Pfizer’s new CEO, Jeff Kindler announces a strategic plan which involves the slimming of the workforce by around ten thousand employees over the next two years. Its aim is to reposition the company in the long term for improved performance and shareholder returns. The unexpected timing of the departure of former CEO Hank McKinnell recently prepared the way for significant changes at the company. The honeymoon period for a new leader may work in the company’s favour
When a corporate leader departs unexpectedly, we can expect two things. That the company has reacted to some external events, and that the move will be followed by a major change intiiative. Both seem to be the case at Pfizer.
The shake-up comes as the world’s biggest drugs firm faces rising competition from generic drugmakers.. Pfizer said it planned to close three research sites and two factories in the US, as well as a factory in Germany and research sites in Japan and France.
Pfizer’s news release this week announced that
‘the company’s immediate priorities were to drive improved performance, position Pfizer for future success and enhance total shareholder return. Executing on those priorities will mark the beginning of an ongoing process to change the
The restructuring follows the company’s leadership changes in which Hank McKinnell was replaced last year as CEO by corporate lawyer Jeff Kindler.
McKinnell’ departure was attributed to the disappointing performance of the company over several years, and possibly to his leadership style, and reluctance to yield to shareholder concerns over his remuneration. The leader of the world’s largest pharmaceuticals group was attracting the increasing attention of web-based protest groups.
What’s a leader worth?
We examined the issue of Mr McKinnel’s remuneration in an earlier Blog. This is probably an unwelcome side issue for the company, although it would have contributed to the considerations leading to the appointing a new leader.
A leadership principle
There is a leadership principle emerging here. We commented on it in the earlier case as the temporary leadership honeymoon granted to a new leader during which change programmes are more easily initiated.
I would like to offer a more speculative possibility. The honeymoon effect may be more powerful when a charismatic leader is involved. I am reminded of examples in political and sporting fields. This idea is open to testing by a careful examination of the consequences of leadership changes in the short and longer term. As far as I am aware this has not been tested for business readers, but I would welcome suggestions and comments.
If this is the case, it should be noted that the company has appointed someone with a safe pair of hands, rather than a more dangerously charismatic personality.