International Research Journal , August 2010 ISSN- 0975-3486 RNI: RAJBIL 2009/30097 VOL I *ISSUE 11

Research PaperHealth Management -U

ATTRITION IN PHARMACEUTICAL INDUSTRY: HUMAN RESOURCE MANAGEMENTS ROLE AND STRATEGY

August, 2010

* Dr. Alaknanda Dhotre.

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* Institute Of Health Management and Research, Jaipur, Rajasthan.

A B S T R A C T

The pharmaceutical industry is growing exponentially; there is a constant thirst for the best and the brightest of employees. After information technology, the pharmaceuticals industry is grappling with the highest level of attrition rate of 30 to 35 per cent, according to a recent survey of Indian pharmaceutical companies by Interlink Marketing Consultancy. The article discusses current attrition rates of various companies. The attrition patterns of major pharmaceutical companies like Ranbaxy, Sun Pharma, Pfizer, Novartis, Merck, Sanofy Aventis etc are discussed. The causes of attrition like money factor, working conditions, organizations culture, opportunities for growth, organization behavior, supply and demand imbalance etc are discussed. Watson Wyatt India Total Rewards Survey TM is studied. The causal theory of attrition is summarized in tabular form based on Watson Wyatt Survey. Roles of human resource management in meeting organizational needs and tasks are discussed. The Parameters for attracting potential employees are given percentage wise in tabular form. Factors used to differentiate rewards for superior performers like salary rise, growth opportunities, training programmes, etc.given percentage wise are given. Strategies to retain talented people, psychological environment, and career track management are discussed. Organizational environment like work culture, engaged leaders, effective communication practices, challenging assignments, international exposure, flexible work-time, quality of life, work-life-balance, etc. can increase employee engagement and improve productivity. KEY WORDS : Attrition rates, Pharmceutical Industry specific issues, Interlink Survey, Watson Wyatt India Survey, Parameters to attract employee, Strategies to reduce attrition. research reveals that the pharmaceutical industry INTRODUCTION: The pharmaceutical industry is growing annually experiences an employee turnover of 30 to tremendously; companies are focusing from survival 40 per cent at the field level and 8 to 10 per cent at the strategy to competitive strategy. There is a constant managerial level. thirst for the best and the brightest of employees.The Supply vs. demand ever growing industry is facing the problem of heavy Attrition is the function of demand and supply. The attrition. After information technology, the industry has continuous demand of experienced pharmaceuticals industry is grappling with the employees and globalization has created the need of highest level of attrition. The fast fresh talent for incorporating new ideas. The demand growing knowledge-based sector suffers an annual comes from the growth of the industry and the policy attrition rate of 30 to 35 per cent, according to a of the company. These two things decide whether recent survey by Interlink Marketing Consultancy. there is a demand of fresher or experienced employees. Interlink surveyed a sample of 15 companies in the On the other hand, the supply comes from the small, medium and large segments in the Indian educational institutions and the market. The supply pharmaceutical sector. The survey points out that from the educational institutions is enough to meet the sectors high churn other than the natural rate of the demands of the pharmaceutical industry but, there attrition is mainly due to poaching, burnout, high is a lack of experienced people in the industry, which in turn has created an imbalance. Sources from the stress at work and inadequate payment. Globally, the rate of attrition in pharmaceutical is industry are of the view that as far as marketing and only 10 to 12 per cent, says the IBS report. The sales areas are concerned, pharmaceutical industry

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RESEARCH ANALYSIS AND EVALUATION

International Research Journal , August 2010 ISSN- 0975-3486 RNI: RAJBIL 2009/30097 VOL I *ISSUE 11

is one of the sectors most affected by a high attrition rate in India. But, the attrition rate in the R&D segment is very high, as the highly skilled work area has severe dearth of experienced professionals and, at the same time, new opportunities are tremendous in the sector, as globalization on the R&D front and the increased outsourcing opportunities in India have created a sudden demand for skilled research people.The other industry-specific issue is the ethical practices. The pharmaceutical companies have to comply with statutory requirements of quality assurance, like good manufacturing practices, Good Laboratory Practices and voluntary codes of marketing practices. The study shows that a large number of people, the oldgeneration employees, in particular, who find it difficult to adhere to ethical standards, leave the organization. But the strict compliance with international standards is of gold standard in the pharmaceutical industry which cannot be ignored. At Pfizer, attrition is about 20 per cent. At Novartis, attrition is pegged at about 10 per cent. . At Nicholas Piramal, attrition is 20 per cent at the field level, but lower at the higher levels, Sun Pharma pegs attrition at 10-12 per cent, largely skewed towards lower, entry levels in the field, Merck Ltd, the Indian arm of the German drug maker and one of the oldest multinational pharmaceutical companies operating in India, suffered 20% attrition last year. Aventis Pharma Ltd, the Indian unit of French drug maker Sanofi-Aventis, loses around 22% of its 2,177-strong workforce annually. From Table 1.1 , It is obvious that attrition rate is almost more than 40% at middle and junior management level. Attrition due to better growth or career opportunities is high at all the levels, particularly in pharmaceutical industry. The survey included data of 100 foreign as well as domestic companies of six types of industries including pharmaceutical industries. WHYMANAGE? The Indian pharmaceutical industry is one of the most dynamic in the world. It ranks fourth worldwide accounting for eight percent of the worlds production (in terms of volume) and 13 in terms of value. The market in India is highly fragmented, as there are more than 10,000 licensed firms with a total annual turnover of Rs 54,000 crore (Rs 540 billion). Out of this, only 300 companies are in the organized sector. The pharmaceutical sectorwhich employs a total of 500,000 people in India across domestic and global 88 firmsis losing at least 30% of its workforce annually. STRATEGIESTO REDUCEATTRITION: Recruit: Focus on the right-fit model, robust evaluation procedure (both technical and practical

tests) and reference checks are some of the ways of sourcing talent. Derek Stockley, a management guru defines talent management as a conscious, deliberate approach to attract, develop and retain people with the aptitudes and abilities to meet current and future organizational needs.. Develop and train: Training helps in identifying the potential talent from employees and later helps to sharpen their latent skills. Training like behavioral programmes, leadership and other managerial programmes can help groom employees further in line with their career paths and aspirations. Pharmaceutical companies on a fast growth track will have to focus on managing their star performers as well. The best people have to be elevated into potential prospects of succession planning, states Dias. Retain: Retention of talented employees is always the most important agenda for any company to grow. While good compensation can be a hygiene factor in talent management, only monetary benefits may not be attractive to retain them. Giving them higher salaries(48%),Faster growth opportunities(62%), Betterperformance based bonusamounts(46%), Advanced training opportunities(38%), Recognition awards(54%),Reflects in the salary increase(50%), Projects abroad(24%) etc.are some factors used to differentiate rewards for superior performers. Source Watson Wyatt India Total Rewards Survey TM Psychological relationship: Employees in pharmaceutical companies are generally intellectual staff and hence the psychological relationship between leaders and employees is very crucial. Professionals who contribute to organizational competitive edge directly want a high degree of organizational recognition that their ideas are important. They also demand the freedom to explore and fail. They expect their leaders to be intellectually on their plane but they do not want a leaders talent and skills to outshine their own. From Table no.1.2, it is evident that there are different parameters to attract employees. (Table 1.2) Career track management: While employees are more seeking job advancement and job achievement, challenging and growing career path, career track planning is important. Career track planning can be done by developing comprehensive career growth plans for existing talents Some talented employees are highly individualistic. Providing mentors for them to become good team members and team leaders is another workable method. Organizational environment : Organizational
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International Research Journal , August 2010 ISSN- 0975-3486 RNI: RAJBIL 2009/30097 VOL I *ISSUE 11

environment like work culture, engaged leaders, effective communication practices, challenging assignments, international exposure, flexible worktime, quality of life, work-life-balance, etc. can increase employee engagement and improve productivity. Good working atmosphere, better opportunities , career planning, international opportunities for good performers, strong meritocracy, regular and timely rewards have helped Sun Phrama Company, to reduce attrition as quoted by company spokesperson. Industry sources point out those pharmaceutical companies must not only attract talent but also foster an environment in which their clever people are inspired to achieve their fullest potential in a way that Table 1.1: Reasons for leaving the organization

produces wealth and value for all stakeholders. CONCLUSION: With changes and innovations in the human resource managements strategy, using tools like. Good recruitment strategy, Development and training, Talent retention strategy, Good psychological relationship, Organizational culture, Career track management, it is possible to reduce attrition in the pharmaceutical industry. I would like to conclude with the famous saying, Profitability is the sovereign criteririon of the enterprise and business has two basic functions-marketing & innovation.-By Peter Drucker.

RESEARCH ANALYSIS AND EVALUATION

Table 1.2 : Parameters for attracting potential employees

R E F E R E N C E
Fred Luthans: (11 th edition), Organization Behavior, Mc Graw-Hill International Publication (page no.157 to 192.) Stephen P.Robbins,Timothy A.Judge , (12th edition), Organization Behavior, Prentice Hall Of India Pvt.Ltd.New Delhi. (page no.72 to 89.) http://www.thefreelibrary.com/ accessed on 15th Dec.2009. www.watsonwyatt.com accessed on 22nd Jan 2010. http://www.expresspharmaonline.com accessed on 26th Jan 2010. www.business-standard.com accessed on 2nd Feb.2010. http://whatsinbiz.wordpress.com accessed on 4th Feb.2010.

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