Pharmaceutical companies are potentially faced with many problems when the Chief Executive Officer (CEO) does not understand basic issues of drug development, marketing, or production and yet insists on being actively involved in decision making in these areas. A wise CEO who does not have a background in these areas (and even if he or she does) will delegate responsibility to his or her most senior managers. By doing this, the CEO usually enhances his or her own image within the company and enables the company to be run more efficiently. If the CEO does not have adequate confidence in his or her senior managers’ ability to make sound decisions or does not trust them in other ways, then those managers should be given different tasks, transferred, or encouraged to resign. As a consultant, the author sees this principle abridged on a weekly if not daily basis, and this problem is not limited to small start-up companies where the expertise is often thin and the CEO is sometimes forced to make decisions outside his or her expertise. Some of the other aspects of a wise CEO are discussed in Chapter 20 in the section discussing whether the company is run by professionals or amateurs.

To become a truly effective senior manager in the pharmaceutical industry, it is essential to understand how drugs are developed and how the industry operates. Even the heads of personnel and human resource departments require this knowledge. Clearly, many companies either do not believe this principle or believe that it only takes a short while to learn about the pharmaceutical industry. For example, some companies hire academicians with (a) impressive reputations, (b) solid understanding of science, and (c) important contacts for senior managerial positions within research and development (R and D). These people often have little or no industry experience and have only interacted with a company as a consultant. Another comparable example occurs when government executives are brought to a company because of their contacts and knowledge about the Food and Drug Administration (FDA). It is ironic that a company’s board of directors sometimes turns over important senior R and D responsibilities to people with little or no knowledge about drug discovery, drug development, and the pharmaceutical industry. Nonetheless, both scientifically sophisticated academicians and knowledgeable government employees often add important characteristics and input to a company, but not as new senior managers of a highly complex system they know little about. Differences between pharma sense and pharma-think versus academic-think and government-think are discussed in Chapter 5.

Companies should primarily promote experienced managers or leaders from within the pharmaceutical industry to their most senior positions, even if their scientific reputation is not as illustrious as that of some academicians or their connections are not as impressive as those of some government employees. The mistake of hiring inexperienced senior managers from outside the industry is often so dramatic in its negative impact on the productivity of a company that it is surprising that this practice occurs on so many occasions. The author’s observations are that it usually takes new managers from outside the industry several years to learn fully the basics of industrial drug discovery, drug development, and marketing activities. During this period, their company’s research effort may stagnate, go off on tangents, make many mistakes, or, at the least, not move forward aggressively in a desired direction. In addition, many outside scientists who are hired to head R and D groups overly emphasize the research function they are usually most familiar with and pay insufficient attention to maintaining a balance with other functions that they are usually less familiar and comfortable with. Moreover, drug discovery activities in industry are quite different than drug research in academia, and many academic scientists never learn the basic principles of industrial drug discovery research.

Who should a company want to hire as a director of research in charge of new drug discovery? This person could be a top administrator, a top scientist, a top leader, or someone with other qualifications and characteristics. If so, which characteristics are most important? These questions are answered differently in different companies because each company’s needs differ, the people making the selection have their own biases, and the characteristics of potential candidates will also differ. A final word is that experience counts, and industrial experience counts more.

A major personnel issue concerns whether to staff an organization based on peak periods of activity, lean periods of activity, or some middle position. In groups, departments, or companies where staffing is based upon meeting anticipated (or actual) demands experienced during peak periods, there is almost invariably a problem encountered during slack periods. The problem is that a significant amount of staff time is underutilized and unproductive. Employees may be fired or forced to take early retirement in organizations that are less concerned about employee well-being and are not “paternal.” In other organizations, personnel may be reassigned or allowed to “weather mild storms.” When an organization expands its staff during good times and trims back during lean periods, the process is sometimes referred to as an “accordion effect.” This phenomenon is often observed in small consulting companies. After they win a large contract, they rapidly hire new staff to help conduct the work. When the contract is over, many staff members are let go or fired if a sufficient number of new contracts have not been obtained to provide adequate employment. In extreme cases, companies are forced to go out of business. This latter phenomenon is relatively common for small consulting companies that are dependent on sustaining a given level of contracts.

Chronically understaffing a company is usually an unsatisfactory approach because it creates a large backlog of work and places heavy pressures on the staff. One alternative to avoid undue pressure is to contract work to others that cannot be conducted in a timely manner in-house to outside groups. This is usually referred to as “outsourcing.” Contracting work to outside groups is often more expensive for a company than if the work were done in-house. Nonetheless, if additional work occurs sporadically and may be satisfactorily performed by contractors, then the contracting approach makes good business sense.

The advantages of understaffing are that people generally (a) work hard because they have a large workload, (b) become more efficient in performing their work, and (c) put aside less
important work (this may also be a disadvantage). This type of lean and (hopefully) efficient organization often (a) develops a positive esprit de corps and (b) almost everyone cooperates with each other because they feel that they are playing an important part in a group effort. On the other hand, the staff may become so overburdened for a long period with an excessive amount of work, or employees may believe that their employer is cheap, purposely keeping the group understaffed, and profiting unfairly from their difficult conditions; as a result, the workers become burned-out or disgruntled, and their efficiency markedly decreases. To achieve the desired balance between under- and overstaffing, one should analyze staffing issues in the context of a cost-benefit analysis.

The cost side of the cost-benefit analysis includes both actual direct costs (e.g., low unemployment keeps the unemployment tax rate low) and less indirect costs (e.g., training of staff). The benefits of understaffing include steady employment. However, if a company understaffs by too many people, it can lead to situations where important errors are made by overworked staff or inexperienced temporaries. A major problem with overstaffing is that it threatens steady employment over a long period. One rough measure of whether a firm is over- or understaffed is to examine the ratio of total company revenues per employee for the past several years or, possibly, to compare data from a few carefully chosen companies. These figures do not indicate whether the staff is deployed appropriately, and these numbers are also influenced by the nature of the marketed drug portfolio the company previously had or other companies have. Nonetheless, there may be valuable information in a comparison with past history or competitors to indicate the degree of over- or understaffing.

The level of drug development activities (i.e., work load) in a specific department or group varies as a single major drug travels through the development pipeline. The work load of a group also varies over time as more or fewer drugs are being developed simultaneously. The numbers of permanent staff may be adjusted to account for long-term changes in the total work load. It is more difficult, however, and it makes little sense to adjust a department’s staff on a continual basis each time there is a change in its level of activities. Two major types of changes occur over time. First, there are changes in work load that are of long duration and may be viewed as relatively permanent. Second, there are temporary or transitional changes that fluctuate over a shorter time span, on the order of weeks or months.

The staffing options for fluctuating changes usually require a different approach than for long-term changes. Some possible solutions to meeting short-term staffing needs involve temporary adjustments, such as (a) adding temporary help, (b) contracting work to outsiders, (c) allowing backlogs to develop temporarily, (d) reassigning personnel, or (e) using special deployment teams.

Employees who have been overworked for a period of time may reach a stage at which they are unable to function effectively (i.e., partial burnout) or at all (i.e., complete burnout). Managers should be aware of this problem and learn to recognize early signs of burnout and then to counteract it.

The signs of burnout may include nervousness, irritability, depression, unusual and atypical behavior, and decreased productivity on the employee’s part as well as increased absenteeism. These are often observed after a period of particularly long hours and weekends. Burnout differs from stress, although stress may contribute to burnout.

The best procedure to counter burnout is to prevent it from occurring, and the worst step is to replace people who experience burnout. If burnout is observed, the staff may be encouraged to take a short vacation, attend a professional meeting, or given a “fun” assignment for a short period. A more long-lasting solution is generally to increase the resources that will help the individual perform his or her work more efficiently. Another step to prevent burnout is to hold managers responsible for preventing it. Managers may rotate work assignments among staff, change the work environment, send people on various courses, or do something else that will add positive stimulation to their work.

Every few years, there seems to be an entirely new vocabulary that is popular in the management literature. New terms enter common usage and management magazines and books every few years that appear to describe new management concepts, but in reality, these terms are merely new jargon for older concepts.

A few of the management terms and concepts that have some intrinsic value but should be de-jargonized for effective communication are:

Every few years, there are terms such as reengineering that do become widely accepted and enter colloquial and then accepted speech.

All professionals should strive to eschew jargon from their vocabulary when they are speaking with individuals from outside their discipline. Even within their discipline, jargon may easily be misinterpreted or given a different “spin” (sic). The use of jargon is often exaggerated by management consultants.

There are few disciplines outside of management itself with more jargon per sentence than management consultants talking about production and productivity. When it comes to making major improvements in R and D or marketing, these people show less enthusiasm than they do in tackling production problems. This enthusiasm for production may result from the mechanistic nature of much of the manufacturing operations and its ability to be described conceptually in terms of logically applied systems. These comments should not be interpreted as anticonsultants or proposing new procedures. Rather, these comments focus on the importance of consultants substituting sound language in place of jargon and empty phrases to explain their assessments, plans, and actions.

No pharmaceutical company can combine overstaffing and overpaying its employees, except for a limited period. To do so would put the firm’s cost structure out of line with competitive firms and raise serious questions with its investors. The company
should carefully analyze which positions are most critical to its success and set its pay levels high enough to attract and retain individuals with sufficient skills to create and maintain competitive advantages for the firm. Conversely, the firm should be careful not to overpay positions where high skill levels are not critical to the success of the enterprise. In such areas, the quantity of staff is likely to be more important for the company’s success than the quality of those staff. Nonetheless, there is a balance in this regard because the skills of every secretary and administrative assistant are important for a pharmaceutical company’s success and most companies can afford to hire excellent secretaries and administrative assistants. Numerous issues and inefficiencies occur in both government and academia because of the relatively low pay they can offer for those positions, as they cannot always attract high level staff. These types of issues and inefficiencies are well known to many professionals who interact with those staff.

Companies can purchase almost any ingredient of drug development (e.g., rights to a drug, manufacturers, services of contractors to develop a drug, consultants, people to design and monitor studies). One key ingredient that companies cannot easily purchase is a talented and loyal senior management group that understands the subtleties of drug development, knows the professional people within the company, and works together as a team. On the other hand, it is often easier to replace a senior manager than a middle-level manager who has specific skills and experience necessary for drug discovery or development. The possibilities of conducting drug development via a virtual company is not addressed in these comments but is reviewed in Chapter 54.

The term critical mass is widely used today. Critical mass is a concept that is applied to many areas within a company. Everyone at a medium or large pharmaceutical company appears to want to achieve it, but what exactly does it mean?

Critical mass may be narrowly defined as: a sufficient number of professional and nonprofessional staff with appropriate skills and talents to achieve specifically defined tasks or activities within a specified time period. This definition indicates several factors that must be described, including the (a) number of staff, (b) skills of staff, (c) experience and training of staff, (d) management levels of staff in the organization, (e) time available to complete the assigned task, and (f) nature of the assignment.

A broader definition of critical mass is: a sufficient number or amount of resources to achieve specific defined tasks or activities within a specified time period. This definition would include all of the resources needed to complete the activities on schedule. These resources would include funds for specific activities (e.g., promotional expenses), equipment (e.g., in technical development laboratories), as well as staff in all relevant areas.

Critical mass also may be applied to successful completion of a general activity requiring many staff and a large number of activities, such as (a) a drug’s development or (b) a drug’s launch. It could be applied globally in terms of the total number of staff and money to conduct discovery research or much more narrowly to a specific function such as the staff needed to discover (hopefully) a compound to inhibit a specific enzyme.

In identifying the critical mass required to complete an activity such as a clinical program, different people will derive highly different values (even using the same definition of critical mass) depending on:

These comments indicate that critical mass should be clarified before anyone attempts to provide a specific value or series of values for this concept in terms of staff, money, or other resource quantities.

Important characteristics to seek in new staff and to help foster and develop in current staff are briefly mentioned. Each of these characteristics and their description clearly reflect the author’s biases. Few people (unfortunately) possess all traits listed.

Every manager who supervises professional staff understands the need to balance the time spent by their staff at work, traveling, or on professional activities. In some cases, the company’s policies dictate how this balance is to be handled, but in others, it is within the purview of the manager to establish guidelines.

This is often an emotional issue for staff because some professionals are very protective of the time they are allowed to spend on external activities, and other staff who do not have these perks are envious of those who do.

It is not only companies that face this situation. Government regulatory agencies also have a similar issue to deal with. When the ability to conduct research is considered as a perk, an opportunity to advance one’s career, or merely as a critically important component of one’s job, then the issue has an important influence on whether a person has sufficient job satisfaction to remain in government service, particularly if they could move to industry for a higher paying position. The ability to conduct research has been widely reported as a key reason why many people have accepted positions at the Center for Biologics Evaluation and Research of the FDA.

The types of activities that could be considered as either perks or as professional activities include both internal and external activities that are not part of one’s core responsibilities.

Some of the internal activities that many desire to do include: