Middle managers are hamstrung, says Hoffman: “Pharma has defaulted a lot of its operations management to finance. Finance wants to reduce services and people to commodities.” This is especially true in manufacturing, where recent, highly-publicized recalls can be traced to preferred-vendor, lowest-price requirements established by Purchasing departments.
“Not that I want to be the harbinger of doom,” says Chin, “but I'd add that a lot of pharma operations has defaulted to finance and legal. Finance wants to reduce services and people to commodities, and legal wants to impose additional restrictions because it's in the business of mitigating risks.”
It’s a recipe for disaster: “If you examine the organization,” she says, “you'll find that this middle layer of management are the ones who are translating and scaling corporate strategies across their individual functions, and then ensuring the appropriate execution and measurements of those strategies. You can look at troubled organizations and find strategies that have been ‘lost in translation’ as it percolates through this middle management layer.”
Indeed, a recent internal investigation by Johnson & Johnson into the many recent problems at McNeil places blame on middle managers and lower-level execs, but not senior executives. McNeil underwent massive staff cuts, hampering Manufacturing and Quality managers’ ability to oversee operations. “With reduced central oversight and tasked with implementing the Pfizer Healthcare acquisition, some McNeil employees may have lost focus and commitment to maintain quality standards,” the report said.
“With the benefit of hindsight, it appears that the restructuring may have been imperfectly executed,” the committee said, in what appears a gross understatement. Critics have viewed the report as a means to insulate senior management, and the company, from further legal liability.
“Vulnerable to Litigation”Thus, in pharma’s troubled organizations, it may not be top management that bears the brunt of legal troubles. Pharma commentator and
blogger Jim Edwards recently wrote that there is “an emerging pattern in the prosecution of white-collar criminals in the drug industry: middle managers and other underlings—the ones actually carrying out illegal schemes—are becoming more vulnerable to litigation, as their names appear frequently in the paper trails.” CEOs and other top executives, on the other hand, are becoming more insulated, “as they tend not to be the writers of incriminating emails and PowerPoint presentations.”
Here’s an example of a typical middle manager quandary, from the forementioned biopharm Quality manager, related to product lot release. In a four-week production cycle, oftentimes a problem won’t crop up until the third week. “That means you have one week to investigate thoroughly, do a good CAPA, and everything else,” she notes. “I wouldn’t hesitate to hold up a shipment, but you get a lot of hassle for that. You can’t hold it up too often, because people will start to say you’re just too slow.” The thinking goes: a recall may happen once a decade, whereas a late shipment shows up on performance metrics immediately.
She says she carries her iPhone everywhere and documents everything that happens in emails. “Everything’s in writing,” she says. “It proves that I did tell you that.” Just as importantly, she says, senior managers can get information immediately wherever they may be, and can go back and reference the correspondence at any time.
“Often, senior management is blind to the risks that are being taken at lower levels of their organizations,” says Scott Chizzo, president and chief consultant at Maxiom Group. “We need risk management frameworks to make sure they are in the loop.” (Here’s our
full interview with Chizzo on how to establish such frameworks.)
Hoffman believes that the Department of Justice and other authorities will target upper management of organizations that are absent those frameworks. A case in point is the Office of Inspector General’s pressure on Forest Laboratories, in which the company has been precluded from doing business with the government (i.e., Medicare, Medicaid) while CEO Howard Solomon is still in charge.
Nevertheless, “Middle managers are really going to have to look out for themselves,” Hoffman says. “Being the good corporate water carrier will have its hazards.”
Systemic SupportThe key to the middle manager’s success is often organizational support, notes Chizzo of Maxiom. “There are clearly examples where one can point to shortcomings in middle management as the root cause of a particular failure,” he says. “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.”
Companies must consider, says Chizzo:
- 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?
Integrity
There are things the middle managers can do to establish their relevance and importance. “The best way to engage senior executives in a dialog is to present potential options and scenarios you've thought through,” Chin says, “and discuss the boundaries of execution for each option to come to a mutual agreement as to which ones are feasible and are both creative and cautious."
“Senior executives may not always be able or willing to sit down and ‘brainstorm’ with you as a middle manager,” she adds, “and you'll be seen as lacking creativity and proactiveness or, worse, ‘lacking leadership’ if you skip this step and go straight to senior executives with open-ended questions.”
Hoffman has a few key suggestions for pharma’s middle: Make sure senior management hears from you vocally and regularly; keep an eye on the big picture and not just short-term tactical issues; and watch how other industries are doing things—“Don’t be parochial,” he says.
Whether these strategies will make a difference, Hoffman is skeptical. “The thing that motivates senior management above all else is their own remuneration,” he says. “When you had some of the families running companies (Merck, Upjohn, etc.), they would try to balance the wealth of family with well-being of employees, customers, suppliers, and surrounding communities. To a large extent today, whoever isn’t in the boardroom is the enemy.”
In any environment, says Hoffman, pharma’s middle managers must always balance their professional integrity with the sometimes contradictory demands of the company. “How far do you go within the standards and canons of your profession versus the imperatives of your organization? That’s always a trade-off to make, and given the dynamics of the industry today, it’s that much harder to do.”
