Shoring Up Pharma’s Middle Management

Pharma's middle managers are under the gun--criticized for failure but rarely thanked for success. (See "The Good Fight: The Plight of Pharma's Middle Managers.") It doesn't have to be this way, says Scott Chizzo, president and chief consultant of Maxiom Group. In this interview, Chizzo offers advice on how drug companies can ensure success in the mid-level of their organizations.

PhM: New research suggests that the role of the middle manager in pharma and other industries is more significant to organizational success than previously thought. Would you concur?

S.C.: I absolutely agree. Middle managers are the key to translating a company’s strategy into the specific actions needed to implement the strategy. They manage critical resources, prioritize activities, and provide direction and motivation for the majority of the work force.  Their role is critical for both the execution of the strategy and the performance of the business.

PhM: It’s been said that pharma middle managers often get mixed messages from senior management: that they need to be cautious and avoid regulatory issues or other problems, but need to take chances and meet operational and earnings expectations. What can be done about this?

S.C.: It’s a critical issue. Innovation requires risk-taking. We need managers to take appropriate risks to make progress on research, development and commercial programs. However, I see one of two scenarios that can result in disaster. First, the Biopharma industry is a highly risky business and it attracts risk-takers. Too often, however, organizations and individuals develop a certain hubris around these risks. Because they have been successful in overcoming risks in the past, their risk tolerances become higher and higher and they lose sight of the fact that something could fail. It leads to an institutional arrogance that that is not balanced by proper oversight, contingency planning and analysis.

Second, organizations often lack tools and frameworks that support risk-based decisions.  We need every level of management to be aware of the risks of different courses of action and have good processes in place for making those decisions. Those processes would include analyses, scenario planning, contingency  planning, escalation paths, and organizational governance for key decisions. Often, senior management is blind to the risks that are being taken at lower levels of their organizations. We need risk management frameworks to make sure they are in the loop.

PhM: A lot of experienced, mid-level professionals in pharma have been laid off in recent years, due to budget cuts. Have you seen this? What impact has this had on the operational capabilities of these companies?

S.C.: Yes, we have seen cutbacks in middle management from budget cuts, attempts to streamline organizations and from consolidations due to merger and acquisition activities.   If not done carefully, cutbacks in middle management can be harmful if, as a result, there is a loss of organizational learning, capabilities and leadership.  Sometimes there are positive benefits from faster decision-making and rationalized organizational capabilities.  These decisions must be weighed carefully to not increase the risks to business operations, compliance and performance.

PhM: Some people have attributed (at least in part) recent high-profile manufacturing problems (such as GSK in Puerto Rico) to sloppiness and incompetence among plant/quality managers and other mid-level professionals. Is this a fair assessment? Can you cite examples of situations in which middle management has failed?

S.C.: There are clearly examples where one can point to shortcomings in middle management as the root cause of a particular failure. But, I think that there are many of the failures pinned on middle management are actually the result of more systematic shortcomings of the entire management system at their company. When looking at a particular situation, one has to probe at the surrounding management system and consider:

• How well trained and supported are middle management?
• Does middle management have the right tools for making risk-based decisions?
• Does the organization’s culture support open, cross-functional thinking or is decision-making limited to functional silos?
• How well informed is senior management of the risk-level of decisions being made deeper in the organization?

These systemic factors, I believe, contribute the most to organizational failures.

PhM: What effect has the recent flurry of M&A's in the industry had on the middle management layer in many companies?

S.C.: M&A situations can be quite difficult for middle management. There is a lot of uncertainty for an extended period of time that they must live through. From the time the merger or acquisition is announced to the time that there job is either secure or eliminated can be many months in duration. For much of this time, a high level of paralysis can set in as managers wait for the shoe to drop. It takes a strong, mature manager to look beyond the immediate uncertainty, keep making forward progress with their staffs and initiatives and trust that they will be okay.

It is vital for companies in the midst of an M&A situation provide as much communication and support as they can at all levels of their management structure to prevent paralysis, keep morale high and retain the talent they will need to make the merger or acquisition successful.

PhM: Finally, what advice do you have for middle managers seeking greater relevance within their companies?

S.C.: The Biopharma industry is one of great opportunity. For middle managers to best capitalize on those opportunities they must strike a balance between taking risks and ensuring a high level of discipline and compliance for the work and the teams that they are responsible for. What I see the most successful managers doing are:

• Think and act holistically. Middle managers that can think broadly and operate cross-functionally to further the goals of the business will be the most successful.  It requires not operating in silos and building fiefdoms, but partnering with others in different functions to capitalize on opportunities, build new capabilities, improve processes and accomplish objectives.
• Create a vision and execute on that vision.  Successful business leaders are able to create a compelling vision that others will follow and then know what steps they need to take to execute on that vision. Middle managers must create a vision for their departments and teams and guide them in execution of that vision.
• Recognize risks and take steps to mitigate risk. Managers must recognize that success is not guaranteed and that there is substantial organizational risk tied up in the decisions that they make. They must understand those risks and proactively build contingencies and engage with peers and senior management to fully vet and mitigate these risks—don’t go it alone!