CASE FOR ANALYSIS Encouraging Learning at Baxter International To change the culture and attitudes, CEO Loucks rewarded

managers on company not divisional performance. This new environment promoted learning. 1. What factors impeded organizational learning at Baxter?

Until 1990, division managers had complete decision-making authority and received rewards based on the performance of their divisions. They focused on their divisions and did not take a company wide perspective. This environment did not foster innovation. Divisions lacked any incentive to cooperate with one another. 2. What steps did CEO Loucks take to promote organizational learning at Baxter? Loucks changed the reward system to promote organizational learning. He rewarded managers on company, not divisional, performance. He mandated that top managers purchase seven times their annual salary in stock. Middle managers received stock options tied to company performance. This new environment promoted learning because divisions shared knowledge. Decisionmaking was improved because divisional managers questioned decisions. New ideas were discussed, and everyone contributed opinions. This new approach resulted in a stock price that has doubled since 1990. 3. How could it have made use of IT and knowledge management? Loucks has most of the systems in place that would allow them to focus more on learning. The final step in getting the divisions to take a company wide view would seem to be to take advantage of a knowledge management system. This would allow managers across divisions to share ideas and insights, resulting in faster, high quality decisions.


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