Organizational Design and Talent Strategy in the Changing Biopharma Landscape

April 6, 2018

Without considering the organizational and talent aspects of change, companies put themselves at risk for poor employee engagement, loss of talent, and ultimately, failed business initiatives, writes Viq Prevaaz.

The biopharmaceutical industry has been rapidly evolving with sub-verticals in the industry (pharm, biotech, generics, biosimilar, etc.) blurring together, an increasing trend of working with external parties (CMO, CRO, universities), and rapid advancements in leveraging technology for drug delivery. As the environment changes, the types of talent and associated competencies needed will also need to change to remain competitive and excel in the market. Organizations will need to define what knowledge, skills and behaviors are needed for each position in their respective enterprises.

Based on the evolving ecosystem, organizations will also need to ask questions like, do leaders have the skills to build a collaborative and integrated working environment across various outsourced organizations/resources and lead a new and diverse team of technical and business backgrounds? Or, does the organization have talent with the specific and novel technical and/or specialized and relevant knowledge across different areas (specifically technology, R&D, and desired outcomes), to make connections and discover new therapeutic solutions that are impactful? These types of questions around talent should be at the forefront of every organization. Without defining the mix of skills (innovative, leadership, collaborative, technical) needed for each position in each function, at each stage of the drug development cycle, assessing and selecting talent will be more of a subjective exercise than an objective and thoughtful one specific to the strategic objectives of the organization. 

The biopharma model of yore has been based on traditional dosage forms and the primary care physician delivery model. By leveraging technology and consolidation of the value chain, that model is evolving and leading to advancements in enhanced delivery of therapeutic solutions and delivery modes, such as the expanding area of electromedicine. As the uses expand into different therapeutic areas, the need becomes even greater to have talent at every stage of the development lifecycle with competencies that match the business strategy.

With these disruptive changes, the industry is experiencing a pivotal point in its evolution, requiring biopharma organizations to keep up with the very industry evolution they are initiating. Because of this, organizational leadership teams are under high pressure to be first to market in this new industry landscape, resulting in “triage transformation” practices that often times short cut an effective and deliberate talent management and associated change management strategy and execution process.

As a result, biopharma companies are becoming more “self-aware” as they develop their business strategy. Either they discover they need to purchase and/or partner with new businesses to evolve their organization to meet the new market demands and meet their defined strategic objectives, or they are forced to divest of businesses that just don’t fit their new direction.

Whether through M&A or self-initiated transformation, organizations should consider a pragmatic and holistic approach to re-thinking organizational design and talent strategy that is reflective, respectful, and anchored in the overarching business strategy. Without considering the organizational and talent aspects of change, companies put themselves at risk for poor employee engagement, loss of talent, and ultimately, failed business initiatives.                                                                                                  

From our experience, we’ve seen biopharma organizations bypass critical org and talent aspects to quickly get to an “end state,” without thoroughly considering the impact of skirting through the org and talent considerations on the future state organization.  This includes three-dimensional considerations from a competency, cost, as well contribution perspective. In this article, we highlight the areas we commonly see biopharma organizations circumvent, while also providing recommendations on what is required for a successful biopharma organization of the future. 

It is no secret that the development of any bio pharma drug is a long and arduous process, and any talent competencies that can help shorten that process to be first to market with a clinically superior product, can increase profitability. Studies have shown that first-to-market players have a 6 percent market-share advantage over later entrants, achieving market-share leadership in less than 50 percent of the drug classes evaluated[1]. That first mover advantage increases significantly with a clinically superior product, which is in a great part dependent on the innovative contributions of the drug development team.

Infusing these required competencies into the organization often involve bringing in talent from different industry verticals to leverage skills that translate well into meet the strategic objectives in a constantly evolving drug development environment. Skills such as technology and marketing from other industries can facilitate work done by the core therapeutic drug development team and ensure novel modes of not only drug delivery but the way in which drug delivery is viewed and presented to the market. Different backgrounds and required competencies which can viewed as “non-traditional” can bring new thinking and problem-solving abilities in addition to the required technical skills to contribute impactfully both on innovation and efficiencies.

One area in particular is the importance of developing strong global leaders in the biopharma industry that are skilled to leverage not only a global value chain but also maximize diversity of thought to accelerate innovation and development. Cross-pollenating talent across geographies and verticals can result in a deeper understanding of a new market, and a more informed and integrated talent pool that can effectively support true global development. That being said, developing global leaders through global experiences is a considerable investment on the part of the organization. Organizations can develop a global leader program that accounts for the end to end program/process. By doing so, organizations can better manage its investment and increase its return on investment. For example, using predictive analytics, organizations can understand the ideal candidate profile and timing for international assignments. In addition, predictive analytics can allow organizations to better manage risk around poor or insufficient candidate preparation and future leadership pipeline, and also realize monetary/non-monetary savings associated with repatriation.

Right-fit the organization

How do you create an impactful structure that promotes efficiency while retaining critical operational and organizational knowledge? 

Often times, organizations undergoing fast-paced, transformational change will overlook the importance of thoughtfully designing their future state organizational structure. Instead, organizations will try to short-cut the org structure process in order to find a quick, “easy” solution that brings about some level of stability. While it is important to find and maintain a level of stability for the business to effectively operate during the transformation, by speeding through the org structure process, organizations will likely find themselves running into inefficiencies, misalignment to strategy, and the need for more, unplanned change.

Roles identified

First and foremost, leaders must define their short- and long-term business strategy, articulating the main business objectives linked with core business competencies and activities. This should act as a guiding compass as leaders make decisions on the org structure and associated talent required and also identify potential opportunities for upskilling that may be required. Working with functional business leaders, Human Resources can lead discussions defining the future state org structure from the perspective of “what work needs to be done and how those activities relate to one another across and within each function/business.”  An enterprise view that takes into account the relevant supply and demand levers will provide the agility required to ensure the organizational structure is deliberate to meet the business objectives.

In addition to looking at org design from an operating model perspective, org design must occur from a job/position level from a three-dimensional perspective, looking beyond cost but perhaps more importantly, contributing value to the organization from a competency perspective. In acquisitions, organizations will need to reconcile job titles and responsibilities across different businesses, and in divestitures, organizations must assess that the positions that no longer exist do not leave any gaps in the remaining organization. Moreover, understanding what and how many roles will be needed in the future state org will be critical as leaders eliminate redundant roles and add new, needed roles, leveraging this opportunity to view the organization from a creative lens, creating new creative roles to drive efficiency and innovation. Especially in the case where an organization has acquired a new core or adjacent business than its own, leaders will need to go through this role/position org structure process with due process and analysis to ensure they are not eliminating needed operational roles and/or adding unnecessary, duplicative roles.

Cataloging skillsets

To do these things recommended above efficiently and effectively, organizational data must be compiled into a central location. Many times, we have found organizations struggle obtaining this aggregate view due to disparate systems and differing datasets. However, by making the effort to have the aggregate view, leadership can use analytics to drive and improve the quality and speed of decision making, identify organizational design issues (e.g. span of control, orphan or broken reporting structures), and understand talent segmentation by function, region, tenure. Understanding that transformational change does not happen overnight, organizations must understand where they are starting from, where they are going, and the incremental steps in between that journey.  By having this central data station under one hub provide a single voice of truth and allows for the organization to quickly generate reports of org charts, roles/positions, headcounts, and personnel costs will be key to make decisions based on the latest information and measure progress against key metrics.

It is also critical to focus on the personal attributes that may help stimulate more innovation and create more inspirational teams and leaders. Often it may be necessary to look outside the biopharma vertical for the characteristics needed to move the business forward. How can an organization disrupt an industry with old thinking? What are the attributes that will drive that innovation? Identify those attributes, then incent and celebrate them.

Optimize performance through talent

How do you develop and integrate your talent to be knowledgeable and functionally agile across all relevant components of the biopharma vertical for efficiency? Are your leaders equipped to manage a new and diverse set of talent and skills?  What mechanisms and models are in place as part of your organizational infrastructure to ensure talent is multi-faceted to successfully function in the new biopharma environment?

Once the skills are defined for each position, leadership can begin to make individual talent decisions. The ability for leadership to see the entire talent pool – across all functions, new and old organizations, and complete talent continuum (e.g. gig economy, RPA, etc.) – is important so that they can make sure they are identifying the best talent in the appropriate role based on needed skills. In addition, building talent profiles for each individual based on qualitative (e.g. current and previous role/responsibilities within the organization, performance reviews, previous experience before current organization) and quantitative (e.g. psychometric tests based on identifying core competencies) can provide the information needed to make an informed talent decision. Using technology to help build these talent pools and profiles and also track the movement of individuals from one position to another can expedite the talent selection process while still warranting that the decision maker has the information needed to have the right person in the right position and team to increase individual and team effectiveness.  It also provide an opportunity to create a data base on which analysis can be conducted to fuel future talent decisions on a fact-based premise.

Optimizing performance through talent does not stop at placing the right talent in the right position. To gain continual optimization, organizations must align their performance management and learning & development programs in a way that is meaningful to employees and helps retain key personnel. Most bio pharm organizations are in very specific therapeutic pillars of focus with drug development teams that have institutional knowledge they can’t afford to lose to the competition. These teams have the lessons learned around failures and successes that can be used in the development of new drugs. Losing personnel in these roles could result in serious setbacks including the possibility of losing an organization’s first to market advantage.

Performance management programs can influence the culture and behaviors organizations are looking to build. With the various business strategy changes, along with market environment changes (e.g. millennials, remote/digital workers, etc.), biopharma organizations should consider evaluating the effectiveness of their current performance management program. Does it incentivize teamwork or knowledge sharing? Are there monetary and/or non-monetary incentives to help foster innovation? Is there enough performance differentiation that will motivate employees and retain your high-performers?  It is also important to note that performance management criteria and incentives must be tailored based on the position type and the type of demographic that position type typically is composed of. As market changes occur and innovation increase at a rapid speed, biopharma organizations will need to think more creatively about the performance management process as well so that it can influence the desired behaviors to be exhibited.

The process of evaluating an organizational structure and talent should be an ongoing process which means building in the flexibility to make changes without disruptions to business. To keep pace with the evolving business strategy, an organization’s talent needs to me mapped to that strategy. In an increasingly competitive marketplace, ask yourself – what steps has your organization taken to make sure all of this is in place?

Viq Pervaaz is a Principal in the EY People Advisory Service and leads the Life Sciences practice. Joana Choe is Senior Consultant, People Advisory Services, EY.

 

The views expressed are those of the author and do not necessarily represent the views of Ernst & Young LLP or any other member firm of the global Ernst & Young organization.

 

[1] Pharma’s First to Market Advantage, McKinsey and Company, September 2014  https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/pharmas-first-to-market-advantage