In A Tight Economy, Purposeful Workforce Planning Is A Must

As we near the mid-year point, some of the workforce challenges facing biotech and pharmaceutical companies linger from 2023. The sector reportedly experienced 57 layoff rounds through Q1, mirroring what we saw during the same period in 2023 but doubling from 2022. Overall, in 2023, restructuring and cost-cutting initiatives led to a 57% rise in layoffs compared to 2022. In some cases, layoffs were the result of challenging macro-level economic conditions with many companies operating in cash-preservation mode. For others, cost-cutting was driven by expiring drug patents, increased pressure on drug pricing, clinical trial failures, and shifts in strategic priorities. To add to these pressures, the combination of increasingly complex organizational structures, changing workforce compositions, technology enhancements, evolving standardized tools and methodologies, and new ways of working have elevated organizational and workforce effectiveness as a strategic priority.

Instead of defaulting to tendencies typically seen across the pharmaceutical sector, including being reactive, leadership teams must focus on building and deploying a workforce strategy as a critical capability to ensure the company can deliver on current and future goals. It’s about being proactive. To do so effectively, a purposeful evaluation of the structure, headcount, skills, and culture of the workforce is required, to answer the following essential questions:

1. Do we have the right leaders to evolve the organization in line with changing industry conditions? If so, is our structure aligned to execute?

2. Do we have the right volume of resources invested in the right places?

3. Do we have the requisite skill sets in our workforce? 4. Do we have the right culture and people-related practices to be effective?

Below we highlight four actions required for answering these questions and identifying structure, size, role, and skillset requirements that are most critical to applying a forward-looking and cost-effective lens to organizational effectiveness.

1. Align the organizational structure to business objectives: Create a process, cadence, and prioritization matrix that examines whether the organizational structure is aligned to growth aspirations and market conditions, and which aligns highly skilled and capable people — especially within core functions — to a structure that drives efficiency and synergy across business units. Identify which parts of the structure need to stay static and which parts need to be more dynamic, outlining future roles, mandates, and competency requirements.

2. Conduct volumetrics and efficiency assessments to define appropriate resourcing: The mantra of doing more with less has never been more prominent in biotech and pharma, especially since COVID-19. Many companies ramped up workforces to accommodate atypical peak demand and now face the need to rapidly reduce headcount. Conducting a targeted evaluation to identify capacity requirements and opportunity areas/initiatives to improve efficiency is critical to deploying the right sized workforce to enable growth and to deliver against future requirements.

3. Identify where investment is required to upskill and prepare the workforce for the future: As biotech and pharma organizations change, it is critical that companies examine job functions to determine if they are still needed or how they need to evolve. They also have to figure out what, new roles are needed and identify the critical skill sets that are required to avoid keeping the workforce stagnant. Conducting capability assessments as an investment in the broader value proposition is a differentiator to building a fit-for-purpose workforce and to attracting/retaining top talent.

4. Culture orientation and evolution: Conduct a deep dive into behaviors, mindsets, and perceptions across the workforce to take a comprehensive, practical, and evidence-based approach to simplifying complex organizational behavior and future choices. Partnering with human resources to refresh and align performance metrics and rewards to incentivize new behaviors and new ways of working and targeting cultural characteristics/elements that need to evolve as part of growth is part of future-proofing the organization.

Purposeful and active consideration of these elements year after year will yield perhaps the strongest safeguard against future layoffs or cost-cutting pressure. Allocating investment and driving accountability across the organization to engage in strategic, rather than reactive organizational, and workforce planning can result in significant mitigation of cost and cultural implications from rapid reductions in force.