Wednesday, January 18, 2012

Do (and communicate) the right thing at the right time
A few months ago, Novartis, one of the biggest pharmaceutical companies in the world, aroused people’s attention by announcing a cutback on more than 1000 jobs in their Swiss headquarters and a local production facility, while at the same time reporting on a profit in excess of USD 10 billion for the first nine months of 2011. Unsurprisingly, such a controversial announcement wouldn’t make sense for the general public and especially not for the company’s soon-to-be ex-employees.
However, after a certain period of considerable protest on the part of the employees and their unions and the usual stubbornness and secrecy of multinational corporations in such situations, yesterday’s newspaper reported on a wondrous U-turn that seem to have occurred in the management of Novartis. Whereas nobody has to leave the outdated production facility (that even receives a substantial makeover) anymore, also the job cuts in the headquarters could have been reduced by over two third.
After digging deeper into the triggers that caused Novartis to act this way, it appears that a fruitful dialogue between the involved stakeholders from the economic, political and social sphere has taken place in order to mutually find a better solution for the company’s planned restructuring in Switzerland. Apparently, managers from the US had a great influence on the overhasty communication regarding the mass layoff and were afterwards surprised by Swiss people’s intense reaction on the announcement.
What tells us this story? In my opinion, the case vividly illustrates two important aspects of stakeholder management and the idea behind “people-for-people”. On the positive side, the case confirms that bringing together the involved people in the form of a multi-stakeholder dialogue, clearly has the potential to yield most favorable solutions for all involved parties in situations like this - given the dialogue is set up correctly and all parties are willing to constructively contribute to the solution.
However, on the negative side, the right timing and corporate communication in the context of such stakeholder round-tables as a problem-finding an -solving approach is also decisive and – as shown in this case – can go terribly wrong. Why Novartis risked reputational damage and didn’t first try to involve the concerned stakeholders, search for common ground and this way actively seek a mutually beneficial solution that might even put them in a favorable light from a best-practices perspective remains their secret. 
Marc Moser

Source: TagesAnzeiger, “Novartis: Schweizer setzen sich gegen amerikanische Manager durch”, frontpage, 18.01.2012, Zürich.

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