconduct are true or false through proper and intensive investigation. After proper investigation and nature and intensity of misconduct it takes corrective measures ranging from warning to dismissal, retraining, or increased monitoring. So failure by any employee to comply with the employee guidelines or GSK policies will subject to the disciplinary actions. Employee including supervisors who ignore or fails to detect misconduct or have knowledge of misconduct but fails to correct may face disciplinary actions up to and including termination from the employment. Breaches of law may also result in civil or criminal penalties for individual employees. GSK performs regular employees surveys (See CSR report, 2006, p. 41) to monitor GSK's culture, gauges employee satisfaction and assess the effectiveness of employment policies. GSK's global leadership survey is sent to GSK managers in every two years. Internal communication within GSK has been more frequent and it's a two way process, using various channels. It has been evident that the present processes of employment and separation/termination policies in GSK is well defined and more employee friendly. It encourages honesty and integrity of employees, which is the basic policy of GSK. GSK has a well-planned separation policy and process. It relies on employee dignity and abilities. GSK has a system which clearly laid down the code of conduct for employees to follow and if any employee do not follows the processes and legal & ethical code of conduct his/her conduct has to be probed on the basic of laid down procedures. The employees have been properly informed about employment rules & regulations and any one breaches it, he/she must be disciplined though different actions depend on severity of the beach of code of conduct. Discharging an employee can be an emotional and critical event for all parties involved. The decision to terminate needs to be approached carefully and rationally. Progressive discipline process has to be adopted, which includes four steps i.e. verbal warning, written warning suspension and dismissal/termination. All these four process could be applicable to employee depends on severity of breach of conduct. GSK has applied apparently only written warning & dismissal from employment. GSK has to adopt certain other ways to discipline behavior of employees. In many situations punishment does not motivate an employee to change behaviour. GSK has to encourage employees to monitor their own behaviours and assume responsibility for their actions. Rather than depending on threat and punishment, supervisor has to use counseling skills to motivate employees to change. Supervisor role as counselor rather than adversary and collaborative problem solving rather than blaming employees, motivates employees to act positively. The first counseling session between supervisor and employees ends in a verbal solution acceptable to both parties. The next step is to written agreement. If there is still no performance improvement, final warning has to be issued to employee. Rather than suspending, it provides an employee extra time to evaluate his/her situation and come up with new solution. Company may even give the employee a decision-making day off with pay to develop a plan for improved performance. This act of company underscores management good faith towards the employee and probably reduce the chance that employee will win a wrong discharge suit. Finally the performance could not improved results in dismissal/termination. Incidents of Gross misconduct likely to result in immediate discharge. This type of decision-making, which is planned and have several steps, may take a little more time but employee feel more satisfied even if they may be terminated at the end. It has a positive effect on company's bottom line and even minor violations like absenteeism, incompetence, different rule violations, tardiness, horseplay etc., declines. The hot stove rule provides a model how a disciplinary action should be administered. The rule suggests that disciplinary process is similar to touching a hot stove i.e. 1) touching a hot stove results in an immediate consequence, burn ii) A hot stove provides a warning i.e. discipline rule should inform employees of the consequence of breaking rules iii) a hot stove is consistent in administering pain to anyone who touches it. Disciplinary rules should be consistently applied to all (Sherman, 1987). Even the U.S. courts require the employers to follows & prove that employee was discharge for just cause and laid down the various steps i.e. Notification (for warning verbally and in writing about consequence), Reasonable rule violated investigation before discipline, fair investigation, proof of Guilt, absence of discrimination, reasonable penalty and right to appeal. So it has been evident that if GSK has to comply with this legal requirement for separation, it has to follow the standard procedure. Though it is following most of the processes and procedures still some procedural improvement as well as counseling and more time to improve performance could be provided to employees. ********************************************************************* References: 1. Sherman C.V. (1987) From losers to Winner's, New York, American management Association. 2. Information about GlaxoSmithkline retrieved from the website [Accessed on 2nd June 2007]. 3. Annual report (2006) GlaxoSmithkline accessed from from the website< http://www.gsk.com/investors/reps06/annual_review_2006/index.htm > [Accessed on 2nd June 2007]. 4. Corporate Social Responsibility (CSR) report (2006) GlaxoSmithkline accessed from the website [Accessed on 2nd June 2007]. (%) GSK 2004 (%) GSK 2002 (%) Read More