Timing, Trust and Transparency: Wage Restructuring at Glaxosmithkline

The economic ups and downs since the eruption of the Asian crisis in 1997 had prompted a wave of restructurings and job losses in Singapore and several other Asian countries. As a response, policy-makers in the Singapore government had urged companies to undertake wage reforms and to adopt more flexible wages. The wage restructuring exercise undertaken by the Singapore office of Glaxo Smithkline, one of the largest pharmaceutical companies in the world, in 2002 is studied in this case. Since the merger of Glaxo Welcome and SmithKline Beecham two years earlier, there had been consolidation with the less efficient plants in the system closing down. Although the Singapore plants were performing well, the impetus to restructure wages came primarily from a more competitive internal and external environment. Management believed that the introduction of Performance Bonus (PB) would lead to improved metrics and was essential for the company to compete in the changed environment. While the Union leadership was in broad agreement that the plant needed to remain competitive, it had some initial misgivings about the proposals put forth by management. This case charts the process of the wage restructuring exercise, illustrating some of the challenges that companies may face in implementing wage restructuring initiatives. We also examine the impact of different factors, as well as the process of implementation, on the success of such initiatives.