Calling up reinforcements
pharmafile | June 28, 2006 | Feature | Business Services |Â Â interim management, recruitmentÂ
In the pharmaceutical industry outsourcing has never enjoyed greater popularity and all the indications are that this trend is set to continue over the next few years. The use of interim managers is no exception and, currently, all the major global players are making use of interim specialists in a wide range of roles for a number of different reasons.
One of the main benefits is the ability to tap into highly specialist areas as and when you need – and quickly, too. Interim help can cover unforeseen events – good and bad, for example, when a key person unexpectedly falls ill and has to take time off just as an important project is coming to a head.
There also may be occasions when there is a need to freeze or even reduce headcount. As a result, difficult gaps can suddenly emerge within a team. Anticipating these problems early on and covering them quickly, by parachuting in interim support, can save the day. In the 2005 MORI Captains of Industry survey commissioned by BIE Interim Executive, sudden departure was cited as the top reason for appointing interim executives. The research also showed that interims are being used more for start-up and turnarounds.
Interim expertise can also be used in more positive circumstances, such as for an exciting new business opportunity, or to meet tight project deadlines, which would be out of the question without additional, skilled help, or to temporarily cover essential knowledge gaps.
The alternative of recruiting for a permanent specialist to fill this gap is not even an option in terms of time and, in any case, full-time assistance may well not be needed beyond the life of the project. Interim managers, who can immediately jump into the driving seat, can be the best solution in the circumstances.
Dr Catherine Beech, director of Gateway Global Partners said: "Using interims means you can benefit from expertise in a specific area from someone who is effective from day one. They can also bring strategic direction to a new business early on, but without huge investment."
An interim can, undoubtedly, also bring a fresh perspective to a business, without being constrained by what has happened in the past. Thinking 'outside the box' can be seen as extremely valuable by people using interims, as one senior HR director summed up. He said: "An objective viewpoint is very helpful and with an interim we used recently, we benefited greatly from a fresh approach and the authority and respect that person commanded. Internal staff can be more likely to listen to someone from outside.
"In this particular case, it would have been very difficult to access this specific area of experience in-house, as the project involved moving to a new therapy area. This plus point persuaded me to think more in terms of added value than pound-for-pound cost."
Cost and control
One of the main reasons why companies use interims is, of course, cost and the control of overheads. By only paying for what you use, you can control the level of input and, therefore, the cost. It avoids increasing the overheads on an ongoing basis by employing a full-time, permanent specialist.
But does using interims work out more expensive overall? At first sight, interim daily rates can seem high, typically ranging from 700-1,500 pounds for a senior medic or executive in the pharma industry, including agency fees.
Compare this with an annual salary for a medical director – using the average annual salary from Pharmaceutical Marketing's latest survey – of just under 104,000 pounds. This could cover an estimated 225 working days per year, which would exclude eight days of bank holidays, 25 days holiday and a conservative three days of sick pay (as compared to the national average of around seven days). However, when one factors in other areas such as professional training, IT training, away days, conferences etc, a more realistic estimate of actual working days might be between 200 and 210 days.
But salary alone isn't the end of the story, as one HR director pointed out. "To make a fair comparison, you need to take the whole package into account," he said. "At the very minimum, these individuals will receive a company car or car allowance, company pension scheme and private healthcare. That doesn't include the compulsory National Insurance the employer has to pay and any other perks included."
Returning to the case being compared, in addition to the average quoted salary of 104,000 pounds, 12.8% of annual salary goes in Class 1 National Insurance contributions, resulting in 13,312 pounds being paid by the employer. Other benefits which the employer would be expected to pay as part of a standard package include: private pension of 5,200 pounds (in a conservative example where the employer pays 5% contribution, but this can be as high as 15%), membership of a private healthcare scheme estimated at 550 pounds per annum, company car or car allowance of 5,000 pounds. All these benefits in themselves are subject to an additional Class 1a National Insurance contribution, payable by the employer, again at 12.8%. Additional investments in the permanent employee would include professional training estimated at approximately 2,000 pounds and office/corporate functions totalling 200 pounds.
This brings the total cost of employing a permanent senior medic to around 131,000 pounds per annum, working out as 655 pounds for a daily rate based on 200 working days a year. This excludes additional benefits which are more difficult to quantify in general terms, for example bonuses, share options, or childcare vouchers, maternity and paternity leave, subsidised meals and initiatives such as employee assistance programmes. Taking all these additional benefits into account could potentially increase significantly the total figures quoted above.
Recruitment and relocation
These calculations do not take into account any costs associated with recruitment, which would include any fees payable to the selected recruitment partner, as well as internal overheads associated with the recruitment process. There's also the cost of relocating an individual and family which can run into tens of thousands of pounds, particularly if the person has been living and working overseas. This eventuality is becoming increasingly common, particularly for high-profile, specialist positions which can often require a search of national, or even international scope. All these costs need to be included in the equation.
In contrast, around 70% of companies only use an interim specialist for three days per week, compared to five days for full-time, permanent staff. This is because often interims can effectively cover the workload in a reduced time because they are unhindered by internal issues and don't need to devote time to internal or external meetings, staff or management issues, conferences or office politics. As a result, the time spent is very focused on the project in hand and, therefore, highly productive and cost effective.
No internal issues
This benefit is echoed by the interims themselves who enjoy being able to get on with the task in hand without having to get involved in other office issues, planning or administration.
Graham Fothergill works as an interim pharmacovigilance executive/scientist. He said: "There are many advantages to working as an interim, but one of the key ones for me is not having to get involved in budgeting, appraisals or general office politics. It means that you can focus clearly on the task in hand and not find yourself spending valuable hours dealing with internal issues. Additionally, you realise that your experience and expertise is being appreciated by the client.
Taking an average daily rate for an interim senior medic as 1,000 pounds, three days per week, gives a total of 3,000 pounds. This compares to five days a week for the permanent member of staff at a daily rate of 655 pounds, making 3,275 pounds.
All in all then, using an interim resource may not be as prohibitive as it may first appear in terms of the financial outlay. Added into this, is the fact that you can exert control over the resource and end the interim assignment with one month's notice if the project the interim is working on is called to a halt, for example. This compares with the six or seven weeks' severance pay per year of service, in addition to outplacement coaching and services, which would be standard in the case of the redundancy of a permanent employee.
A senior player in the industry has direct experience of this situation. She said: "A couple of years ago, a project I was leading was frozen for a whole range of reasons and I was fortunate in having two interim managers as part of the team. We were able to conclude their involvement with this particular project without any expensive severance arrangements and also then deploy their skills elsewhere within the company."
The MORI Captains of Industry survey also found that the proportion of senior people who consider that interim executives are more suitable and cost-effective than management consultants continues to increase - 56% versus 52% in 2004.
Right solution, right time
The key here is using the right resource at the right time for your project, your department and in line with the strategic goals of your company. Dr Roger Anderson is an experienced pharma recruitment consultant. He feels there are optimum times to choose permanent recruitment, such as when a company is setting up or re-organising a specific work group.
He said: "In these circumstances, you need to recruit a head for this group to drive it forward, within the technical, medical, commercial or internal political environment, in order to achieve the objectives set. This individual will then often retain people whom he or she regards as able, effective and committed and then recruit more permanent staff to fill the gaps. Since interims are not normally involved in the internal politics of a company, they represent a safe pair of hands, but rarely a long-term member of the team driving a new group forward.
"Other key points to remember are that unlike interims, over time, permanent recruits will become part of the company's history bank, understanding formal and informal processes and working on improvements. Permanent recruitment is also important when a company likes to protect its internal technical, commercial and processing methodologies because they may be key factors in the company's success."
Certain circumstances
Interims can play an important role in specific circumstances, explained Roger Anderson, and may be a more practical option than making an expensive permanent hire, under pressure, which may not turn out to be the best solution long-term.
He said: "Optimum times to go for interims are when a job is clearly defined and produces an outcome that is clear and definable – for example, filing for a product licence, analysing adverse events for reporting, drafting reports from study findings, drafting and checking written and audio-visual materials on products.
"In such cases, an experienced and efficient pair of hands can cover a role until a permanent person is found or it may remain an interim position for longer, because the cost is a running one and not headcount.
"Interims are also particularly useful when a reorganisation within a company or a closure is imminent but not immediate. Gaps need to be filled as and when key people leave, but it wouldn't be fair or practical to take new staff onto the payroll only to let them go later.
"Last but not least, interims can feed back to management on areas of inefficiency or with potential for improvement, almost as an aside to the day-to-day job they are doing. It can almost be like a short-term consultancy. An interim has no real axe to grind, but they can notice things and add more value to their time with a company in terms of helping to improve working methods and processes. Often they can see different ways of working more clearly and bring previous experience to the party."
So interim or permanent recruit? Both have their role to play, depending on circumstances, company and project. However, interims can provide a solution in a wide range of situations and, they are not as expensive an option as people first think. So, it's well worth weighing up all the factors, before reaching a decision.
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