Organisational change and the psychological contract at a pharmaceutical company

Abstract

Orientation: Over a period of 6 years, a South African pharmaceutical company had been involved in several mergers and acquisitions. These changes had proved difficult for staff and staff attrition had risen.

Research purpose: The objective of the study was to explore the perceptions of senior managers about the impact of change on the psychological contract. The sub-objectives were to determine what organisational factors contribute to changes in the psychological contract during periods of change, and the implications of the breach of the psychological contract for the company and its employees.

Motivation for the study: As the company was set to embark on further mergers and acquisitions, the opinions of senior managers about how such changes should be addressed are important for the company.

Research design, approach and method: A case study approach was used in this qualitative study. The population comprised 60 senior managers of whom 12 were purposefully selected for inclusion in the study. A semistructured interview schedule was used to capture the views of these managers and themes were extracted by means of content analysis.

Main findings: Seven themes emerged which encapsulated the perceptions of senior managers about the impact of change on the psychological contract during periods of mergers and acquisitions – lack of communication, an absence of planning, lack of employee engagement, less than optimal human resources involvement, lack of preparation of the organisational culture and poor change management processes. These factors need to be addressed to strengthen the psychological contract of employees during periods of change.

Practical/managerial implications: The study highlighted areas that leaders and managers of the company should consider when embarking on mergers and acquisitions if the psychological contract of employees is not to be negatively impacted.

Contribution: While caution must be exercised in the generalisation of the findings, companies in the same industry or those in other industries could use the findings as points of departure for considering the elements that should be addressed in change initiatives.