CASE STUDY

GLUE TECHNOLOGY IN ACTION

Teva, Israels largest, and one of its oldest companies operated as a domestic Israeli company for almost a century. In the 1990s, Teva took an internationalization strategy through acquisitions. As a result, Teva grew from fewer than 3,000 employees (1992), primarily located in Israel, to more than 13,000 employees (2005) on three continents. At Teva, post-merger implementation focuses mainly on cultural integration, with specific attention to talent management, retention, and adaptation to local cultures. Once the acquisition of a company has been approved, cultural and economic issues are key to integration.

Cultural integration focuses on socialization into the Teva vision. Because HR people (even in different firms) tend to speak the same professional language, HR people at Teva are the first to make contact with the acquired organizations. HR issues revolve around developing a working plan budget (focusing on planning, controlling and compensation), alignment of HR worldwide working plans (with an emphasis on cost differentials), monthly tracking of labor costs and number of employees. Teva has a track record of a variance between HR plan and actual of less than 1 percent. This successful record has positioned HR as a strategic business partner with Tevas senior management in terms of supporting the acquisition strategy.

While there is a focus on HR metrics at the global level, Tevas corporate culture is strongly decentralized, focused on lateral services rather that functional silos and hierarchies, devoid of written policies, and embedded in a dynamic Israeli management style. Teva has policy guidelines, not policies. Management in Tevas headquarters in Israel, Petach-Tikva, does not tell division management how to run its business. For example, HR has performance appraisal process guidelines, but there is no formal process, standard appraisal form, or performance review timetable for all units. Tevas informality is a core culture aspect of the company and reflects the strategic orientation of the company, which emphasizes decentralization. Teva is a company that is built on relationships among people, not among roles.

In such a structure, Teva attributes an enormous importance to people. The focus is on constantly enriching the experience of people through brainstorming and participation. Everyone can say anything and is encouraged to contribute. There are no functional silos; people work laterally. In functional organizations, the culture is such that questions are directed to the persons responsible for the function. At Teva, Israeli management asks the same question from everyone. Unlike in France or the US, where managers respect the domain of responsibility, Teva management crosses information from different sources in order to enrich the response. At first, working this way resulted in a lack of trust and miscommunication among the managers of the acquired companies. Now they attribute much of Tevas business success to the flexibility of the organizational structure.

Another example of lateral services is the establishment of Shared Service Centers (SSE) as part of HRs organizational structure. According to Avi Robinson, Vice-President HR International: The Shared Service Centers give lateral services to all sites in a particular geographic location. The two major parameters of success are service and efficiency. These SSCs are focused on HR measurement in order to show results. In addition to SSC responsibilities, country HR managers play an active business partner role for all local Teva activities.

In addition to the formal post-integration mechanisms described above (such as lateral services and HR shared services), a number of initiatives are aimed at forging global work force integration, both of general employees and of HR professionals. HR development projects such as the Teva Way, Shaar (or Gateway), and Global Leadership operate at a global employee level. They are intended to integrate training and development activities, push strategy-derived issues, and provide some of the glue technology. At the HR professional level, the global HR Team (made up of country HR Managers) meets face-t0- face on a regular basis and works virtually on lateral projects.

The Teva Way is very aspirational and informs every employee what kind of a company Teva wants to be. The Teva Way is about shared values and the alignment of local activities to global initiatives so that every Teva employee, regardless of location around the world, can share the trademark Teva culture. The focus is on accepting local cultural differences while still making a commitment and contribution to Teva and its success. It is not just a slogan, but a concerted effort to identify and disseminate Tevas core values.

Another development project is Shaar (called Gateway in other countries). Designed to aid in the development of younger managers, Shaar has been running for nine years in Israel and has now expanded globally. Middle managers with various functional areas of expertise are selected early on in their careers and socialized into business development and leadership. This is an accelerated program where trainees are exposed to Tevas senior management and asked to work on lateral team projects, often in areas outside of their comfort zone. The objectives of Gateway are both lateral integration and employee development.

Finally, Global Leadership Development is one of the mechanisms for the development of senior managers. This program provides cross-border and lateral project opportunities and greater exposure to the senior management team.

Remaining an Israeli company inspite of its rapid growth is very important to Teva. There may be a sense of loss in Israel as the company grows from a domestic company to a major global company. As Teva grows through acquisition outside of its domestic market, the majority of its employees will reside outside of corporate headquarters country. What it means to be a global Israeli company is much clearer in Teva Israel than in the companys operations around the world. From an Israeli perspective, Teva is the crown jewel of corporate success in a competitive global business environment. With regard to HR, they are the most advanced and a best practice to be emulated by other Israeli companies. Being a global Israeli company is also part of the companys strategic vision with important HR implications.

QUESTIONS 1. What is HRs role in developing glue technology? 2. What does it mean for Teva to be an Israeli global company?