Finding people with the right skills is getting harder, reported a PwC report. 51 per cent of pharmaceutical and life sciences CEOs say that it’s become more difficult to hire suitably qualified workers. Middle managers with the potential to rise to the top are particularly in short supply. The attrition rate in pharma industry is rising continously and has already crossed about 12 – 15 per cent. While manufacturing has flocked to regions in the north of the country due to attractive tax incentives, these companies are facing a severe manpower crunch, and poaching of skilled personnel has become quite common.
Today, the Indian economy is growing at a fast clip and young professionals have multiple career opportunities across growing industries, for instance sectors like pharma, hospitality, banking, FMCG, insurance etc. The Indian pharma sector is the third largest in the world with regards to volume and is registering a healthy growth rate thanks to investments in promotion and new launches. Industry estimates that by 2015, the Indian pharma industry would be the third largest globally with an output of $20 billion.
These factors add upto the fact that it is very good time to be in the pharma industry. But, will the industry get the right people to take it to these lengths, is the question that lingers.
New era
With the dawn of the product patent era in India from January 1, 2005, the onus is on ‘research and development’ (R&D) to ensure the survival of the pharma companies in the global market. Indian pharma companies can no longer rely on generic drugs and innovation is considered as the need of the hour of the pharma industry. But, India lags behind when it comes to highly qualified individuals suited to perform these functions.
Dr Ajit Dangi, President and CEO, Danssen Consulting determines, “While the Indian scientists so far excelled in reverse engineering, the skill set required for basic research is little different. It is estimated that about 15 per cent of the R&D scientists working in the US pharma industry are of Indian origin and many of them have the appropriate skill set. Many of them would like to come back as the economy in the west is slowing down and employment opportunities are declining. This is a good opportunity to reverse the brain drain.”
To tap the opportunity at right time, he suggests that human resource (HR) management needs to be proactive to attract such talent by devising strategies which are different from the one used for local recruitment. This should include relocation assistance like offering accommodation, assistance with children’s education, cultural counselling, career opportunities for spouses etc. As a result of this, there is a number of opportunities available to associates/ employees.
Crucial challenge
Employee retention plays a crucial role to any company’s growth. (reference) The demand-supply imbalance leads to significant efforts to retain and attract a skilled human resource. This has led to higher salary hikes in the pharma sector than most other sectors .This is clearly a challenge in an industry which is very knowledge and relationship driven. S D Gupta, Director, Indian Institute of Health Management Research (IIHMR) says, “The attrition rate in the pharma industry is 20 per cent. And as per reports, this year’s salary hike will be the highest for the Indian pharma industry, with a projection of 13.3 per cent hike. With this in mind, it becomes the responsibility of an organisation to create proper slabs for salary hikes for deserving employees.”
Ranjit Shahani, President, OPPI and Vice Chairman and Managing Director, Novartis India analyses the situation and comments, “India became a product patent country in 2005 but is yet to provide the right ecosystem for innovation to flourish. The Indian economy on the whole is on a growth trajectory which means there is plenty of opportunity out there in the marketplace. It is therefore not uncommon for people to switch jobs and careers more frequently than previously.”
Dr R B Smarta, Managing Director, Interlink Consultancy says, “To retaining the R&D team becomes a very tricky situation. However, in my experience, I have seen that continuous training and development, and a recognition process by providing opportunities to this set of people helps both the organisation as well as the individual.”
Gupta gives a suggestion to overcome such situation saying, “Attrition rate can be reduced by providing a positive atmosphere to its employees in terms of supportive culture, training programmes, a policy in place for conflict management and adequate ‘rewards and recognition’ programme. It is crucial to employee retention, which in turn, contributes to the company’s growth.”
Bottleneck in the industry
The Indian pharma companies have the best quality sales force, and a lot of efforts one taken to train and keep them updated in terms of knowledge and skills. Hence retention is really something which pharma companies need to focus on.
Shahani shows global picture of the sales force, “Global and leading national pharma companies have a highly trained and motivated sales force and therefore hold great attraction for employers looking to recruit a skilled sales force. As always, there are two sides to a coin and the large number of opportunities does put pressure on attrition rates, particularly in sales. Pressures also come from other industries that are newer entrants to the market, such as insurance. The market attrition figures for these roles could be as high as 25 per cent and this means a constant pressure to hire and train new talent.”
Smarta shows his concern saying, “There are a lot of things required to be done at the bottom of the hierarchy, with respect to medical representatives (MRs). As we know talent crunch in the pharma sector been observed due to high attrition rate and constrains of attracting new talent.”
Today, at graduation level a very limited number of students consider an MR’s job as a dream job. The core agenda to get into the industry is altogether different from choosing this as an career option. Unfortunately, this set of people later on face cross-industry transfers. And all this happens because they have very minimal domain understanding. So in such situation industry faces cross pollination of non-pharma to pharma mindsets, explains Smarta
Ravi Sitaram, Senior Manager – HR, Inventia Healthcare shows the hitches in the industry and its root cause may be in the education system. He points out, “There is a yawning gap between the aspirants and the number of total number of seats available in the institutes. This creates a supply pressure right at the bottom of the chain. Second is the lack of quality interface between corporates and institutes which affects the quality of a graduate or a postgraduate passing out and entering the industry. But having said this, there have been concerted efforts in aligning the curriculum more towards the industry rather than being only academic. “
Smarta suggests, “Organisations need to create a work culture which is friendly and healthy. Also a sense of belonging and feeling a part of the organisation’s larger goal which helps them to take ownership of the overall plans for the business and importantly, for their own career growth and development. An open, transparent culture is absolutely key to retention of talent.”
Play safely
Retention is always a big challenge for any organisation in today’s time frame. Survival amidst cut-throat competition is an art that modern day organisations have to learn quickly. It assumes greater significance in companies which are technology intensive.
Sitaram highlights, “While we too have been facing a double digit attrition rate, we have been able to fairly manage our key and valuable employees by providing them a wholesome experience – whether through effective multi-skilling or opportunities to work on better technology and processes. Since we work on a niche platform, the concern is more about not losing to competition but migration of a developed human capital. We have secured our confidentiality and intellectual property, it ensures stemming of any disastrous consequences. But the greater challenge is replacing the right talent.”
Inspite of a certain set of people who are constantly on the look out for a job switch, there is a sizeable population who could get easily retained; specially the ones who are an asset to the organisation. These are the people who tend to understand the organisation at a slightly macro level. Sitaram continues that there is a two-fold approach which often works. Employees need to be gainfully engaged in the first place. This is possible if management can provide the right climate and ensure transparency. Once built, it is also imperative to continually rationalise on the manpower to sustain the healthy climate. Secondly, managers need to be constantly stay connected with their team to understand the micro forces that shape or affect the team dynamics. Managers need to really demonstrate that they believe in developing and grooming the talent at their disposal. Only a sincere effort in that direction will be appreciated. A strongly bonded team always stands a higher chance of staying together and also making that stay more enriching. Financial incentives also have a significant bearing. Many companies today have various forms of reward and recognition schemes in place which help maintain motivation levels of achievers.
He cites outs other trend in the industry which is picking up very fast. “Another big trend catching up amongst established companies is increasing focus on ‘Variable Pay Plan’ (VPP) with higher percentages now getting apportioned to VPP as part of overall compensation. This serves to effectively rein in the talented lot,” says Sitaram.
Sitaram reveals his own company’s strategy to retain skilled human resource, “We believe in grooming our human capital by setting up the right support system which can provide them the requisite training – functional and behavioural. Wherever possible we provide for job rotation and multi-skilling so that employees can explore the length and breadth of their job by staying within the organisation. We have spot recognition schemes to generate ideas and recognise stretched contributions that are integral to the organisation’s progress and greatly motivates the doers.”
Shahani also shares his company’s policy and says, “With the fundamentals in place, retaining most valuable employees is possible. In Novartis, our overall retention is significantly better than the market, but what is really heartening is that our retention of high performers is even better.”
Shifting the paradigm
There is a growing perception, albeit baseless, amongst employees that being in an organisation for more than couple of years reduces their market value. This is more out of apprehension and peer pressure with which they constantly tend to compare. These are the people who probably do not place overall job satisfaction at the top of the list. They are the ones who look for short term benefits. To compete such situation in a organisation. Sitaram suggests, “All organisations now have to put up with the ever increasing trend of job switching. Reasons across sectors are pretty much the same – what I call the ‘RPM’ factor — Role, Position, Money. It pretty much relates the same way as it would for a fast moving car with lesser mileage.
Dangi updates, The business environment in the pharma is highly regulated compared to other sectors and is also intensely competitive, attracting talent is not very easy. HR management, therefore has to devise innovative strategies for acquisition and retention of talent. It is a mistaken belief that a prospective employee is always looking for a big jump in compensation while switching job. “While good compensation is important, factors such as planned career growth, learning environment, company’s reputation etc. play an important role in attracting talent. Today’s young professionals are not very keen on terminal benefits like pension, provident fund, gratuity etc. and would rather have all these benefits` now `. Hence innovative compensation management strategies which are not only performance based but maximise take home pay by efficient tax planning is crucial. Most pharma companies have a structured approach towards compensation and career planning. However, productivity linked bonuses, employee stock options, job rotation in different functions and fast track career growth for high potential employees go a long way in retaining talent.”
To overcome with such unscheduled problems he suggest, “To optimise `return on employee`, particularly in important functions like sales and marketing, continuous training and learning opportunities (including outside the company ) by sending them. Hierarchy plus Input, Process, Output (HIPOs) to executive training in reputed management institutes as well as coaching and mentoring go a long way in retaining good talent
Dangi stresses, “It is often said that employees join companies but leave bosses. Boss – Subordinate relationship therefore plays an important role in employee retention.”
Shahani anticipates, “The last three years have seen salary hikes in the pharma industry that have been among the highest across sectors, in the range of 13-14 per cent. Since most companies in the sector have ambitious plans for the next few years, we expect the talent war to continue. However, such aggressive salary hikes, coupled with a number of business and HR initiatives will contribute to making the sector more attractive and will help in getting more good talent into the sector. We clearly see that we are moving in the right direction.”
Whatever the condition of the pharma industry in the future there has been a imbalance between demand and supply of skilled human resources. It means that HR departments of pharma companies need to keep a watch on all possible avenues. We need to wait and see what methods pharma companies will opt for to safeguard growth. Retaining its existing skilled human resource or poaching?