Compliance and globalization changing approach to leadership search in pharma and healthcare

Xenia Becker and Cedric d'Halluin of SpenglerFox collaborate with GoINPHARMA to discuss compliance and globalization changing approach to leadership search in pharma and healthcare. 

Executive search and recruiting have changed rapidly over the past decade. Most of these changes stem from a deep restructuring of client needs. Whereas, some 10 years ago, businesses were asking executive search firms to fill top leadership and sales management roles, clients, in the past half-decade, started asking for placements in the fields of Market Access or Medical Affairs. The way larger pharma companies approached their business had changed. Many went from a commercial sales view of doing business to adopting a more scientific approach to bringing goods and services to market.  Demand for leadership with deeper technical know-how grew.

In emerging markets, the situation is not that different. Compliance issues have had a big impact on how corporate HR picks new leadership hires.  The expat vs. local approach to hiring has come full circle. Initially, expats were brought in to emerging market countries to mentor and help with transition and economic restructuring, then local talent hires gradually replaced them.  However, during the last five years or so, the environment in many emerging markets (i.e. Brazil, Russia and Turkey) has changed.  Markets have become more regulated and subsequently ways of doing business have changed. Market buzzwords no longer include “expansion”and “adding headcounts”; instead, headquarters for multinationals in these markets now speak of “compliance” and “rational growth”. Because of new regulatory demands, company leadership teams are generally more cautious and calls for expat-influenced management have once again grown: due to their more extensive experience in handling compliance-related decision-making.

Management and Leadership Skills

Candidate skills have always been important. However, businesses (as our clients) have gone through significant evolution and this has changed their demands.  If you go back a decade, it was very likely that a  German company filling an executive post abroad preferred to, and did, hire a German candidate. This is no longer the case.  Also, mobility is an increasingly important factor.  More businesses seek people for leadership roles who are willing to relocate.  This fact breaks with previous industry standards where business executives and upper-level managers focused primarily on career development. They took on a position expecting to advance within that specific worksite (geography).  Today, however, markets like Germany are opening up to foreign talent: businesses are putting knowledge and skills at the top of their recruitment qualification wish lists.

Key Skills in Demand

Soft skills have grown in importance.  This is particularly true for the pharma industry, and this stems from the fact that regulatory norms have changed a lot over the past twenty years.  Previously, sales teams (and their leadership) had much more freedom in their approach to business.  However, this has all been halted by regulations that look to curb potential corruption.  This means that companies have had to look for new ways to build relationships with healthcare professionals.  Businesses need leaders that keep an eye on compliance and work within the letter of the law and focus on sales team monitoring.  Alongside that, pharma businesses now also place greater importance on executives’ ability to manage multicultural teams and to work within so-called matrix organizations. This means leading and providing guidance not only for local business units, but also therapeutic divisions, which can be a challenge.

A further critical skill is executives’ ability to optimize production processes.  Business leaders now look more at efficiency alongside improved production.  This has been the case for the past few years: businesses are looking to minimize waste and focusing on lean management tools.  The Great Recession did much to push this trend.  Prior to the economic slowdown, there had not been such a big need to focus on efficiency. Now, this has all changed. Clients have excellence centers for lean management in pharma production.  This, in turn, has changed pharma companies’ approach to talent sourcing. Previously, businesses had been more conservative, i.e. they hired talent with pharma backgrounds for pharma roles.  Yet in recent years, they have switched up their search approach in the quest for efficiency.  Now, it is common that a pharma company will look, for example, to the automotive sector to find the efficient leaders it needs.

In emerging markets, retention and development of executive talent is just as important as the search process. Businesses increasingly focus on leadership development and use of assessment centers. Executive HR teams have moved from mass recruitment of new employees to intense development of existing teams; businesses are moving away from operational approaches and focusing more on strategy. They put more effort into strengthening the teams they have in place, rather than running external searches. One could say that companies have moved from an expansionist view of doing business to a strategist one.

Impact of Technologies and External Influences

Businesses increasingly talk of pushing forward with technological advancement; for example, as part of phenomena like Industry 4.0.  However, the key ask organizations now have for their leadership at present is greater creativity.  Businesses want their executives to be more flexible. You also see a greater push for a bottom-up approach to leadership versus traditional top-down models.  Company leadership increasingly feels that customer-facing team members have a more direct relationship to the consumer: they have direct feedback on what the market wants.

A specific reality impacting emerging markets involves local manufacturing. This is the case in Brazil,
Russia, Saudi Arabia, South Africa and Turkey. Governments now have requirements that businesses  invest in local manufacturing in order to get approval for price reimbursement for medicines and medical devices. Essentially, companies must localize production or they get booted from the market. This creates a further dilemma for multinationals as the talent for managing production is not always readily available on local markets.  Overall, this is part of a broader cycle involving the expat/local/expat-hybrid recruitment cycle mentioned earlier.  Some businesses have looked to bridge the expat-local talent gap by recruiting via national diasporas.  They put together special packages to bring their countries’ expats back to their home markets.  This has been a preferred recruitment strategy for emerging markets in recent years: businesses search among talent that has relevant, important cultural ties but who have also worked in different cultural environments and can offer a fresh perspective.

The Future Executive

Executive talent must increasingly be people-oriented.  Businesses are shifting away from hierarchical leadership; these days, the focus is more on the team. This also stems from generational changes within businesses where younger leaders place greater importance on meaningful work assignments.  Meeting this need has also become critical due to a lack of talent in many areas: need for retention is a key motivator. Leaders also need to focus on the needs of their teams and what younger generations now expect of work environments.  For example, perks like home office have become standard.  Whereas, a decade ago this was rare or unthinkable, most businesses now offer a mix of on-site (workplace) presence coupled with home office days.

On-site vs. home office arrangements also place a new set of demands on executive leadership. Directors need better communication skills and they have to invest in developing trust across teams that may not be physically present on a daily basis. Executives have to check in regularly with their managers and lower-level teams and agree on reporting schemes that satisfy both sides.

In emerging markets, executives increasingly expected to focus on effectiveness and efficiency. For example, you see pharma companies moving to an FMCG mindset.  As the market for OTC products begins to grow more rapidly, sales demands a more aggressive approach. Pharma companies are looking for consumer-empathetic (consumer-minded) talent to drive and manage operations.

Moving Forward: Take-aways

As has been summarized in the text above, global economic forces are rapidly changing what businesses need from their top executive management.  Our view at SpenglerFox is that clients must consider leadership placements within the framework of ever-changing business environments. Top executives will need to put together teams that can work within new regulatory structures, run flexible organizations that react quickly to new production needs, and introduce management styles that accommodate multi-generational employee teams.  Investment in the development of forward-thinking and strategy-focused executive talent will ensure that your business succeeds on global markets in the coming decade.

For more information please contact Xenia Becker 

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