L.E.K. Look Forward - L.E.K. Talent Focused Organisational Strategy

Hello and welcome to L.E.K. Look Forward into 2024. 

L.E.K. Consulting’s annual analysis of the challenges and opportunities in the year ahead. In this short video, Life Sciences partner at L.E.K.; Anne Dhulesia and Phil Roux who is a partner in L.E.K.’s Organisation and Performance team outline the increasing challenge to Biopharma and high-tech businesses of unlocking the true value potential of their talent.

• Life Science companies are complex businesses 

  • They operate in global markets that are highly regulated 

  • They require strong cross-functional collaboration and understanding of what each function does 

• They require talent with deep understanding of the industry: employees are key 

• Employees are also the largest cost to the business 

• This creates the perfect opportunity to create or destroy value based on the effectiveness of the organisation 

• And this complexity has created a number of challenges … both in terms of attracting and recruiting talent … 

  • We see a clear shortage of talent: talent is often one of the key risks to strategy execution 

  • There is also increasing competition for talent: just simply given shortage. Not just within biopharma but also with adjacent industries such as Pharma Services.  

  • We have witnessed growing talent demands (in terms of responsibilities and work packages): switching companies is easier in a post-pandemic world ... Where remote working is the new normal 

  • As a result, talent retention is becoming a key topic 

• The dynamics above have been driving up salaries by as much as c.30%, particularly in key "hot spots"  

• ... Underlying inflation is also pushing up wages across the board 

• In addition, if you want to your key talent to stay AND thrive, you need to create an organisational environment that enables that 

• ... But more often than not, there are key hurdles in the way 

  • Lack of strategic clarity and what it means for an individual’s contribution towards the strategic goal- 

  • Ineffective functional interfaces 

  • Structural complexity and duplication 

  • Inefficient process and supporting technologies 

• There are clear signs that organisational effectiveness can be the cause of issues in biopharma companies  

  • Around 10% of drug development failures are due to challenges in organisational effectiveness 

  • 50% of Biopharma M&A results in shareholder value destruction, often partly due to PMI issues  

• If these challenges are not sufficiently addressed ... You can end up with a "vicious cycle" 

  • Underperformance of a team results in deteriorating relationships with the broader business ... 

  • Deprioritisation for investment ... 

  • Increasing challenges attracting and keeping talent ... And so on 

• This may be limited to one or two specific functions ... But given the complex nature of Biopharma businesses, this can still have significant impact on business outcomes, as well as causing cost increases in the area affected that are hard to control 

• As we look forward, in Biopharma and in similar High Tech industries ... Where key talent is core to growth and performance ... We expect these challenges to only become more front and centre to long-term business success 

• So, what to do about this ... The answer is a Talent-Focused Organisational Strategy 

• Three critical lenses need to be applied 

  • Can I operate effectively … am I provided the right guidance, channels and tools to get things done effectively on a day-to-day basis?  

  • Can I thrive … do I feel safe and inspired to go that extra mile? 

  • Do I feel valued … do I feel my efforts are recognised and fairly rewarded? 

• The good news is that this isn't about a radical new approach ... But rather about a comprehensive re-examination of the organisational design and operating model choices you are making, with the three talent lenses 

• Pairing this with a more comprehensive view of the "Return on Talent" equation will allow you to more clearly weigh up the investments required against the outcomes you value 

  • What outcomes are truly impacted / controlled by a particular function or team? 

  • What does it cost us to attract and retain talent … AND equipment with the tools to thrive? 

• You will even find areas to optimise Talent costs – such as reducing cost to attract / retain through investments in creating a high-performance environment for them to operate in 

• Contrary to what we have seen earlier, a virtuous cycle allows you to create an organisation that can attract and retain talent 

• The steps are simple 

  • The basis is a clear strategy, well-articulated at a functional level 

  • A well thought through operating model allows to articulate the right roles and responsibilities 

  • Not just at a functional level but within functions 

  • And also for the leaders… 

  • …who then can build on the benefits and have the confidence to keep investing in processes to create an even more productive organisation 

• This can result in tangible business outcomes 

  • A scalable cost base 

  • Topline growth 

  • Value creation in an M&A context 

• The big prize is an efficient, scalable and high performing organisation 

• And we expect this to be an important lever for Biopharma and other high-tech businesses to consider for success in 2024 and beyond