|
New path
to innovation
In an article titled “The Pharmaceutical
Industry Faces a Horror Year,“ a Zurich newspaper (http://snipurl.com/21qcbem) writes, that leading pharmaceutical firms like
Pfizer, Sanofi as well as Novartis are facing the loss of patent protection
for important top products this year, and are therefore facing major
revenue losses. Interestingly, these firms are confronting the situation
with drastic personnel cuts in different areas, which includes such as how
to respond to clinical developments. Cost saving has to begin immediately.
However, proceeding this way raises questions.
First, investigations show[i] that
personnel cuts, particularly in the long run, do not bring about the
desired success, unless a strategic reorientation occurs at the same time.
In an extensive empirical study the authors were able to show that the size
of the employee cuts is not a factor in explaining the post-downsized
performance.
A further point concerns “survivor sickness” studies[ii].
They show that personnel cuts have an array of negative consequences, also
for those who remain at the firm: “Research indicates that survivors
exhibit a plethora of problems, such as demotivation, cynicism, insecurity,
demoralization, and a significant decline in organizational commitment”[iii].
One also speaks of the difficulty in diagnosing dysfunctional side effects
of personnel cuts. They often lead to slumps in productivity.
In addition, if one considers that in the knowledge oriented society of
today, knowledge is often a more important success factor than capital.
There is then the danger that for every cut in personnel, the know-how
networks will be destroyed and important knowledge bearers will be
discarded. Indispensible resources for future core competences may be lost.
It is also striking that the only reasons given for the personnel cuts are
the costs, but never the revenue side of the coin. By strengthening R&D
capacity, setbacks could be absorbed. Is it therefore sensible to dismiss
people in the area of research and development? Wouldn’t it make more sense
to encourage targeted cooperation with stakeholders that possess special
knowledge, in order to stimulate the innovative productivity of the firm’s
own R&D?[iv].
Also in our own empirical investigations, we have always found impressive
examples of cases, where firms that work together with their stakeholders
have been able to substantially increase their license to innovate (see
Sachs, Rühli 2011, page 114 ff). In this regard an interview partner (page
118) mentions, “The suppliers are creative and often involved as they try
to find new solutions for the market….They act as accelerators who give us
new ideas….And very often the supplier is also a strategic thought
leader….”
Especially in the area of innovation, firms should not only engage in
professional stakeholder management when the turnover drops. Our examples
show in fact that not only the firms improve their license to innovate but
also the involved stakeholders, which motivates them to further
cooperation.
Based on the above, we can conclude that managers, practicing personnel
cuts with the argument of saving costs, have an obligation to demonstrate
that they also have the above mentioned consequences under control, e.g.
the benefits. It should be carefully examined if the multifaceted
disadvantages and damage of personnel cuts are not, in fact much higher
than the advantage of short-term cost savings.
Sybille Sachs
|
|
No comments:
Post a Comment