Cultural entropy and being sensitive and informed about local ways delivers profitable cultural change

Dealing with cultural challenges to help a newly acquired plant in a remote part of the UK to achieve its potential to be highly profitable.

A global chemicals company, with posted sales of €74.0 billion in 2015, our client’s broad portfolio ranges from chemicals, plastics, performance products and crop protection products to oil and gas. We worked with the Pharma Ingredients & Services unit of their Nutrition & Health division – a global leader in manufacturing highly-concentrated omega-3 fatty acids, for pharmaceutical, clinical nutrition and general nutritional applications.Through research and innovation, they support their customers in nearly every industry in meeting the current and future needs of society (case study anonymous at client request).

Having acquired a plant producing an ingredient for a pharmaceutical product, the usual organisational development issues of moving from a Research and Development SME start-up to being a production unit within a multinational corporation were compounded by the local work culture, which was incompatible with the expectations of the plant’s new owners. Primeast worked closely with the General Manager to investigate the challenges, and to support him through process consultation, coaching and leadership facilitation. As a result of this intervention, life at the plant improved greatly, with relationships improving and productivity increasing.

By the time Primeast withdrew from the assignment the plant was showing £3m profit and over £30m of sales on the order book.

The Brief

Our client acquired a plant producing an ingredient for a pharmaceutical product, dependent on strict Good Manufacturing Processes (GMP) quality control and using an innovative process operating 24/7 that converted the raw material into a purified substance, which was then transported worldwide for final processing. Established for 20 years, the plant had the potential to be highly profitable from the outset. However, it was located on a remote island where the strong local culture was not only very different to that of the new parent company, it was even different to the prevailing culture on the nearest mainland, a factor that was quite unanticipated by the parent company. The usual organisational development issues of moving from a Research and Development SME start-up to being a production unit within a multinational corporation were also compounded by the local work culture, which was incompatible with the expectations of the plant’s new owners to fulfil its commercial potential.

Our Solution

Primeast was asked by corporate level management to assist the General Manager (GM) in turning the plant around, and worked closely with him to investigate the challenges, and to support him through process consultation, coaching and leadership facilitation. Barrett Values Centre’s Cultural Transformation Tools (CTT) methodology was used to collect data on the current cultural challenges and to establish a target culture for successful operation. Significant cultural entropy (over 40%) was identified – as a measure of the conflict, friction and frustration that exists within an organisation, this indicated serious problems in terms of the amount of organisational energy being consumed in unproductive work. Primeast also assisted the GM in restructuring the company to meet the new operating conditions, with further management appointments being made on the basis of corporate experience, interpersonal ability, and cultural compatibility.

The Result

As a result of this intervention, life at the plant has improved greatly. Relationships have improved and productivity has increased. A greater sense of community within the plant has resulted in teams working purposefully out of choice to develop the quality of collaboration between departments. This has resulted in fewer disruptive incidents, greatly reduced reworking, less employee absence and little wastage. A staff survey undertaken at the end of 2015 put the company at the top of a corporate league for the best example of employee engagement in Europe. Whilst targets are now being met as a matter of course, by the 2nd quarter 2014 production was as much as the whole of the previous year. By the time Primeast withdrew from the assignment the plant was showing £3m profit and over £30m of sales on the order book. The senior management team is now a cohesive unit which is actively engaged in developing the quality of leadership experienced within the plant. Confidence has increased so much that the parent company has planned for further capital investment as part of its twenty-year strategy.  In 2015 the plant received the Scottish Enterprise Life Sciences Award for Community Engagement.  It continues to go from strength to strength winning a 2017 Scottish Enterprise Life Science Award in the export and international trade category.

Plant General Manager, Global chemicals company

I would say that [Primeast’s] project exceeded all our expectations and will have a long term impact on the commercial success of our company. I do not regret any of the resources in staff time and finance that were expended reaching where we are now, fantastic improvement against the background of acquisition of an SME by a Multinational, remote location, internationalisation with local, German and Norwegian cultural adjustments and challenges.