GlaxoSmithKline's CEO: Look to the middle for innovation
Change starts with leaders, but the mid-level of the company makes things happen. Here's how Andrew Witty advises making cultural changes stick.
This month, I attended BSR Conference for the umpteenth time. Actually, it was the 18th time. My favorite parts were the CEO keynotes from GlaxoSmithKline, H&M, Maersk and Pepsi.
While they all were interesting, Andrew Witty, CEO of GlaxoSmithKline, said something that really piqued my interest. In his keynote, Witty said that the "middle drives sustainability."
In his remarks, Witty focused on how transformation starts with leadership — but the mid-level of the organization is creating the innovative ideas driving change within the organization. Companies such as GSK draw on the knowledge, enthusiasm and expertise of their employees and endeavor to align them behind their mission and values.
One of the most difficult but important actions a business can take is instilling the "right" culture. This includes having effective incentives, reward systems and robust compliance to help employees understand that how they do things can be as important as what they do. An organization continually must challenge itself to rethink established practices. As Witty’s comment implies, an organization can’t expect to stay the same when everything around it has changed.
Although this is not easy to implement, GSK and other companies report their commitment to creating a business where employees consider the consequences of their actions and sustainability culture is embedded, ultimately improving CSR practices.
How to motivate employees
Witty spoke about how GSK incentivizes non-sales force employees based not just on what they do, but how they do it. This year, a novel performance system at GSK is being implemented to clarify employee expectations and assist them in planning their own sustainability-based goals. As GSK explains, "This will create a clear link between our values and how our employees are rewarded. The new performance system will place greater emphasis on individual performance and will help employees understand how they personally contribute to the delivery of our strategy and living our values, and how this links to their reward."
In addition, a five-point rating scale is being implemented to assist with reviewing employees and identifying strong performances. This includes a “global bonus structure where 60 percent of an employee’s bonus will be aligned to the achievement of their individual objectives and 40 percent will be based on business area results.”
As for the United States sales force, customer-facing sales representatives receive bonuses based on their individual knowledge and behaviors, customer evaluations and the overall business performance, rather than the traditional approach that incentivizes based on the volume of prescriptions they generate. Additional information about the sales for compensation approach can be found on GSK's website and in the company's "First in pharma" infographic (PDF). GSK reports it is in the process of expanding this approach worldwide.
AMREF Health Africa is one of GSK's NGO partners for the PULSE volunteer program.
Witty also spoke about the PULSE volunteer program. High-performing employees can take their expertise and knowledge to an NGO for a three- or six-month volunteer immersion experience, with the goal of returning to GSK with new experiences and perspectives — thereby contributing to cultural change within the organization. In discussing the program, Witty has said, "PULSE is a great personal opportunity for individuals to experience something different in life — something which gives them the opportunity to recharge their batteries intellectually and emotionally, and to open their mind to what is going on and to view things a different way. Moreover, it is a great opportunity for NGOs to [acquire additional relevant] skills."
As described in GSK’s 2013 Corporate Responsibility Report (PDF), GSK implements online social networks and other interactive methods that help to teach employees about sustainability and practical ways they can create meaningful impacts as individuals.
Additionally, the annual CEO Environment, Health, Safety and Sustainability Awards acknowledge and reward important company-based work in environmental sustainability. The 2013 awards recognized a scientific team from the "R&D and manufacturing units.
Working collaboratively, the team discovered and developed a new way to manufacture a chemical that we use in clinical trials for a treatment for Fabry disease — a rare genetic metabolic condition. Using synthetic biochemistry, the new process not only reduces manufacturing costs, but also cuts CO2 emissions by around 80 percent."
Doing it for themselves
Additional "middle" examples are visible in GSK’s LEED Platinum-certified commercial operations in Philadelphia, Pa. and manufacturing approach in Zebulon, N.C. The site in Zebulon went from producing 750 tons of landfill waste in 2009, to two tons of landfill monthly today.
This was done through Zebulon’s Environment, Health & Safety team identifying what waste could be recycled and the process by which it needed to be separated and collected, or streamed. Everyone at the site — including production operators, supervisors, managers and lab personnel — had to significantly adjust how they work to accommodate these new processes.
I wonder how other leaders view the potential of their talent if they were to split the groups into top, middle, bottom. "Middle" isn’t the answer for all companies, but it certainly works for GSK.