Pharma’s continuation of mergers and acquisitions (M&As) will likely lead to ongoing uncertainty in staffing levels—and a decided level of angst among employees. With nearly a 40% reduction in field personnel since 2006,1 how can remaining staff and leadership thrive in an industry that is focused on addressing revenue gaps through M&As?
If we go back to 2011, Challenger, Gray & Christmas referenced the nearly 300,000 job cuts that the industry dealt with for the prior decade. Given a recent Ernst & Young report that projects stepped-up M&A activities, remaining pharma employees may feel they need to prepare for possible job reductions. But employees also need to remember that M&A efforts do not always signify cuts. Post M&A, if a team is able to profitably grow their top-line, I have seen business units increase their headcount.
Create the Right Corporate Culture for Transitions
It is a leader’s task to actively encourage continued job performance from staff who may be uncertain about job stability. Even for organizations struggling to reach revenue targets, company leadership can truly make the difference—I have seen staff members step up and deliver against transformation plans with the right corporate culture put in place.
To build the “right corporate culture,” three critical success factors need to be considered. Remember to:
1. Provide updated performance management plans. Leaders within all levels of the company need to put forward a simple, compelling plan that links each individual’s efforts to the transformation plan. In particular, these efforts should be baked into each individual’s annual performance plan so that there is a clear link between efforts and potential reward, as well as accountability for results.
2. Decide which projects are important. Teams need to act with speed. Facilitating this often requires senior leaders to make purposeful decisions on existing projects that will have to be delayed and/or cancelled so that bandwidth can be made available for these incremental efforts.
3. Provide timely information and analysis. Senior executives must communicate timely information and analysis that enables middle management and other staff to quickly lead/execute against the transformation plans. Employees need this support if they are to act with speed.
With this type of strategic framework in place, I observed one company begin to execute a turnaround in under 60 days. Eventually, they moved from 14th (last) in the region to 3rd, added new positions and earned regional commercial excellence and global HR awards for their collective efforts to successfully deliver against their revenue quotas.
Use Performance Metrics for Actionable Results
The company was able to accomplish such a quick turnaround because timely performance metrics were provided, which led to actionable results throughout the entire workday. For example, when sales orders were secured, executives were able to immediately contact field force members and express their timely congratulations as well as encouragement to pursue additional opportunities.
Of equal importance, these data-driven actions addressed prior employee satisfaction surveys that conveyed the need for increased communications from senior leadership to the field force. Finally, analytics provided objective data points for the senior executives to use when they had to explain their rationale for pursuing certain priorities that were not always popular with the rank and file.
Manage Valid Resentment
Of course, managers and senior executives face challenges when there does not seem to be a burning platform for change—such as not making revenue targets. But pockets of pharmacos are doing well and some employees might resent change given their track records—so how can you help these teams thrive during an M&A upheaval?
One of the keys is prudent enterprise information management. Everyone in a company needs to be operating and basing decisions on the same set of information. Within the pharma industry, I have seen companies at which a team might be doing quite well, but the parent organization is struggling.
In this type of situation, simple but visually compelling balanced scorecards can provide employees with a more accurate state of affairs. These single-page scorecards can communicate the financial health of the company and the key performance indicators for qualitative areas.
In turn, having access to such info can provide additional insights on existing plans and the potential need to pivot. When undergoing change, basing decisions on analytical evidence and objective data helps to address the often emotional assumptions and biases that sometimes accompany M&A efforts.
What Pharma Can Learn From M&As—And Other Industries
Pharmacos once were recognized as some of the best-managed companies. Today, however, pharma could learn quite a bit from non-pharma industries.
For instance, business analogues can provide additional insights on how to be more innovative, efficient and effective. Look at IBM. For the first four years that Fortune published its “Most Admired Companies” rankings, Big Blue won top honors. But about a decade later, the firm’s ranking plummeted to No. 354.2
Fortunately, the company tasked a combination of new and existing leaders to collaboratively turn the firm’s performance around. For those pharmacos that are striving to change their daily operating models, IBM provides a compelling analogue of a firm that successfully changed its business offerings to meet its clients’ evolving needs.
The Path Forward: Create New Operating Models
Despite the industry’s challenges, I do believe that a number of factors will help turn the situation around. First, there are the macro-environmental factors such as the aging global populations who could benefit from pharma’s evolving product and service lines.
Second, there is a greater receptivity among pharma leaders, who are now more willing to consider business analogues of other industries that have engaged with consumers for a longer period of time—given that pharma traditionally invested much of their resources with healthcare professionals versus consumers (e.g., patients and/or their family members/caregivers).
Finally, some pharma senior executives are providing a collaborative company culture, allowing their teams to come up with some very non-traditional operating models. An example: Merck’s early 1990 efforts with the deployment of their AstraMerck joint venture. This start-up, with team effort and input, eventually created a very valuable asset for customers and other stakeholders. This team’s creative efforts were later captured in a Harvard Business School case study—so I’m hopeful that today’s leaders can replicate this type of success and turn pharma’s fortunes around.
References:
1. http://blog.pharmexec.com/2014/01/29/2014-end-of-the-road-for-the-american-rx-salesperson63.
2. Brown, Michael and Turner, Paul. The Admirable Company: What it Takes to be Ranked Among the Best. Profile Books. 2008. http://bit.ly/1gJEfin.
Sidebar: How To Keep Your Brand on Track
Four tips to ensure your brand doesn’t suffer while your company is transitioning following a merger or acquisition.
1. Strategize with confidence: With approximately 90% of the world’s analyzable data being created in approximately the last 24 months, decisions can and should be predicated upon data and analyses that are forward-thinking and ideally predictive in nature. If you are striving to persuade your colleagues on a particular point, strategizing with hard metrics should support your case. Building data-backed recommendations can reduce unproductive meeting discussions and free up time towards revenue-generating initiatives.
2. Execute with speed: Whether you are working in Big Pharma or a smaller-sized firm, you need to scan the business environment, debate potential courses of action, and quickly execute against the decided actions. As a leader, you will make first-mover decisive actions that capture value for your clients.
3. Provide a single source of truth: If your brand plans are to provide strategic direction for not only your area but also other functional departments, it is critical that colleagues trust your key performance indicators (KPIs) and the data/information that are behind them. Pragmatically, you need to have a single source of truth (e.g., trusted data) and user-friendly analytical tools that your teams will actually believe in and use to make their decisions and act in a timely manner. Brand managers can then link these KPIs and insights directly into field trip reports, performance reviews and other communications that encourage constructive dialogue among the stakeholders.
4. Engage in person on the front line: While you should leverage various social media options to communicate your brand’s benefits, make sure to directly meet your internal clients (sales force, etc.) and their customers to see how your proposed brand solutions are being received. By doing so, you can harvest new data points and insights that increase the probability of your brand’s success.
