How to be effective in your people strategy during an economic downturn
After a robust and unprecedented 2021 in the life sciences industry, the positive momentum that began in 2020 flatlined in 2022. Layoffs are happening in waves across the industry, with 23 companies announcing layoffs in November alone, bringing the 2022 total to 119 companies.
Similarly, fundraising has taken a hit. Industrywide, M&A volume is down 48% while deal valuations plunged 28% this year.
While there is plenty of optimism that these trends are temporary — and PwC predicts there is a strong year ahead for M&A in the sector — there is no question the resetting of valuations is going to lead to some short-term pain.
Leaders in pharma and biotech, especially those at early-stage and emerging companies, will need to become more intentional about how they allocate resources, particularly as it relates to their most expensive asset: their people.
Here are five ways to move forward with confidence.
Get Intentional with Workforce Planning
Whenever resources are limited, leaders must be intentional about where to invest, which, when it comes to your people strategy, starts with workforce planning (WFP). The purpose of WFP is to help you develop a comprehensive, data-driven approach to thinking about talent, allowing you to build resilience in your talent lifecycle.
To begin, resist the urge to focus on the roles or the people you think you need to hire; instead, start with your business strategy and how it informs key projects. This will help you identify gaps between the skills you have today and the skills you need to deliver on your key projects tomorrow, giving you a clear sense of where and what type of additional support you will need and when you need to invest in it.
WFP will also help gain alignment across your leadership team and build investor confidence. When there’s a plan in place that demonstrates how the leadership team plans to operationalize your business strategy with an aligned people strategy, it demonstrates a thoughtful, comprehensive approach to growing the organization, which can help gain investor and employee trust and assist in securing the funding needed to move forward.
While this type of planning can sound arduous and time-consuming, it doesn’t need to be. There are simple frameworks you can use to help you plan by capturing position titles, leveling, business dependencies, gating of resources, and compensation market data by department.
Of course, there are robust, high-cost tools to help build these plans, including SAP Success Factors and Workday – but simple Excel spreadsheets often work just fine for earlier stage and emerging companies.
Bottom line: the planning process doesn’t have to be expensive and complex. But it is imperative to follow a WFP process to avoid risk and make data-informed decisions regarding one of your most expensive budget items: headcount.
Leverage Flexible and Fractional Resources
One of the outcomes of workforce planning is to identify what type of headcount is needed, based on your business strategy. While workforce planning may identify a need for full-time resources within your organization, leaders shouldn’t view full-time employees (FTEs) as the only way to solve a talent need.
There’s a constant struggle to plan for success while not bringing on at-risk headcount. For example, some organizations hire internal recruiters to help the organization scale, only to lay off those same recruiters – sometimes only months later – because they no longer need to hire. Although you generally only need 1.5 HR personnel for every 100 employees, some earlier-stage organizations bring on full-time HR resources to fill specific skills gaps they assume only FTEs can fill.
Instead, organizations should consider flexible and fractional resources that can help fill these gaps, including:
Internal training and promotions: It’s always worth asking: “Who in my organization may be interested and willing to step in and take on some additional responsibilities?” You may find someone on your team who is more than willing to fill a skills gap and effectively eliminate the need for additional headcount.
Recruitment Process Outsourcing: An RPO gives you all of the benefits of an HR/TA team but with the flexibility to easily scale up (or down) to respond to your business needs.
Contract workers: Contract workers can step in for a set period of time, helping you save on overhead while still providing the talent needed to accomplish critical goals.
To put it simply, organizations too often focus on buying talent when they should instead consider borrowing and/or building talent.
A good rule of thumb to follow: At an early stage, buy generalists, or utility players, who can wear several hats within a specific function until your organization is large enough to warrant specialists. In the meantime, borrow and build specialized talent to fill critical skill gaps.
Use Assessments to Promote and Hire for Right-Fit over Experience
While full-time alternatives are important to consider, there are also ways to bring greater intentionality to your processes when you need to fill open positions.
One of the best ways is to assess fit holistically, which may mean employing objective assessments, which can be used for both internal promoting and external hiring. Assessments give you the ability to deprioritize experience and focus on behavior, helping you to identify right-fit employees and candidates who are most likely to fit your organization’s needs.
For sales leaders in the field, using a multi-faceted, objective assessment such as a Front-Line Leader Assessment, can help you evaluate who to promote, ensuring you make informed decisions about who to hire, develop, or promote into these critical roles.
Assessment of characteristics that can be developed, such as resilience, can help establish a baseline for training and development initiatives in addition to being valuable when you do need to hire new FTEs from outside your organization.
While assessments can be a great tool in your hiring kit, they are not a silver bullet or panacea. Many commercially available tests are not appropriate for use in selection but can be great for team-building or self-awareness. Many broad-based personality assessments provide excellent measurement of work-related behaviors but the feedback is generic. Our team of behavioral scientists at Mix partners with our clients to ensure assessments are “dialed in” to our clients’ unique goals and cultures.
Improve Retention and Level Up Your Existing Team
The pressure during turbulent times is not just financial – it can also undermine your employees’ confidence, reduce their effectiveness and engagement, and contribute to burnout that may cause them to look for greener grasses and more developmental opportunities elsewhere.
As such, pharma and biotech leaders need to help their people be resilient while developing the mindsets and behaviors needed to confidently navigate a complex and unpredictable environment. Investing in your team’s continued development can also discourage them from quitting – a trend that dominated many workplace conversations in 2022.
There are several ways life sciences leaders can invest in their teams to improve their engagement and effectiveness during turbulent times, including:
- Take another look at your culture: Does your organization embrace risk-taking and learning from mistakes? Or do employees feel pressure to strive for perfection in all they do? Are they truly empowered to say “no” when they’re at capacity, or is there pressure to work late into the evenings and weekends to demonstrate loyalty? Does the culture encourage asking for help, or does it value those who seem to never need any? Do role models show up vulnerable and human, or flawless and superhuman? Consider the signals your leaders are sending, what behaviors are actually rewarded, and how that impacts your team’s ability to learn, grow, and be well.
- Fostering development-focused reflection and dialogue: Providing the training and tools for all employees to identify their career aspirations, build an effective plan for getting there, and seek the support and alignment from their manager helps ensure your organization continues to focus on what’s needed in the future.
- Thoughtful stretch assignments: Challenges and limited resources create opportunities for people to work on strategic initiatives and get exposure to different areas of the business that can further develop their skill sets.
- Mentoring opportunities: Helping employees find mentors who have “been there, done that” helps them quickly get advice so they can move more quickly.
- Coaching opportunities: Working with a coach who provides a safe space for your people to reflect and create tailored action plans helps ensure your employees thrive and remain focused on the bigger picture when times get tough.
- (Re)Programming your talent processes: It may be a good time to re-think your performance management or succession planning approach to be more practical and effective for your evolving needs.
One of the great benefits of upskilling your people is not only that it will improve your culture, strengthen leadership teams, and help you retain talent – it will also help you build your employment brand. People want to work for companies that understand these principles and apply them meaningfully across their organizations.
Find Invested External Partners
With economic downturns comes the pressure to do more with less. And, in many cases, finding the right partners who can work alongside you to support your efforts is a practical way to access the insight, talent, and support you need to remain flexible and agile during challenging times.
At Mix Talent, we are beyond optimistic about the future of the life sciences landscape, and we’re here to help you solve the difficult problems this storm has created so your organization can come out the other side stronger, smarter, and more resilient than it’s ever been.
If you’re looking for help maximizing your resources during this time, don’t hesitate to reach out to set up a conversation with our team of life sciences talent consultants.
About the Authors
Patty is an accomplished Human Resources executive with over 30 years of internal practitioner experience in the life sciences industry. During her tenure, Patty has led human resources departments in small, mid-size, and large pharmaceutical and biotech companies. Her diverse experience spans various stages of organization development to include start-ups, commercial launches and expansions, M&A activities, IPO filings, and downsizings. Patty leads Mix’s Human Resources Consulting practice, which helps companies achieve readiness for their next stage of growth. Whether acquiring an asset, transitioning from an academic/research lab, and/or preparing for clinical studies or a commercial launch, Patty’s expertise brings clients practical solutions to manage those milestones.
Chad Thompson, Ph.D. is the Principal of Mix Talent’s Assessment & Consulting practice. An Industrial/Organizational Psychologist by training, his expertise is in defining and measuring people, behavior, and culture in organizations. He has worked with a variety of companies in his career, from the Fortune 10 to start-ups. He has built over two dozen behavioral models and selection systems for pharma/biotech sales roles over the last decade.
As the head of Mix’s coaching practice, Sara’s mission is to help leaders get unstuck and lead with greater passion, purpose, and confidence so they can create a better world. She is a leadership coach and consultant with 15+ years of experience partnering with senior leaders from startups to the Fortune 100.