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Turnaround of a Pharmaceutical Company from First to Fifth Back to First

Turnaround of a Pharmaceutical Company from First to Fifth Back to First

Mr. Gonzalez was asked to go to the Philippines to get his first full Head of HR role, in a very corrupt and belligerent union environment. After learning from a very experienced union negotiator and decertifying the first management union ever in the Philippines, Mr. Gonzalez had to focus his attention on rebuilding a corrupt business — starting with the termination of all of his peers and the General Manager. This was done within three months of his arrival. Mr. Gonzalez had to manage the operation for six months before the new GM arrived.


After assessing the state of the business, Mr. Gonzalez determined that the Company had sold 14 months of inventory ("loading the trade") in each of the prior three years to obtain maximum bonus payouts. His first business plan proposed not selling the first month of the next fiscal year, allowing the trade to absorb the excess inventory and avoiding the returns that had to be handled every year to correct the anomaly. Even though the salesforce earned no commissions that December, Mr. Gonzalez used the month to establish a new selling process with realistic targets per territory — accounting for store openings and closures, new or departing doctors, and hospital openings and closures. The new system also realigned how commissions were measured, giving greater weight to sales occurring early in the cycle instead of a last-minute rush at the end of the month and year. This reduced distribution costs by over 75% and eliminated manufacturing overtime entirely.


While the solution was initially unpopular with the salesforce — and Mr. Gonzalez was hated for it — the team achieved its full-year targets six weeks before the end of the fiscal year, leaving only the question of how much bigger they wanted their bonuses to be. Within 10½ months, a negative situation for some became a win-win for all.


Finally, the game to win the trust of the Filipino team continued. After 12 months of doing everything by the book and achieving business success, Mr. Gonzalez still wasn't accepted — people believed he was only there to fire them. One Friday evening, he received an anguished call from a worker: the daughter of a sales associate needed life-saving surgery, but the product she needed was out of stock in Manila. Mr. Gonzalez directed the caller to the distribution center — no product. He called the pharma plant — no production available.


As it was early Friday night, Mr. Gonzalez called the Head of QA — a high-ranking member of Philippine society — and asked her to return to the plant and release one of the vials held back for the FDA-equivalent regulator in Manila. Every production run required a one-vial holdback for testing in case of on-the-spot inspections; a violation of this nature could cost her job and career, and the Company a huge fine and public embarrassment. Mr. Gonzalez weighed the negative publicity and legal ramifications and put his own name on the line, writing a legal act to replace the vial and taking full responsibility for the decision, clearing the Head of QA and the Company of any wrongdoing. In the middle of the night, he was informed the surgery had been a success and the child had been saved.


On Monday, the Company had changed. What 12 months of work had not produced, the events of that Friday night had. Mr. Gonzalez became the most beloved expatriate in the Company, and by the time he left, over 50 people accompanied him and his family to the airport, crying at their departure. He left the Philippines with the Company back at number one, and a team that went on to take on huge responsibilities across the Corporation, including HQ.