Coping With Turnover, or “Employees are Jumping Ship: It’s Sink or Swim”

A plant manager writes in...

Retaining top performers and talented employees is a strategic business issue for pharmaceutical manufacturing organizations. What kind of a business case and action plan would you make to the vice presidents of finance and human resources if your organization was faced with this hypothetical case study? Pharma X is a small biotechnology firm developing, manufacturing, and marketing vaccines. The organization won approval from the FDA twenty years ago to market a vaccine that attacks a debilitating respiratory illness. The organization has grown in size from a small start-up team to over 500 employees with annual sales revenue of $250 million and profit margins in the 25-30% range. Recently, two new biotechnology firms have started operations in the area, locating their facilities only 30 miles from Pharmaceutics research, manufacturing, and administrative facility. Although producing and marketing different products than Pharma X, these competitors utilize similar skill sets and technical competencies. They also offer starting salaries 25% higher than Pharma X's base salary for entry-level employees. As a result, over 33% of manufacturing operators and quality assurance specialists have left Pharma X in the last two years, many after receiving skills training worth $75,000+. Another 10-15% have stayed with the company, but transferred to other departments within the organization. The management team has experienced considerable turnover in the last two years as well, having replaced 40% of the senior leaders. Exit interviews were not done until recently, but operators and quality personnel have been voicing complaints for some time about the work culture inside manufacturing and quality operations. Specifically, concerns have been raised about the pay-for-skill compensation system, the lack of training required to learn skills and maintain regulatory compliance, as well as the lack of employees and supervisors to properly staff each team and area. Many employees complain about the shortcuts which management seems to reinforce with their constant nagging about getting product on the truck. Pharma X recently obtained FDA approval for a new vaccine that is forecast to grow to over $1.5 billion in sales within 5 years. This product is extremely complex to manufacture with a production cycle of 10-12 months. The organization is just starting to finalize hiring plans, but the preliminary estimate is for employment to grow and reach 1,500 employees within a few years. The vice presidents of finance and human resources are concerned about the vulnerability of the organization, the financial impact of this turnover, and the range of options and potential solutions. What possible recommendations might you consider in a presentation scheduled for next week?
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