Dr Kay Wardle of RSA examines the impact of short-term survival strategies on pre-clinical R&D organizations.
Since the first signs of recession in the summer of 2008, the global pharmaceutical and biotechnology industry has responded by downsizing and/or freezing its recruitment activities. In many organizations, drug discovery and pre-clinical R&D have been most severely affected by the cuts, as industry leaders focus their resources and finances on late stage development compounds and increasing market share of their existing products.While this approach makes clear business sense in terms of delivering a more rapid return on investment — and, indeed, may be critical for company survival in the short-term — it may represent a short-sighted and ultimately damaging solution for R&D focused organizations.
Lessons from last year
In the summer of 2008, HR consultants and innovation experts warned pharmaceutical and biotechnology companies to avoid one of the biggest pitfalls of past downturns — slashing research and pre-clinical development headcount to reduce short-term spending. Over a year into the recession, life science businesses that failed to heed that advice and drastically cut early R&D activity are now being confronted with a quickly vanishing new product pipeline.
If history is to repeat itself, when the economy turns around, those businesses that have made the greatest short-term savings will find themselves at a disadvantage as patents on their existing products expire and sales volumes come under pressure from purchasing, cheap generic alternatives and new and improved products entering the market from competitors.
Re-building the pipeline will become a top priority and the focus once again will be on recruiting and retaining senior level R&D executives who can drive innovation, define new research strategies and begin the search for the new drugs and vaccines of tomorrow.
While the financial landscape remains bleak, talent management initiatives are often viewed as an unnecessary cost to cash-strapped organizations, rather than a benefit. However, it is during difficult times that it becomes critical for companies to retain, motivate and develop their top scientific talent and to quickly plug strategic gaps in their R&D senior management teams. These are the people who will make all the difference to the success of a struggling organization by leading the drive for future innovation and an invigorated new product pipeline.
Thawing the recruitment freeze
Many organizations believe that recruiting top R&D talent during a recession will be easy. There are lots of candidates and few opportunities — so what is the problem? In reality, however, the most innovative, strategic and visionary pre-clinical R&D executives and scientists will remain employed — even during the deepest global recession. Furthermore, in our experience at RSA, senior level executives who were once readily open to exploring alternative career opportunities are now much more cautious — preferring the security of staying with a ‘known entity’ rather than the risk of moving to a new organization.
In the current recession this is compounded by a decline in the housing market and, for candidates moving from mainland Europe to the UK, by the weakness of the pound against most other currenciesCompanies will need to work harder than ever to attract and recruit the best candidates.
While financial rewards will always play a key part in the decision-making process, candidates will increasingly make decisions based on the stability (perceived or otherwise) of the organization and on the career advancement opportunities the role offers. Hiring organizations must remember more than ever that recruitment and selection is a two-way process. Companies must think carefully about how to differentiate themselves from their competitors and must put the effort in to ‘sell’ the opportunities presented by both the company and the role.
Finally, employers must demonstrate a consistent and genuine interest in the candidate, leaving them in no doubt about the desire of the senior management team to bring them on board.
Hanging on to what you’ve got
Another common assumption made by companies during a recession is that they will retain their top scientists and scientific leaders. There are few jobs out there — so where are they going to go? In reality, top performers will always have opportunities and if they are not treated well by their employers, they will leave. This may not happen immediately but, when the economy picks up, more opportunities will become available to them and a company that loses a key R&D executive at this stage will be left less able to capitalize on the recovery.
In the current financial climate, equity, hefty bonuses and large pay increases are no longer an option for many organizations in retaining key R&D executives. Companies must now find more creative mechanisms of incentivizing, and hence retaining, their staff. Managers and scientists who have survived the cuts within drug discovery and pre-clinical development are often left feeling undervalued, demotivated and overstretched in their attempts to adequately resource ongoing projects. The company may be shrinking or taking out layers of management — hence opportunities for progression up the traditional career ladder are diminishing or disappearing altogether.
It is therefore important for companies to find ways to continually develop their scientific leaders of the future — perhaps through the use of “stretch” roles or secondments to other departments. Ongoing and consistent communication from the highest level within the company remains a key retention tool. It helps remind discovery and pre-clincal R&D staff of the value they bring to the business, particularly when the focus is on much later stage projects and marketed products.
Even when companies are focused on short-term objectives, it is important not to lose sight of longer-term goals and aspirations. As organizations emerge from the downturn, their strategic plans may need to evolve to meet the needs of the post-recession market place. Forward-thinking organizations will have already devised their future hiring strategies or are acting now to predict the skill-sets they will need for the future. Once the need is determined, these organizations will conduct both internal talent reviews and external benchmarking activities to ensure that they have the appropriate staff on board to take the company to the next stage.
Recent times have seen a significant reduction in research and pre-clinical development headcount across both large and small pharmaceutical and biotechnology companies, enabling these organizations to focus resources and finance on later stage projects and products. While this can be a quick and easy way of saving costs, the longer term implications on attracting and retaining top R&D talent need to be taken into account and addressed through considered talent management approaches.We believe the companies that hold their nerve through the recession and emerge with their product pipelines intact and strong R&D leadership teams in position will be best placed to benefit quickly from the recovery.