Spotlight on: Staffing and retention. Pharma, biotech and medical devices

Spotlight on: Staffing and retention Pharma, biotech and medical devices A US perspective 2013

Expansion, mergers, acquisitions and competition have impacted on salary and benefit expectations, and the perceptions of those working across pharma, biotech and medical devices. Introduction With competition, mergers, acquisitions, divergence and outsourcing impacting the evolution of the pharma, biotech and medical devices industries, we spoke to professionals across the US to ask how changes in the industry have impacted their perceptions of the market and their motivations for the future. In this report we examine the impact on market confidence, recruitment and retention, the global mobility of talent and the need for employers to adapt and build a strong employer proposition in order to address the war for talent. We also explore what this could mean for the US and its ability to remain a driver for change within the industry. Methodology This comprehensive report is based on results from our online survey, in-depth interviews with professionals from across the US and conversations with our specialist pharma, biotech and medical devices staffing consultants. Focusing on market trends and employee perceptions, our research was conducted with hundreds of sector professionals from across a range of disciplines and from organizations of all sizes. 2

Job security Motivation to move Considering that 12.3 million Americans are currently out of work, 5 million of which are considered long-term unemployed, it may be a little surprising that confidence in the pharma, biotech and medical devices job markets is high. Our survey shows that more than 4 in 5 respondents (81.8%) have no concerns over their future job security. In fact, almost a fifth (19.3%) of those surveyed said they were very confident in their future and over a quarter (26.7%) said they were quite confident. This may, in part, have something to do with the rise in consumer confidence generally occurring across the US. Employment growth averaged 157,000 new jobs per month in 2012 and pharma and healthcare generally benefited more than most. In October alone the US healthcare industry contributed more than 28,000 new jobs, while a recent study also found that healthcare, pharma and medical accounted for the top three places in nine of the US top 10 places to find a job. With that in mind, it s telling that only 6.4% of respondents to our survey are very concerned about their future job security, while almost 12% (11.8%) are quite concerned. Job security appears to be impacting how confident people feel about their ability to find a new job. A recent report even went so far as to show that almost a quarter of Americans (24%) say it is a good time to find a job, which is triple the number that said the same a year ago and reflects the most positive job market since 2008. Retention How confident do you feel about your job security? 19.3% 26.7% 6.4% 11.8% 35.8% Very confident Quite confident Neither confident nor worried Quite concerned Very concerned When we take into account the results of a recent Gallup poll we can see that regionally, Americans in the West are most confident about the current job market, with almost a third (31%) agreeing to feeling confident. Americans from the East are a close second at 28% and, although people from the Midwest (22%) and South (19%) are less positive, we can still see that generally employees have been more positive about the job market than they have been for some time. According to our survey changes to salary and benefits packages are definitely needed if companies are to retain their top talent. When we asked our panel what the most important factors are that would make them consider a new job, salary increase was the predominant factor according to 61.5% of our respondents, with only 15.4% of our panel saying they were happy with their current pay and unlikely to look for a new role. It s not just salary expectations that could introduce retention issues in the year ahead. For some respondents the potential for long term career growth is a key factor in their willingness to look elsewhere (48.0%). However, this opens up contradictory motivations: on one side is an emerging employee pool that is highly ambitious; it s a pool that wants promotion (48.0%), higher salaries (61.5%), better benefits (19.6%) and more challenging jobs (28.4%) Why are you likely to look for a new role in the next 12 months? Better salary Promotion opportunities Better work/life balance on the other side is an emerging pool where lifestyle is critical and where people demand better work/life balance (33.8%), a more conducive working environment or culture (33.8%), or are looking to relocate (15.5%), and their new job has to facilitate that lifestyle. Either way, we can see that the employer proposition is becoming increasingly important for companies within these highly competitive markets. There s a need to focus not just on having a good story for recruitment, but also on developing an employee proposition that is driven by the needs of their employees, as well as the eagerness of the company to grow and compete in these fast-paced, highly competitive sectors. 33.8% 48.0% 61.5% Taking into account market confidence and the fact that 1 in 4 Americans believe there has never been a better time to look for a new job, it s hardly surprising that almost 80% (79.1%) of our respondents said they were likely or extremely likely to look for a new job in the next 12 months. This has the potential to be of particular concern for pharma, biotech and medical devices companies looking to retain their best and brightest talent, and is no doubt in part linked to the increasing opportunities and competition occurring internationally. As jobs become increasingly available and the search for top talent becomes increasingly difficult, it seems employees are demanding more; more pay, better benefits, more chances of promotion, greater opportunities for growth and indeed greater potential generally. How likely are you to look for a new role in the next 12 months? 44.4% 18.2% 2.7% Better benefits package Relocation The future of my current role is uncertain Better working environment/culture New challenge 15.5% 19.6% 28.4% 28.4% 33.8% The significant growth of the generics market and the long term impact of the patent cliff has brought additional pressure to bear on employers. With generics companies and traditional pharmaceutical companies both maximizing the growth of the generics market we are already seeing significant job growth and the beginnings of a talent shortage; meaning many companies are being forced to increase the size of their salary and benefits packages or risk losing their best people. Extremely likely Likely Unlikely Extremely unlikely 34.8% 0 10 20 30 40 50 60 70 % 5

Reasons to stay Although the pharma, biotech and medical devices industries currently offer great new job potential across the whole of the supply chain, our study shows that on the whole almost half of our panel (46.2%) said they are happy in their current role or at least happy enough to stay there for the next 12 months. With that in mind, it s worth considering why, in such a confident job market, many more are not looking to move. Over recent years the US market has been extremely buoyant and the opportunities for movement across organizations or territories have never been better. As a result a large proportion of our study (43.6%) found a new job in the last 12 months and as a result are keen to stay in their current roles for the foreseeable future. It s somewhat telling that only 5.1% of people feel there are a lack of job opportunities in the current market, but this still does not encourage our panel to look elsewhere. Salary satisfaction is not a reason people are willing to stay in their current jobs either. Only 15% of respondents said they were not looking for a new job because they were happy with their current salary package. This could have potential ramifications in the future and employers will need to consider the competitiveness of their salaries if they are to retain their best people. Why are you unlikely to look for a new role in the next 12 months? 46.2% Happy in my current job However, some employees find other aspects of the employer offer more attractive than pure salary alone. Our survey shows that more than a quarter of our panel (25.6%) are happy in their current job because of the work/life balance offered. What s most surprising is that the vast majority of people we spoke to said they were not looking for a new job in the next 12 months even though their current job does not offer good promotion prospects. This appears to fly in the face of a contradictory opinion that shows that almost half of our panel (48.0%) demand greater opportunities for career progression from their employer. These differences of viewpoint could again have potential ramifications for the future since they suggest people are employed in their current role for the short term and do not expect their company to be an employer of choice for the length of their career. It also shows that employer loyalty is increasingly becoming a thing of the past and employees are using jobs and companies as a means to achieve the next step in their career, rather than seeing that next step within their current company. Migration and the impact on recruitment Over recent years we ve seen a definitive sea-change regarding employees willingness to look internationally for the right job, and this year has been no exception. In 2012 we saw an increasing trend for specialists moving across international borders and as a result have needed to adapt our staffing programmes and service offering accordingly. In fact, in 2012, Real produced a number of guides to working in different countries in response to this change and for this report felt a question around people s eagerness to relocate internationally was pertinent. We asked our respondents whether they d be willing to relocate for a new job and, like our respondents across Europe, US-based employees are increasingly attracted to the idea of relocating. So much so that the number of people willing to relocate and the numbers not willing are almost the same with 38.8% saying yes they would relocate and 42.0% saying they wouldn t. A further 19.2% remain open to new international opportunities, stating they would consider a move for the right role. Would you relocate internationally? 42.0% 19.2% 38.8% Yes No Maybe There are many reasons why we are seeing an increasingly migratory talent pool, but the biggest impact on the growth of this population is due to: The patent cliff which is likely to have a significant impact on growth and profitability until 2014 and as a result has led many pharma companies to restructure and reinvent themselves through mergers & acquisitions and outsourcing parts of their supply chain to companies in Asia Pac and the US all of which mean greater opportunities for employees. The amount of venture capital funding within biotech and medical devices is growing significantly within the US, with the biotech sector seeing investment of $487 million and medical devices receiving $309 million. We are now seeing places such as Ohio, Minnesota and Illinois becoming increasingly attractive propositions. The BRIC countries are no longer seen as emerging markets and are now regarded as emerged. China is expected to take over from Japan as the largest pharma market in Asia Pac, making it the world s 2nd largest market in total. Russia is focusing less on imports, which grew by around 20% between 2007 and 2011, and instead looking to boost domestic production by limiting state purchasing of drugs from overseas. Local companies in Brazil are looking to take a foothold in the biological sector and are investing billions of dollars into manufacturing and R&D over the next five years. Where would you consider relocating to? 43.6% I ve not been in my current job long Within US Europe The US and beyond 25.6% Good work/life balance 15.4% Happy with my current salary/benefits package 5.1% Lack of job opportunities in market 2.7% Good promotion prospects Looking further into the subject of relocation we asked our panel where they would be willing to relocate to. The results again show how migratory the US pharma, biotech and medical devices markets are becoming. Although two fifths of our respondents said they d only be willing to relocate within the US, a slightly greater number acknowledged that Europe is becoming an increasingly attractive proposition; with almost 40% (39.3%) saying they would seriously consider a move to a European country, while over a fifth said they d consider a move to Asia Pac. 39.3% Asia Pac 21.8% 38.9% 7

Attracting talent Considering the increasingly migratory nature of the candidate population it s worth understanding what motivates people when looking for a new job and their reasons for leaving their current one. As employers and recruiters work to address the demands of Generation Y, our survey shows these employees are impacting what companies need to provide as part of their employer proposition. When we asked people how important a number of factors are when looking for a new job we can see that the majority of respondents feel all elements of the employer offer are critical to their decision-making and are regarded as either important or extremely important. Financial Unsurprisingly salary is the most important factor for employees and is the main reason for them moving to a new job; with 96% of respondents saying salary was either important or extremely important. What s noticeable however, is that salary plays a much more important role in the decision-making of people based in the US than it does for those in Europe, with 89% of Europeans saying salary is key. A large proportion of US-based professionals are receptive to the idea of moving to Europe, suggesting that salary expectations could be a key factor in this willingness to do so. Somewhat surprisingly, like our European study, our US panel reported that bonuses are only important or extremely important to just over a half of our respondents (56.2%). This number is influenced by the fact that over the last few years large corporates and smaller companies alike have severely cut-back on bonus payments and as a result employees have lower expectations. In the coming years we anticipate this perception will change as competition increases the war for talent, not just within the United States but also within Europe, Asia Pac and in particular the emerged BRIC economies. Benefit expectations How important are the following factors when looking for a new role? % 60 50 40 30 20 10 0 Salary Location Flexible working Not important at all Somewhat important Neither important nor unimportant Important Extremely important Benefits package Bonus When we look further and ask how important benefit packages are to employees, it s telling that just under two thirds of respondents (62.1%) said benefits were important or extremely important. This figure reflects the view of the US Bureau of Labor which in 2012 found that access to employer benefits tended to lean towards employees working in medium and large private companies. Career Company progression culture Scope of role Job security The Bureau found that, for example: medical care benefits tended to cover only 57% of employees in smaller organisations but 89% of people in larger ones; retirement benefits were available to 50% of workers in small companies, 79% to people in medium size companies and to 86% of people in large ones. With smaller medical devices and biotech companies having an increasing role in the development of the US markets, this divide between the benefits haves and have-nots could impact on employee movement in the years ahead. The fact that over a third of people (37.9%) say they are, at best, indifferent to additional benefits, could be driven in part by the fact that they do not currently receive them; although this could soon change. As competition for talent increases the employer offer is becoming much more compelling and that means smaller companies need to improve their employer proposition if they are to compete for talent from existing pharma companies. It also means pharma companies will need to make sure their benefits remain competitive if they want to retain their best and brightest. Variety and progression The second most important motivation for looking for a new job bears no relationship to financial incentives, but rather focuses on the variety and potential of the role being offered, and in particular, the potential for progression within organizations. Just under four fifths of our panel (79.3%) said the scope of their role and the variety of projects is either important or extremely important, making it second in importance only to salaries. Somewhat ironically, even though over 80% (80.4%) of people said that opportunities for career progression are crucial, almost three quarters of our panel (71.5%) also said flexible working was either important or very important to their future decision-making. This shows that over recent years there s been a noticeable perception change towards work/life balance. In the past, flexible working was an exception rather than the rule, and many employers focused on working mothers only. However, over recent years more companies are making this a key part of their employer proposition and as a result employees expectations have increased greatly. Employees no longer expect to have to choose between their career and their life, and instead demand jobs that offer potential to grow and develop their careers without limiting their access to flexible working and improved work/life balance. A recent study even went so far as to say that staff turnover for companies not offering the potential to work flexibly are twice as high as those that do. Our own study confirmed this view by suggesting that flexible working arrangements would cause 71.5% of employees to choose one job over another. A recent example is Yahoo s decision to bar employees from working from home, and the resultant backlash and social media furore linked to the policy. Our study shows that companies that operate in this way could severely limit their growth and competitiveness, making them a less attractive proposition for the most talented, and also reducing the loyalty of those already employed. Location, location, location As candidates become more international in their outlook and US-based employees are more likely to consider an international move, we asked how important location was when looking for a new job. It could be argued that the most talented people have greater choice in deciding where to work and as a result many people are happy to seek work outside their home country due to unbalanced global economic growth and the increasing attractiveness of the international stage. Across the world professions and qualifications are becoming global and large multinationals are recognizing they cannot afford to limit their talent pool to the US alone, particularly with competition putting their retention levels under pressure. With that in mind, it s hardly surprising that four fifths of our panel (80.0%) agreed location is also a key factor in their decision-making. For some this could be intra-country but, considering the fact that almost 40% (39.3%) of our panel said they d seriously consider a move to Europe and a fifth (21.8%) said they d consider a move to Asia Pac, our study shows that international migration is becoming an increasingly attractive proposition for employees across the US. Although global talent mobility has the potential to reduce the competitiveness of US pharma, biotech and medical devices companies, it also offers potential for companies to have a much larger talent pool to recruit from and as a result significantly increases the breadth and depth of the expertise available to them. We have already started to see the US government open its doors to foreign talent through the introduction of H-1B visas, and companies across the whole of the pharma, biotech and medical devices sectors taking a much more international approach to staffing. We anticipate this continuing as employees become much more global, talent becomes harder to find and competition continues to drive change, not only within the US but internationally. 9

Conclusion We can see that the next few years have the potential to be challenging for employers within pharma, biotech and medical devices. With jobs cuts happening in certain areas, significant growth in others and an increasingly migratory talent pool that demands more from its employers, the future development and growth of these highly competitive industries is sure to be driven by change and the ability of employers to adapt to that change and deliver a loyal and more engaged workforce for the short and the long term. Only time will tell which companies understand and deliver on their employer promise and which do little to make them competitive in an increasingly volatile war for talent. Contact us To find your local office and contact one of our dedicated staffing specialists visit: www.realstaffing.com/contactus Or to access the latest sector news, discover how we ve helped organizations and professionals meet their staffing challenges head on, or read our latest staffing and career guides visit www.realstaffing.com Our reports This report is part of Real s dedication to supporting our partners and delivering market-leading staffing solutions. As one of the world s leading staffing consultancies we pride ourselves on being a key staffing partner for professionals and organizations across the pharma, biotech and medical devices sectors. Our series of reports offer best practice advice and insight to help you secure your next job and make business critical decisions that will enable your company to grow and help you manage your staffing challenges whatever they might be. Real Staffing Group 2013. All rights reserved. Real accepts no liability for the accuracy of the contents or the opinions expressed herein. 11

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