Tuesday, July 7, 2015

Deskilling the Pharma work force hurts Philly area

For generations it has been a point of pride that the pharmaceutical industry has made the Philadelphia region a major business hub. In fact, when foreign pharma companies want to establish a comprehensive US operation, they usually seek locations within a 100-mile radius of Philadelphia. The shaky sales of branded drugs and the resulting wave of layoffs have given pharma's finance managers the ability to do the same things: lower wages and exert tighter control. One way of achieving these goals has been through the implicit 55-and-out policy. As the industry retrenches the size and scope of its operations, HR people look to "package out" employees in their 50s. It is far cheaper to replace them with people in their 20s and 30s. The older workers are not only more expensive, but people with 25 years of experience are more likely to recognize management initiatives as BS when they see them. Young people with toddlers at home are apt to do as they're told

Deskilling the Pharma work force hurts Philly area

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By guest blogger Daniel Hoffman:

For generations it has been a point of pride that the pharmaceutical industry has made the Philadelphia region a major business hub. In fact, when foreign pharma companies want to establish a comprehensive US operation, they usually seek locations within a 100-mile radius of Philadelphia.

We have good reason to boast about PA-New Jersey as a pharma center. The industry employs a large number of well-educated people and, historically, it has paid them generous salaries. Pharma’s value to universities, medical centers, suppliers (e.g., ad agencies, clinical trials facilities) and other economic centers also remains impressive.

But look out. There is now good reason to believe that pharma, run by its finance officers and their subordinates in human resources, purchasing and other “business” departments, wants to change all that. And the pain is going to be felt across the region as they cut back that profile of a high-skilled, high-salaried workforce.

Labor historians call the process “deskilling” and the impact will crash through our region with particular intensity, because we have benefited so much from the old way Pharma did business.

Prior to Henry Ford and the establishment of assembly line production in the late 19th and early 20th centuries, highly skilled tradesmen working on the shop floor controlled the pace and manufacturing approach of US factories. These men carried their precision tools with them and business managers at the plants had to accommodate the production demands of knowledgeable tradesmen.

Ford and the time-motion studies of Frederick Taylor broke the control of skilled workers by reducing the production steps to far simpler tasks that unskilled workers off the farms could perform. With a larger supply of easily replaceable labor, wage levels fell, although the absolute wages were higher than what farm workers were getting in the fields. Control over production rate and techniques shifted to the business managers.

The shaky sales of branded drugs and the resulting wave of layoffs have given pharma’s finance managers the ability to do the same things: lower wages and exert tighter control. One way of achieving these goals has been through the implicit 55-and-out policy. As the industry retrenches the size and scope of its operations, HR people look to “package out” employees in their 50s. It is far cheaper to replace them with people in their 20s and 30s.

The older workers are not only more expensive, but people with 25 years of experience are more likely to recognize management initiatives as BS when they see them. Young people with toddlers at home are apt to do as they're told.

As the age and experience levels in pharma decline, so do industry knowledge and functional skills. An increasing number of mid-level managers these days appear unable to even frame the issues they need to address. In many cases, diverse “teams” state those issues for the individual assigned to pursue them. Increasingly the team-developed issues are unclear, poorly drawn and designed to reflect favorably on the group’s prior actions. The “point person,” for her part, is often afraid to even suggest tougher questions. In effect, many mid-managers become administrative assistants.

Years of layoffs have eroded pharma’s image as a recession-proof industry. As wages and workplace discretion decline, these images will also fall. Chamber of commerce types will need other topics for bragging rights.

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About this blog

Check Up covers regional health news and a wide array of healthcare topics from pharmaceutical happenings to patient safety. Read about some of our bloggers here.

Portions of this blog may also be found in the Inquirer's Sunday Health Section.

Daniel R. Hoffman, Ph.D. President, Pharmaceutical Business Research Associates
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