Practise IB Business Management SL/HL 2.1.4 by applying reducing change resistance concepts to exam-style questions.
Healthy Nation (HN)
Healthy Nation (HN) is a pharmaceutical organization that used to operate in the public sector, selling its medicines (drugs) to hospitals at very low prices.
With increasing government funding over several years, H N increased the number of employees in its Research and Development Department, which was staffed by scientists, and in the Manufacturing Department. However, both departments were inflexible and inefficient. Resources were significantly under-utilized, and innovation limited.
HN's structure used to be hierarchical, with a very long chain of command and channels of communication. Senior management made the decisions and set the production levels. Consequently, the scientists in the Research and Development Department never developed decision-making skills, and development of new medicines was slow. In 2021, after many years of losses, the government sold H N to a profit-maximizing global pharmaceutical manufacturer, Global Pharma (GP).
To improve productivity, efficiency and flexibility, the management of GP reorganized HN as a shamrock organization by:
- outsourcing the production function to a well-known manufacturer
- retaining the Research and Development Department, along with its scientists and support staff, and employing additional staff when required.
In addition, two major changes were announced:
- Establishing performance-related pay for the scientists based on a new appraisal system to increase productivity levels.
- Using an expensive external company to provide cognitive training to the scientists to develop innovative decision-making and improve teamwork.
These changes have proved to be very unpopular, and the scientists in particular are resisting the changes and the short time frame in which they will be implemented.
Discuss two human resource strategies that GP could use to reduce the scientists' resistance to the changes.
In terms of application and evaluation, while the reasons for fear and resistance to change are clear given the stimuli, it is expected that candidates show awareness/ understanding that the current employees of HN especially the scientists have been unproductive. They were protected by the government for a while and were largely inefficient. Now a profit maximising organisation is in control and there will be inevitable changes and tension. So while the resistance can somewhat be understood, evaluation should be centered around the points above- power and necessity of change. The fact that a government owned organisation is to be sold to a profit maximising organisation is the key issue for candidates to incorporate in their evaluation.
The question refers to the scientists. Hence a full discussion of the management of the employees in the manufacturing department is not relevant.
Candidates should show awareness that G P wants to keep the scientists and has got no interest in making the scientists redundant. They are to become core employees. Hence GP's bargaining power is strong but not without limit so some discussion and compromise might have to be reached.
Possible HR strategies:
- Education and communication
- Participation and involvement
- Facilitation and support
- Negotiation and agreement
- Manipulation and co-option
- Explicit and implicit coercion
- Application of motivation techniques
- Change of organization structure and leadership styles
The candidates do not have to use the exact terminology above and can evaluate any general HR strategies.
One may argue that GP's management can implement the proposed changes radically and quickly given their profit maximising objective and the losses/long term contract etc. The scientists and the remaining employees will have to accept the changes but can still express fear. GP has the bargaining power to use more extreme methods such as threats to facilitate its changes.
Negotiation and agreement - GP's management is to discuss the proposed change- communicate clearly, explain the reason, invite discussion and possibly
some negotiation, ask for feedback, emphasize the positive outcome in the longer term but not hide the negative immediate outcome of massive redundancies. To reduce fear and resistance, the scientists should be made aware that they are unlikely to lose their jobs. Perhaps GP should be willing to amend some of the changes but again, GP has the bargaining power. Training is already offered for the core employees to enhance performance and to reduce fear of the unknown and any lack of competencies.
GP's management may appoint a change champion among the scientists. This strategy could possibly be seen as manipulation.
N.B. do not reward generic suggestions (max 3 marks) that do not link to the stimulus material.
Marks to be awarded by use of the generic mark bands and the following is to be noted.
Candidates are expected to provide a conclusion with a substantiated judgment.
Grade according to the markbands found on page 3.
For one relevant modification to the human resource strategy that is one-sided, award a maximum of [3].
For two relevant modifications, but the discussion of both is one-sided, award a maximum of [4].
For two relevant modifications, one treated in a balanced way and another in an unbalanced way, award a maximum of [5].
For two relevant modifications, both treated in balanced ways, but no real conclusion, award a maximum of [6]. Conclusions must be more than nominal (for example, when a candidate opens a final paragraph with "In conclusion . . ." but then has no real conclusion, award a maximum of [6].
Maximum mark award
Option 1
Option 2
Judgement/Conclusion
3
One option unbalanced
N/A
4
One option balanced (one argument for and one argument against) or both options in an unbalanced fashion
N/A
5
One balanced and one unbalanced
N/A
6
Both balanced
No judgments/conclusions
7-8
Balanced Largely effective use of business language and the stimulus
Judgments/conclusions based upon analysis and explanation in the body
9-10
Balanced
Rich use of business language, business theory, and the stimulus
Judgments/conclusions based upon analysis and explanation in the body