Focus, focus, focus. It’s the motto of choice for healthcare and pharmaceutical companies as former conglomerates divest to individual businesses. For pharma companies, this has created an opportunity to reaffirm their core strategic direction, moving companies like Merck, J&J and GSK away from multi-divisional and back to pure-play. Rumors abound of similar moves from other pharma giants.

For most recent examples of divestitures, it’s been the non-pharma elements of the business that received a new brand and identity: the pharma element retained the legacy brand (for regulatory reasons if nothing else). The case is clear for change management to support the new brand being spun out; less so for the resulting business which is perceived as mostly the same, at least by some audiences.  But while end-customers such as HCPs may perceive little alteration, for other stakeholders like analysts and investors – and critically, employees – the effects of removing an organizational limb require planning new adaptations if the business is to thrive.

We’re seeing three main areas of concentration as pharma companies seek to redefine or refresh their purpose post-split. All of them require some degree of mindset shift for employees as the reshaped company settles into its new formation or looks to revitalize its pipeline. These include:

• Patient centricity. Most pharma companies have had this as a core element of their purpose for a long time, but internal and external perceptions of what this means can vary. Post-COVID, claims of patient centricity, and particularly issues of access, are under further scrutiny and companies need to walk the talk.
• Customer centricity and digitalization. Again COVID sparked this change, particularly in clinical trial management and in sales representatives’ interactions. The old models for both, long reliant on in-person relationship-building and monitoring, proved possible after all to shift to an online model, and as restrictions have disappeared companies are looking at how to retain the digital behavior efficiencies and improve on data and analytics capabilities.
• Innovation in R&D and supply chain. Despite investments in R&D growing over the last couple of decades[i], there hasn’t been a concomitant increase in speed or productivity. Companies are pushing hard for R&D productivity improvement in order to get more value out of the investments made.

All this means that the changes for employees in pharma business units post-divestment are just as great as in the spun-off units, without there being a handy new company identity for the change to hang its hat on. This can mean the pharma company risks being less immediate in its focus on managing its own organizational change, or is distracted by the operational aspects of all of the above points to address them as a true change management requirement.

Balancing employee expectations post-divestment

It’s easy for a divestment to appear as a narrowing of options rather than a refinement of business focus: even though the differing cultures often found in each segment of a conglomerate often preclude much internal migration. This is an important pillar of post-divestment messaging: what’s in it for employees as they assess their place in the new world?

Another overlooked consequence to divestment can be the loss of easy exposure to the strengths from each business. OTC is closer to FMCG in its speed, agility and customer sensitivity, particularly for divisions such as supply chain and marketing. These are all attributes that pharma companies are keen to translate to their own more measured, more heavily regulated environment: meaning they must be even more intentional on bringing in external inspiration and understanding how to apply it.

Tout the benefits, but don’t over-promise

As with all major organizational changes – regardless of the benefits to the business and the individual – employees will likely have an emotional reaction, questioning their future and allegiance. In the case of a spin, it’s a rare opportunity to re-define or re-align employees around the company purpose – but it must be done with intention.

This is the time to consider the priorities for employees and what’s in it for them as a result of the divestment. Where is the organizational focus and how is anything different from before? For example, allowing a business-as-usual mindset to continue is not only a missed opportunity to refine organizational focus; it’s a willful blindness that can constrain innovation just when the company needs it most.

An employee narrative can be helpful to setting or re-affirming a clear North Star for the business – a point around which employees can rally both practically and emotionally to re-energize commitment and pride. This should not neglect support functions who may previously have bridged across the former company, and because the operational complexity of a transition reverberates for a long time it’s important that the story is intentionally created to stay relevant for months or years.

This is the time to grasp the nettle of necessary organizational transformation and unite employees around the shared business focus with a positive mindset – embracing change for a progressive future, and not mourning the way things used to be.

Tips to build and sustain the right culture for your future

Wherever you are in the divestment cycle – planning, implementing, or post-split – it’s a long journey toward a new future as an organization.

Other steps you can take to best support employees who are living with unprecedented levels of on-the-job disruption and change:

1. Never underestimate the power of the case for change. When articulating a divestment or the sole companies’ strategy, it needs to articulate and reinforce a compelling case for change that reflects what employees care about (e.g., improved patient care/health equity, removal of silos, greater agility/digital development, etc.).
2. Engage people in shaping that vision. The vision needs to be congruent with the employee experience – where possible, employees should be involved to co-create a future they can see themselves in. And listen: a top complaint during transitions is that employees don’t feel heard. Set up channels and sessions for leadership to listen to employee concerns and answer questions to help reduce the resistance to change.
3. Don’t skimp on culture. After a divestment is when the real work begins. But teams are often burnt out by the process of getting there. A re-alignment on the revised or reaffirmed culture requires consistent, long-term, sustained efforts, including ownership from key leaders and enablement of managers.
4. Be transparent… and authentic. It will be as important to celebrate the wins and the milestones as it will be to acknowledge the setbacks. Arm and empower leaders with the information that they need to engage with their people thoughtfully and truthfully. Trust in leadership is a critical differentiator in a time of change. While they may be on-board to the rationale early, the management level a step or two below will be harder to engage and equip: and they are the critical first face to employees, so need to be authentic.
5. Meet people where they are. In an age of increasing information overload, it’s more important than ever to understand and leverage existing rhythms and channels to ensure employee awareness and buy-in. Deliver the message where people will receive it. And repeat, repeat, repeat.

United Minds is a Weber Shandwick consultancy dedicated to making business more human. To learn more, reach out to [email protected].

[i] Source: Research and Development in the Pharmaceutical Industry https://www.cbo.gov/publication/57126 and https://invivo.pharmaintelligence.informa.com/IV146733/Pharma-Innovation-Europe-Is-Being-Edged-Into-Third-Place