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He took Schering-Plough off life support

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in Leaders & Managers,Leadership Skills

Within days of joining Schering-Plough as its CEO in 2003, Fred Hassan knew he had to take bold action to save the big pharmaceutical company. Federal regulators were investigating the firm’s marketing practices, sales were plummeting and its cash flow was drying up.

Hassan reset the company’s direction by sending clear messages to the workforce. First, he unveiled a major reorganization of the business. The massive restructuring led to layoffs; surviving employees faced salary freezes and other austerity measures.

Second, he eliminated his own bonus, reduced the number of corporate jets and shut down the executive dining room.

“I personally showed up [in the company cafeteria] with my tray, out there on the line, taking my food,” he says. “People had never seen that before.”

To allay regulators’ concerns, Hassan cut commissions for thousands of Schering-Plough salespeople. Hassan urged them to act like medical information providers, not commission-chasing salespeople.

Emphasizing the importance of integrity, Hassan instructed them to nix any sale that involved questionable business dealings. He told them that earning trust over the long term meant more than scoring a quick financial gain.

To squelch what Hassan calls “passive aggressive resistance,” Hassan dug deeper. These resistors appeared to accept the changes, but tried to sabotage them behind the scenes. Outwardly supportive, they proved harder to win over.

“Ultimately, if they’re not found and weeded out, they can become very toxic to the new culture you’re trying to create,” Hassan says.

— Adapted from “Fred Hassan: I’m an Unusual Leader,” Gloria MacDonough-Taub, finance.yahoo.com.

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