Or…Winning the “War for Talent,” One Battle at a Time · Mergers and Acquisitions: – In search of a solution that does not always provide a high return ... Culture clashes

Getting the Talent You Want - Keeping the Talent you Have

Or…Winning the “War for

Talent,” One Battle at a Time

Stephen J. Williams, Ph.D. President Bench International, Inc.

Talent Acquisition and Retention Objectives

• Recognize Talent: - People with key capabilities and skills that are

actionable within YOUR company and culture

• Ensure productivity - They don’t just work, they ENGAGE

• Control costs: - Compensation, turnover

• Maintain organizational stability - Retention strategies, parity, culture

Career Drivers of Talented People

Reward

Quality of Life

Environment / Culture

Impact

Recognition

We Tend to Focus on Compensation

Points of Leverage

Quality of Life

•Location •Family support •Travel (quantity / quality) •Healthcare and other benefits •Commute •Housing assistance •Community relations •Relocation policies

Points of Leverage

Environment / Culture

•Facilities •Amenities •Teamwork •Vision •Support •Resources •Career development

Points of Leverage

Impact

•Budget •Team •Remit •Access

Points of Leverage

Recognition

•Exposure •Expanded responsibility •Promotion

Points of Leverage

Reward

•Annual cash compensation •Incentive bonuses •Equity / equity equivalents •Milestone awards •Other long-term incentives

Career Drivers Cultural Variability

Japan US

Attractors

•Challenge

•Pay

•Balance

•Pay

•Benefits

•Balance

Retainers

•Benefits

•Low stress

•Long term success

•Skilled peers

•Development

•Reputation

Engagers

•Decision Input

•Leadership

•Reputation / success

•Decision Authority

•Collaboration

•Reputation / success

Ref: Towers Perrin Global Workforce Study

Engagement Function of Impact

• 16% of Pharma workforce is HIGHLY engaged (vs 42% in not-for-profits)

• In Japan, 59% of workforce is engaged, versus 84% in the US

• 80% of senior executives HIGHLY engaged

• Engagement drops precipitously with level

Ref: Towers Perrin Global Workforce Study

Competing for Talent vs US Pharma / Biotech

Inventiveness

Reputation and history of success

Looks like biotech with products and resources

Compensation programs

Japanese culture is attractive

Competing for Talent Key Issues

Centralized decision making

Language and cultural nuances

Lack of equity programs

Career advancement limitations

Addressing Long-Term Compensation

• Stock Options - Rare among Japanese-based companies

• Stock tracking / share equivalents - Phantom stock with scheduled vesting , issued and

exercised relative to Nikkei price

• LTIP (cash deposits that vest over time) - Cash credits (as a percentage of salary) with scheduled

vesting

• Milestone awards - e.g. – at IND, end Phase II, NDA and approval, sales

targets

Selecting for Better Fit

Honestly define and prioritize your cultural imperatives

Use assessment tools to identify behavioral “red flags”

Use formal and informal settings

Understand personal drivers and needs

Facilitate Engagement Engagement = Retention

Delegate decisions

Empower actions

Seek and take input

Career development and learning

Recognize and reward accomplishment

LEAD!

Finally

Talent isn’t talent if it’s not engaged and

contributing

Compensation is an acquisition and reward tool– it does not guarantee contribution

Engagement is the best predictor of corporate success and employee retention

You can compete for and engage talent

© 2006 The Hay Group Management Limited. All Rights Reserved

Issues and Trends in Building Organizational Capability Melvyn J. Stark, Vice President [email protected]

Ian B. Wilcox, Vice President Pharmaceutical Industry Sector Leader [email protected]


19 Our Agenda

Trends in M&A in Pharma – Retaining the value through attention to the people

processess

How to Build for Organizational Success – Structure, Process, and Core Elements that create

organizational success

Other “Other Pipeline” Creating a Leadership Pipeline for

Long-Term Organizational Capability


20 The Human Capital Challenges for the Pharmaceutical Industry

Creating Conditions for Innovation: From People to Products, to Organization Design

Identification and attraction of talent – Inside and outside of the industry

Accelerated development of talent – Leadership and technical skill development is in need of a

shorter “development” timeline

Developing nimble, adaptive development and commercial processes

Creating organizations that are adaptive and built for change


21 Business Challenges

Consumer/Payer Power – Armed with data, consumers and payers have become

powerful influencers in the determining the course of healthcare treatment

Price and Industry Image – Pharmaceutical product cost need to be understood in the

context of a healthcare solution

Pipeline: What is coming? From where? Mergers and Acquisitions:

– In search of a solution that does not always provide a high return


22 M&A: Top Reasons for Merger Failure

Inability to Implement Change Clash of Management Styles Culture Clash

– Culture = Attributes which the organization’s leadership

seeks to support, encourage and reward


23 Mergers: Three Drivers

Market Leadership – Two big players join forces to dominate a market or

particular niche

Growth and Capability – One organization seeks to participate in a new market or

increase the competitiveness of a product line by acquiring a smaller or more specialized firm.

Technology – Large organizations seek out small, highly specialized niche

companies to gain access to new technologies


24 The Statistics: A Disappointing Story

Study: In the first year post merger, companies lose up to 10% of market value – Between 55-77% of all mergers fail to deliver on the

financial promise announced when the merger was initiated.

Study: Half of all newly formed companies fail to maintain book value two years after the transaction was completed

The Economist: “…in the medium term, fewer than half of

all mergers add value….”


25 Performance Gaps After the Merger

0

20

40

60

80

100

1 2 3 4 5

ManagedImportance

Communi-cation of the Vision and Goals

Placing the Right People in the Right Roles

Developing a Marketing Strategy

Establishing Technological Advantages with Wall Street

Aligning New Sales Force with Compensation to Support Goals


26 Issues to Resolve

Loss of intellectual capital, coupled with de-motivated employees

Internal focus and loss of market momentum in the short term

Culture clashes


27 Our Best Practice Research: Getting M&A to Work

Well designed people processes can have increase merger success significantly. – Doing cultural due diligence: The other side of the financial

assessment, and just as critical – Develop a human asset profile – a clear picture of the

people assets that are part of the target company

Assess the cultural gap and determine compatibility between the organizations

Define the critical leadership behaviors for key roles and communicate expectations clearly

Define transitional roles – and provide authority to individuals in project manager/integration manager roles

Create well defined financial outcome measures of effectiveness for the merger


28 Core Steps

Undertake Cultural and People Due Diligence – Cultural due diligence for both the acquirer and the target

Plan the People Merger and Integration Build A High-Performance Culture Align, Implement and Measure


29 Organization Structures and Roles

Organizational structures are, at best, an organizing concept.

Organization structure can facilitate, but not guarantee, effective operations.

Organization structures often evolve as a series of managerial reactions. Organization structures should be adaptive and responsive to the operating environment. – The organization structure is a way to distribute work, and it

is a basis for developing capabilities needed to execute on the business strategy.


30 Six Principles for Organizational Clarity

Focus on Value Crystal Clear Understanding of Relationships and

Interdependencies Create Doable Roles Ensure Delegation and Freedom to Act Define Accountabilities and Tie Breakers Teams Matter and Must Be Held Accountable


31 Focus On Value

Structure should be driven by business strategy. No major accountability gaps. Key Questions:

– Is Management’s time focused on those accountabilities

most critical for organization success? – Are all the necessary roles in place to implement strategy? – Are critical accountabilities build into jobs? – Does each job has a clear and distinct purpose? – Does each job add value? – Do reporting relationships make sense?


32 Crystal Clear Understanding of Relationships and Interdependencies

Organization analysis often reveals overlap and gaps in major accountabilities.

When interrelationships are not clear to all parties, confusion wins out.

Key Questions: – Are there overlaps in jobs and accountabilities across the

organization? – Are there jobs or accountabilities missing? – Is it clear where each job “starts and stops”? – Does job design minimize handoffs across the organization?


33 Create Doable Roles

Any process of job can be reengineered. Not all reengineered processes or jobs are well designed. Key Questions:

– Does the “shape” of the job maximize the likelihood of

success? – Are there an appropriate number of accountabilities such

that the job is “doable” – Are the requirements of the job and the motives of

individuals consistent?


34 Ensure Delegation and Freedom to Act

Well-designed jobs have explicit decision-making authority. – Must be equal to the jobs’ accountabilities.

When decision making scope is unclear, people become very risk-averse.

Key Questions: – Are jobs designed with the appropriate decision-making

authority? – Is the appropriate level of risk-taking built into the job?


35 Define Accountabilities and Tie Breakers

The role of each job in decision-making processes needs to be explicit.

“Primary” and “Shared” decision-making roles must be distinguished from “Contributory” roles.

Key Questions: – Is it clear which jobs provide “input” to decisions and which

jobs must make decisions? – Have decision-making processes been defined? – Do these processes enable timely decision making? – Are there clear and fast remedies to resolve conflicts?


36 Teams Matter and Must Be Held Accountable

The most effective teams have absolute clarity and clear value regarding the team’s role and the expected

contribution from each member. Key Questions:

– Is the purpose of the team clear? – Are the accountabilities of the team aligned across the

organization? – Are the roles of the team, and of team members, doable? – Does the team have the appropriate decision-making

authority to be successful?


37 Developing Leaders In Today’s Organization

Assess Early: Assess Often – Understand the individual, their values, their aspirations, and

develop an understanding of their emerging competencies/skills

– Early assessment of skills and potential will provide a “road

map” for development and coaching • Minor issues can become potential derailers later in a

managerial career (e.g., inability to address conflict, desire to hire in one’s image, poor public speaking/presentation skill,

etc.,)


38 Developing Leaders In Today’s Organization

Depth and Breadth: Have a Long-term Development Objective – Depth: In Clinical Development and Scientific roles,

obtaining a degree of depth and expertise is a “right of

passage” and a requirement – Breadth: Obtaining cross-functional exposure, and working

with cross-functional teams shapes “enterprise” thinking and

prepares an individual for general leadership/managerial roles


39 Developing Leaders in Today’s Organization

Define the Critical Leadership Experiences – Leaders grow and develop from “shaping” experiences.

Providing individuals with a rich set of experiences early in their careers will help prepare the individual for the challenges ahead


40 Closing Thoughts

Results Strategy & Culture

Individual & Team

Competencies Organization, Team & Job

Design

Rewards & Recognition

Values & Culture

Management Processes & Systems

Work Processes & Business

Systems

Leadership

Documents

Or…Winning the “War for Talent,” One Battle at a Time · Mergers and Acquisitions: – In search of a solution that does not always provide a high return ... Culture clashes