Thursday, July 1, 2010

Job Loss: Will Lessons Be Learned?

What a gutting! – according to an article in Firece Pharma reporting on a Gray and Christmas report - since 2009, more than 80,000 people have lost their jobs in the pharma industry. We can only hope they find jobs real soon.

But what does this mean for the industry itself? Will a new business model evolve?  Surely new efficiencies, or one can hope. Surely new ideas, as people who once worked for Wyeth, for example, tell their new Pfizer employers how they did things there.

But maybe it also means, for those employees who remain, that complacency is no longer a given. That turf can no longer be protected; that cooperation among departments has to occur; that years of mediocre service cannot be rewarded with more paychecks. Some articles suggest it is those on the outside not the ones who remain who benefit more.   

A recent BNET article points out that the recent mergers haven’t really produced these efficiencies, not in a big way, anyway. Pfizer, for example, went from being “below average” in terms of operating efficiently, to “average.” Merck, after its merger with Schering-Plough, did the same. The author concludes that it likely has to do with size of the company As Mike Wokash at Pharma Reform points out in BNET Talkback below the article points out these nine factors as reasons for the inefficiences:
  1. Dispersed accountability (nobody is really responsible)
  2. Dilution of expertise (overburden their limited best talent with increased workload expectations and give them less experienced and less expensive help to make it even more challenging)
  3. Focus on revenue generation at the expense of quality, training, safety, and customer service
  4. Historical spending becomes the basis for increasing expenses (empire building disguised as a growth rationale) which leads to a cumulative bloating of budgets over time
  5. Disconnect of leadership (especially C-level and corporate officers) from the realities of their workforce and their customers
  6. Poor and often conflicting organizational communications
  7. Inconsistent application of and execution against corporate mission and vision expectations
  8. Less than diligent management oversight which leads to a lack of intervention in time to prevent misbehavior, mistakes and poor decisions from occurring or having a negative impact
  9. Diminished employee morale in response to management indifference to their performance (employees get noticed most when they do something wrong)
We could not agree more with this assessment. Maybe the moves companies are making to "Business Units" will help overcome these challenges.  But as we see this evolve, it seems to look like more of the same, cost cutting and financial engineering to survive a storm, let more people go because we can always hire them back or find replacements. That is when businesses start to experience a swirling cyclical motion, when things that seem like new ideas are really not, but there is no one around to remember that we have "been there, done that."

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