hrm pharmaceutical r&d

8/4/2019 HRM Pharmaceutical R&D

1/12

E L S E V I E RADVANCEDFECHNOLOGY

Technovation, 16(1) (1996) 21-32C o p y r i g h t 1996 Published by E l s e v i e r S c i e n c e L t d

Pr in ted in Great Br i ta in . A l l r igh ts res erved0166-4972/96 $15.00 + 0.00

S t r a t e g i c i l R M : T h e im p l ic a t io n s o rp h a r m a c e u t ic a l R & D

O s w a l d J o n e sA s t o n B u s i n e s s S c h o o l , A s t o n T r ia n g le , B i r m i n g h a m B 4 7 E T , U K

A b s t r a c tT h e p a p e r i s c o n c e r n e d w i t h th e s t r a te g i c h u m a n r e s o u r c e m a n a g e m e n t( H R M ) i m p l i ca t i o ns o f r e c e n t p r e s s u r e f o r c h a n g e i n t h e p h a r m a c e u t i c a lin d u s t ry : th e m erg ers a n d m a rke t in g a g reem en ts wh ich b eg a n in th e la te1 9 8 0 s ; G o vern m en t a t tem p ts to co n tro l NH S sp en d in g th ro u g h th e ' L im i tedL is t ' ; a n d co m p et i t io n f ro m g en er ic d ru g s . D esp i te th e in crea s in g u se o fin fo rm a t io n tech n o lo g y a n d exp er t s ys tem s , s c ien t i f i c r esea rch rem a in s h ig h lyla b o u r in ten s ive a n d very co s t ly . H o weve r , th e co n t in u ed su cces s o f a l l th elea d in g p h a rm a ceu t ica l co m p a n ies i s h ea v i ly d ep en d en t u p o n th e a b i l i t y o fR & D t o i n n o v a t e n e w d r u g s .

Th e resea rch es ta b l i sh es th a t th ere h a s b een a swi tch f ro m p erso n n e lm a n a g e m e n t t o H R M i n th e p h a r m a c e u t i c a l i n du s tr y . T h i s c h a n g e i ss y m b o l i z e d b y a ' h a r d e ni n g - u p ' o f th e p e r s o n n e l f u n c t i o n a s ' w e l fa r e i s s u e s 'g ive wa y to a m o re b u s in es s - cen tred a p p ro a ch to em p lo yee re la t io n s . I na d d i tio n , f i r s t l in e m a n a g e rs (F LM s) a re ta k in g g rea ter r esp o n s ib i l i t y fo r th ea p p ra isa l a n d rew a rd o f th e i r o wn s ta f f. 7 "he resea rch a l so e s ta b l i sh es th a tl e a d i n g p h a r m a c e u t i c a l c o m p a n i e s n o l o n g e r r e g a r d R & D a s a c o r e a c t i v i t ya n d th i s r ep resen ts th e i r d es i re to im p ro ve e f f i c ien cy a n d red u ce R&Ds p e nd i n g. T h e e x t e n t to w h i c h t h e c o r e - p e r i p h e r y m o d e l h a s h a d a n i m p a c to n e m p l o y m e n t c o n t r a c t s o f R & D s t a f f va r i e s b e t w e e n f i r m s i n t h e s am p l e .Th ree co m p a n ies r e jec ted th e u se o f f i xed - term co n tra c t s wh i le in th e o th ert h r ee c o m p a n i e s s u c h a r r a n g e m e n t s w e r e v i e w e d m u c h m o r e f a v o u r a b l y .H o wever , th ere wa s cer ta in ly a co n s i s ten t t r en d to wa rd s th e su b -co n tra c t in go f s o m e R & D a c t iv i ti e s . In e a c h o f t h e c o m p a n i e s R & D e m p l o y e e s w e r ee n c o u r a g e d t o b e c o m e l e s s in s u l a r a n d m o r e a w a r e o f th e c o m m e r c i a la sp ec ts o f th e b u sin es s . Th e s tu d y a l so co n f i rm e d th e wid e ly -h e ld v iew th a tH R M d e c i s i o n s a r e n o t r e g a r d e d a s s t r a t e g i c i s s u e s : o n l y o n e c o m p a n y h a da n H R p ro fes s io n a l o n th e m a in b o a rd .

I t i s a rg u ed th a t th e ch a n g es id en t i f i ed in th e resea rch p o se a seriousth rea t to th e u n iq u e p o s i t io n o f p h a rm a ceu t ic a l co m p a n ies in th e U Ke c o n o m y . T h e s t re n g t h o f U K p h a r m a c e u t i c a l c o m p a n i e s h a s b e e n b a s e d o nth e i r a b i l i t y to m a in ta in a lo n g - term p ersp ec t ive wi th r eg a rd to R&Din ves tm en t . Th e t r en d s id en t i f i ed in th i s r esea rch a re n o t i r rever s ib le , b u t i t i sc lea r th a t th e va lu e o f in -h o u se R& D is b e in g q u es t io n ed a t th e h ig h es t l eve l swi th in th e p h a rm a ceu t ic a l in d u s try .

o 1 6 r~ 4 97 2 (g s )o o o 1 5 -1 T e d e o n ~ V e t 1 6 N o . I 9 1


2/12

O . J o n e s

1 . IN T R O D U C T I O N : H E P H A R M A C E U T IC A LN D U S T R YL I C h a n g e s o t h e c o m p e t it iv e e n v i ro n m e n t

In ternal repu ta t ion has been es tab l i shed as animpor tan t in f luence on the morale , mot iva t ion , p ro-duct iv i ty , re t en t ion , and commi tment to t ask andorgan iza t ion o f R&D scien t i s t s [1 -3] . Th i s researchal so iden t i f i ed a t rend fo r R&D employees in h igh-technology indus tr i es to be g iven shor t - te rm con t rac t srather than taken on as permanent s taff . I t i s suggestedthat shift ing from tradi t ional employment relat ion-sh ips wi l l have impor tan t impl ica t ions fo r the repu-ta t ions o f major UK pharmaceu t ica l companies . Th i smay u l t imate ly th rea ten the mot iva t ion and commi t -men t o f R&D emp l o y ees an d co n s eq u en t l y d amag ecom pet i t ive advan tage en joyed th rough a long- termcommi tment to sc ien t i f i c excel l ence . Consequen t ly ,this s tudy invest igates the s t rategic human resourceman ag emen t (H RM) i mp l i ca t i o n s o f r ecen t p r e s s u refor change in the pharmaceut ical industry [4]:1 . There were a number o f mergers and market ingagreements be tween l ead ing companies in the l a t e1980s . Many companies have con t inued to nego-t iate agreements with their ' r ivals ' and i t seemsthat industry rest ructuring wil l cont inue throughoutthe 1990s.2 . Government a t t empts to con t ro l Nat ional Heal thServ ice spend ing by in t roduct ion o f the 'L imi tedLis t ' (and the p roposed Cl in ton refo rms o f USHeal thcare) . Growth in pharmaceu t ica l sa les inEurope averaged 11% betw een 1987 and 1991 bu t

fell to zero in 1993 [5].3 . Increas ing use o f gener ic d rugs resu lt ing f rom thecombinat ion o f shor ter e f fec t ive pa ten t l i fe andgovernment des i res to reduce heal th spend ing .4 . The secu lar r i se in the cos t o f R& D as pub l i c au th -or i ti es requ i re longer and m ore com pl ica ted t es t ingof d rugs .5. Effect ive patent l i fe (current ly about 7 years) hasbeen eroded by requ i rements fo r more deta i l edtes t ing p rocedures . Major companies , Glaxo mos tsuccess fu l ly , have responded by a t t empt ing toreduce development t ime.Accord ing to G reen [5 ], the response o f pharma-ceu t i ca l companies can be summarized in fourthemes : the cu t t ing o f payro l l and c los ing o f s i t es ;em ergence o f new m arket ing s t ra teg ies ; a sh i ft awayfrom 'me- too ' d rugs to more innovat ive p roduct s , o rconcen t ra t ion on gener ic d rugs , which the govern-ment i s encourag ing ; and an increase in the numberof s t ra teg ic a l li ances . The con t inued success o f a l l thelead ing pharmaceu t ica l companies i s heav i ly depen-den t upon the ab i l i ty o f R& D to innovate new drugs .Desp i t e the increas ing use o f in format ion t echnologyand exper t sys tems , sc ien t if i c research remains h igh lylabour in tens ive and very cos t ly . Lead ing companieshave responded by cr i t i ca l ly examin ing the i r commi t -

m e n t t o R & D a s a core act iv i ty , which has majorimpl ica t ions fo r the man agem ent o f human resources .Th i s research inves t iga tes the personnel humanresource perspect ive on th i s t rend and es tab l i shes theex ten t to which the HR/personnel funct ion has a s ig -n i f i can t in f luence over employee-re la ted i s sues .

1 .2 R e s t r u c tu r in g h e p h a r m a c e u t ic a l i n d u s t ryIn this sect ion, i t i s argued that the pressuresdescr ibed above are l ead ing to very s ign i f i can tchanges in the na tu re o f pharmaceu t ica l R&D. Fur-thermore , the changes have cons iderab le impl ica t ionsfor the ma nagem ent o f human re sources in h igh- tech-no logy organ iza t ions . Webs ter & Swain [6 ] sugges t

tha t the increas ing cos t o f R& D has resu l t ed in a sh i f taway f rom t rad i t ional compound screen ing toresearch on speci f i c therapeu t i c areas . New tech-n iques , par t i cu lar ly b io technology , a re regarded asprecursors o f a second pharmaceu t ica l revo lu t ion .Del la Val le and Gambardel l a [7 ] , the CEO of an I t a l -i an pharmaceu t ica l company and an economis t ,namely agree tha t the 'b io log ica l revo lu t ion '(b io technology) has subs tan t i a l impl ica t ions fo r theorgan iza t ion o f pharmaceu t ica l R &D . The t rad it ionalmethod of d rug research invo lved the mass ive screen-i n g o f co mp o u n d s w h i ch d ep en d ed o n eco n o mi es o fscale derived from large laboratories [8]. This large-sca le screen ing o f com poun ds was a ' fa i rly rou t ineact iv i ty ' which was o rgan ized in h ierarch ica l andbureaucrat ic s t ructures . I t i s widely recognized in thel i te ra tu re tha t even R & D-b ased l arge f i rms are sub jec tto s t rategic and organizat ional inert ia [9-11].Advances in genet i cs , molecu lar b io logy and phar-ma cology have g iven sc ien ti s ts a be t t er unders tand ingof human phys io logy and ce l l recep tors , whichencourages the des ign o f appropr ia te compoundsrather than large-scale screening [7]. Chemists arenow more l ike ly to have a pr ior i mo d e l s b e fo re t h eyat t empt to iden t i fy a compound which focuses theresearch and enab les exper iments to be des igned moreef f i c ien t ly . Randle and Rainn ie [12] ackn owle dge tha tb io technology i s b reak ing the bar r i ers be tween phar-ma cology and b io logy and th i s i s l ead ing to the d i rec tt arget ing o f compounds which obv ia tes the need fo rl eng thy screen ing ( f rom in vivo to in vitro). M o r eex tens ive use o f bas ic sc ience has subs tan t i a l impl i -ca t ions fo r the o rgan iza t ion o f pharmaceu t ica l R &D :

" the increas ing use o f sc ience in drug d i scoveryintensi f ies the di f ferences in character andorganisa t ion o f research and development s tagesin this industry" [7 (p. 289)].

Companies mus t fundamenta l ly rev iew the i r'ups t ream' research ac t iv i ti es by a l lowing sen ior man-agers to def ine s t ra teg ic areas and then pass on theopera t ional respons ib i l i ty to smal l g roups o f g i f t edscient is ts [7]. Fini te resources al located by seniormanagement wi l l be d i s t r ibu ted by sc ien t i s t s them-selves accord ing to 'peer evaluat ion ' o f compet ingprojects . This re-orientat ion of scient i f ic act ivi ty wil ll ead to companies increas ing the number o femployees wi th s t rong academic backgrounds , par t i -cu lar ly PhDs [7 ] . As a consequence , there wi l l begrea ter research open ness as em ployee s dem and inter -ac t ion wi th the wider sc ien t i f i c communi ty by pub-l ish ing the ir research and a t t end ing c onferences . S uchopenness can b e a d i sadvan tage fo r the f irm, bu t de l l aVal le and Gambardel l a [7 (p . 291)] ind ica te tha t sec-recy is l ikely to incur greater disadvantages:

2 2 T e d m o v a f l o n o L 6 N o .1


3/12

S W a t e g ic h u m a n r e s o u r c e m a n a g e m e n t

"the company is not part of the scientific net-work, and it cannot trigger effective links withthe wealth of external information"T h e s h i f t f r o m r an d o m s c r een i n g o f co mp o u n d s t oa more sc ien t i f i c approach may l ead to g rea terd iv i s ion o f l abour in the pharmaceu t ica l indus try . O ne

group would be respons ib le fo r inves t iga t ing a fami lyof recep tors ; ano ther would examine the recep tors 'b io log ica l ac t iv i ty ; a th i rd would be respons ib le fo rthe molecu lar ac t iv i ty o f compounds tha t f i t recep tors i t es ; and a four th par ty would o rgan ize the c l in ica lt r i a l s [7 ] . Consequen t ly , smal l f i rms cou ld under takebas ic research ac t iv i ty and se l l the ir ou tpu t s to l a rgerf i rms wi th access to g rea ter resources . However , thet rans fer o f in format ion wi l l no t be a s imple markett ransact ion bu t based on a long- term re la t ionsh ipbetween the o rgan iza t ions :"In short, the innovator is no longer an individ-ual company. It is a network of agents withcomplementary and heterogeneous skills andassets, wherein the parties are connected withone another by elaborate types of linkages" [7(p. 292)].To suppor t th i s a rgument , de l l a Val le and Gambar-del l a [7 ] p resen t de ta i l s o f an ex tens ive ne twork o fag reemen t s e s t ab l i s h ed b y fo u r ma j o r co mp an i e s :C i b a -G e i g y , P f i ze r , H o f fman L a Ro ch e an d Merck .H o w ev e r , o f th e 1 07 ag reemen t s n eg o t i a ted b y t h efour f i rms s ince the mid-198 0s on ly 37 ] (34 .6%)invo lved research o r development ra ther than market -

ing o r d i s t r ibu t ion . Never the less , i f the scenar io p re-sen ted by del l a Val le and Gambardel l a i s accura te ,then there are subs tan t ia l imp l ica tions fo r major phar-maceu t i ca l companies and the i r sc ien t i f i c employees .Suppor t ing ev idence i s p rov ided by Whi t t aker &Bower [13] who repor t a s ign i f i can t increase in co l -l abora t ive R&D act iv i t i es amongs t l ead ing pharma-ceu t i ca l companies in the US and Europe. The au thorses tab l i shed that 4 .7% o f p roduct s on the market , com -pared wi th 27 .8% in the R&D p ipel ine , were p ro-duced by a l l i ances ."The increase of R&D collaborations with smallbiotechnology companies indicates that drugcompanies are becoming more dependent onexternal invention" [13 (p. 258)].The bas ic thes i s tha t b io technology i s enab l ingdrug research to move ups t ream to smal ler , f l ex ib leand in formal o rgan iza t ions , p roposed by del l a Val leand Gambardel l a , has been cr i t i c i zed fo r be ing over-determin i s t i c . Shenhar [14] descr ibes a ra ther moresophi s t i ca ted approach which c lass i f i es four p ro jec ttypes : low-tech , medium-tech , h igh- tech and super-h igh- tech , each o f which are con t ro l l ed by d i f feren tmanager ia l s ty les vary ing f rom the fo rmal bureau-

cra t i c to the h igh ly f l ex ib le . Managers in terv iewed byCiba-Geigy: 11 out of 25 = 44%

Hoffman: 10 out of 32 = 31%Pfizer: 8 out of 32 = 25%Merck: 8 out of 18 = 44%Total 37 out of 107 = 34.6% (R&D)

Randle and Rainn ie [12] agreed tha t i t was necessaryto a l low cons iderab le f reedom to crea t ive sc ien t i s t s(see [15]) . Ne ver the less , the au thors be l i eve there wi l lbe a con t inu ing t ens ion between the na tu re o f sc ien-t i f i c work and the need fo r l a rge pharmaceu t ica l com-pan ies to remain p rof i t ab le . Th i s means tha t p ro jec t swi l l be d i scon t inued because o f market ing requ i re-ments rather than on the basis of scient i f ic potent ial .Ex ternal ev idence o f the chang ing natu re o f sc ien-t if ic w o rk i s p ro v i d ed b y t h e emerg en ce o f ' t emp i n g 'agencies specia l i z ing in the supp ly o f l abora to ryemp l o y ees . L ev i [ 1 6 ] q u o t e s a U K co mp an y , L abStaf f , which i s run by a fo rmer personnel d i rec to r o fthe sc ien t i f i c equ ipment d iv i s ion o f Fi sons :

"Our very existence as providing professionallaboratory scientists and technicians on a tem-porary basis has prompted two large companiesto take a fundamental look at the way they stafftheir labs".Lab Staf f has a l a rge database o f sc ien ti s t s f rom al ld i sc ip lines w ho are located in a wide range o f sec to rsinc lud ing the l ead ing pharmaceu t ica l companies . I t i sc la imed tha t Lab Staf f increased the supp ly o f t em-porary l abora to ry s t af f to indus t ry by over 80%between 1990 and 1993 and tha t a lmos t 70% weregraduate sc ien t i s t s [17] . Temping agencies such asL ab S t a f f p ro v i d e p e rman en t a s w e l l a s temp o ra ryemp l o y ees . Fo r t h e emp l o y e r , a t emp o ra ry co n t r ac tp rov ides a low-r i sk way in which to assess the sc ien-t i s t ' s sk i l l s . Temporary con t rac t s a l so p rov ide po ten-t i a l employees wi th a Real i s t i c Job Prev iew (RJP) ,

w h en t h ey can d ec i d e w h e t h e r o r n o t t h e co mp an yi s o n e t o w h i ch t h ey co u l d co mmi t t h ems e l v es o n apermanent basis [18, 19].

1 .3 H u m a n e s o u r c em a n a g e m e n tH RM emerg ed i n t h e ea r l y 1 9 8 0 s an d r ep re s en t eda U S r e s p o n s e t o J ap an es e eco n o mi c s u cces s . T h e'excel l en ce ' l i te ra tu re was a l so a key in f luence on thew i d es p read ad o p t i o n o f H RM i n l ead i n g U S co mp a-n ies [20 , 21] . Bly ton an d Turnbul l [22] c lass i fy twodis t inc t approaches to HRM, f i r s t the 'Harvard Mod-el ' [23] which they c la im has had the mos t in f luence

in bus iness and academic c i rc les . The Harvard modeli s widely recognized as d rawing i t s academic l ineagefrom the human re la t ions school and i s descr ibed as' d ev e l o p men t a l h u man i s m ' b y B l y t o n an d T u rn b u l l[22 (p. 4 ) ] . The a l t e rnat ive v iew o f HR M is the s tra-t eg ic approach o f the 'M ich igan S choo l ' [24] whichadopts a much more un i t ar i s t and manager ia l i s t per -spect ive . The d ich o tom y f it s neat ly in to the 'hard ' and'so f t ' ca tegor ies o f HRM iden t i f i ed by Storey [25] .Never the less , there has been cons iderab le debateabout the na tu re and s t a tus o f hum an reso urce m an-agement , and Gues t se t s ou t the key e lements in at h eo ry o f H RM [2 6 ] : Strategic integration: the ab i l i ty o f o rgan iza t ionsto in tegra te HRM issues wi th the i r s t ra teg ic p lan-ning. High commitment: en co u rag i n g b eh av i o u ra l co m-mi tment to agreed goal s and a t t i tud inal commi t -me nt base d on iden t i f i ca tion w i th the o rgan iza tion .

Ted~ealkmh i . 1 6 h . 1 2 3


4/12

O . J o n e s

High quality: the ex ten t to which the managementof emp loyee s i s des igned to deve lop a h igh-qual ityworkforce de l iver ing h igh-qual i ty goods and ser -vices . Flexibility: the funct ional f l ex ib i l i ty o f employeesand organ iza t ion s t ruc tu res which are appropr ia tefo r the management o f innovat ion .As discussed in the next sect ion, this research isp r imar i ly concerned wi th iden t i fy ing the ex ten t tow h i ch H RM i s s u es a s s o c i a t ed w i t h R&D emp l o y eesare incorpora ted wi th corpora te s t ra tegy . However ,the research i s a l so concerned to examine aspect s o ff l ex ib i l i ty wi th regard to the management o f R&D.The ex ten t to which companies incorpora te HRMissues into their s t rategic decis ion-making has beenwid ely debate d in the l iterature. A num ber of wri tershave repor ted cons iderab le var ia t ion in the commi t -men t o f companies to incorpora te HR i s sues wi th the i rbusiness s t rategy [27, 28]. Therefore, ideas central tot h e s t r a t eg i c man ag emen t o f H RM a re ex ami n ed i n

the fo l lowing sec t ion .

po ten t i a l compet i t ive advan tage , and the 'match ingmo del ' [24] i s based on the v iew tha t human resou rcepract i ces shou ld match and suppor t bus iness s t ra tegy[39] . However , th i s approach encourages the app l i -ca t ion o f por t fo l io analys i s and 'gener ic ' bus inesss t ra teg ies to the evaluat ion o f employee s tocks andf lows . Kamoche [39] po in t s ou t tha t the app l i ca t ionof bus iness model s l eads to an emphas i s on shor t -termism and financial rat ional izat ion which is at oddsw i t h th e ' d ev e l o p men t a l h u man i s m ' a s p ec ts o f H R M[35] . Consequen t ly , s t ra teg ic HRM is d r iven by theorgan iza tional imp era t ives o f g rea ter manager ia l con-t ro l th rough the l eg i t imatory dev ice o f s t ra tegy andby HRM pract i t ioners a t t empt ing to ach ieve h igherstatus [39 (p. 35)]. N everth eless , wh i le acknow ledg -ing tha t the concep t s o f s t ra tegy and HRM are con-tested, the approach adopted in this paper is thato rgan iza t ions are p rac t i s ing s t ra teg ic HRM whenemployees ' i s sues are l inked to corpora te s t ra tegywhich i t se l f i s an t i c ipa to ry o f env i ronmenta lchanges [36, 38].

1 .4 S t r a te g i c h u m a n r e s o u r ce m a n a g e m e n t S H R M )According to Boxal l [29], integrat ing s t rategy andH RM i s p ro b l ema t i c b ecau s e b o t h co n cep t s a r e co n -troversial and contested [30, 31]. Purcel l bel ieves thatpo l i t i ca l and power i s sues inheren t in o rgan iza t ionaldeci s ion-making are rare ly acknowledged in the fo r -mula t ion o f corpora te s t ra tegy [32] , whereas Leg ge[33] argues that the contradict ions which exis t inHR M are s imply represen ta t ions o f the fundamenta lcon t rad ic tions o f cap i ta l i sm. Ahls t rand and Purcel l

[34] cr i t i c i ze wr i t ers who def ine SHRM in t erms o fd i scre te ac t iv i t i es such as 'manpower p lann ing ' o r' t ra in ing and development ' [35] . Rather , SHRM isconcerned wi th those fundam enta l cho ices which ' s ig -n i f i can t ly a l t e r employee re la t ions ou tcomes ' :deci s ions abou t locat ion and dep loyment o f personnelmanagement a t corpora te , d iv i s ional o r es tab l i shmentlevels and the integrat ion or separat ion of internal lab-our markets [36 (p. 4)] .Mil ler [36] agrees that there is l i t t le consensusabout the mean ing o f s t ra tegy bu t asser t s tha t i t i snecessary to d i s t ingu i sh the non-s t ra teg ic f rom thes tr a teg ic a s p ec t s o f emp l o y ee man ag emen t . H o w ev e r ,Boxa l l [29 (p . 62)] sugge s t s tha t Dye r ' s w ork [37]gives the 'cri t ical defini t ional contribut ion in thel i t e ra tu re on s t ra teg ic HRM'. Dyer [37] fo l lowsMintzberg [30] in perce iv ing s t ra tegy as a pa t t ern tha temerges f rom impor tan t manager ia l dec i s ions andthat , consequen t ly , rea l i zed HR s t ra tegy may be veryd i f feren t f rom in tended s t ra tegy . In a l a t er paper ,Mi l l er [38] acknowledges tha t s t ra teg ic HRM is' theoret ical dis t inct ive ' and he defines s t rategy as amarket -o r i en ted concep t tha t i s concerned wi th p ro-duct s and com pet i t ive advan tage . M i l l er then sugges t stha t non-s tra teg ic HR M can be iden ti f ied by a numberof fea tu res : separa te f rom the bus iness ; reac t ive andshor t - t e rm; o f no in teres t to the Board o f Di rec to rs ;constrained by a legal is t ic and inst i tut ional defini t ionthat focuses o n low er- l evel em ploye es [38 (p . 25)] .H en ce , s t ra t egi c H R M " mu s t f l o w f ro m an d b e d ep en -den t on the o rgan iza t ion 's (m arket o r i en ted) corpora testrategy" [36 (p. 46)] .Many wr i t ers have iden t i f i ed HRM as a source o f

1 .5 1 1 1 e e s e a r c h o b j e c t i v e sI t is a rgued tha t chang es to the com pet i tve env i ron-men t are l ead ing to a res truc tu r ing o f the pharmaceu t -ical industry. On the one hand this is represented bythe t ake-over fever which be gan in the l a te 1980s andhas con t inued th roughout the 1990s wi th even thelarges t pharmaceu t ica l companies us ing mergers ands t ra teg ic a l l i ances to secure the i r long- term marketposi t ions. On the other hand, res t ructuring is takingp lace in ternal ly as sen io r managers examine op t ions

for increas ing the ef f i c i ency and ef fec t iveness o fR & D .The c omp et i t ive pos it ion o f lead ing pharma ceu t ica lcompanies i s heav i ly dependen t on the ab i l i ty o fR&D scien t i s t s to innovate new drugs . Inev i t ab ly ,wi th in the indus try there are very c lose l inks be twee nbus iness succe ss and sc ien t if i c success . Consequen t ly ,sc ien ti f ic em ploye es have been cen t ra l to the ach ieve-men t s o f th e ma i n U K p h a rmaceu t i cal co m p an i e s o v e rthe l as t 10-15 years . The argument in th i s paper i stha t HRM pol ic ies adop ted by the indus t ry wi l l havea s t rong in f luence on the way in which l ead ing com-pan ies per fo rm in the nex t decade . The speci f i cresearch ob jec t ives are as fo l lows :(1 ) to assess the impact tha t g rea ter compet i t ion hason the management o f sc ien t i s t s in l ead ing phar-maceu t i ca l companies ;(2 ) to evaluate the na tu re o f the recen t HR changesi n r e l a t i o n t o R&D emp l o y ees ;(3 ) to evaluate the HR changes tha t a re l ike ly tooccur in the near fu tu re ; and(4) to es tab l i sh the ex ten t to which H RM pol ic ies arel inked to the s t rategic direct ion of individualfirms.

The more genera l ob jec t ive o f the research i s toexamine these i s sues in the percep t ion o f sen io rHRM/Personnel p rac t i t ioners wi th in the indus t ry . Indo ing so i t i s acknowledged tha t the resu l t s wi l l besub jec t ive and may suf fer f rom the t endency of ind i -v idual s to overes t imate the i r own impor tance in theorganizat ion. Nevertheless , i t i s suggested that 'h igh-technology HRM' wi l l be an impor tan t e l ement in the

2 4 T e d m v a l ~ nVd. 16 No. 1


5/12

S W a t e g i ch u m a n e s o u r c e m a n a g e m e n tdevelopment of pharmaceutical R&D as leading com-panies respond to the challenge of a rapidly changingenvironment. Therefore, it is useful to consider theviews of those individuals who have direct responsi-bility for human resource issues related to R&Demployees.

1 . 6 " l h e s ig n i f ic a n c e o f t h e r e s e a r c hBritain's well-documented decline as a manufactur-ing nation is, according to many observers, the resultof a failure to invest in R&D. The UK pharmaceuticalindustry is unique in terms of its commitment toR&D and its competit ive success nationally and inter-nationally. The leading UK pharmaceutical compa-nies, Glaxo, SmithKline Beecham, Wellcome andZeneca, spend between 10% and 16% of turnover onR&D, which compares favourably with global com-petitors such as Hoffman La Roche, Merck, Pfizer andEli Lilly. In contrast, the main UK companies in elec-tronics and electrical equipment, GEC and Racal,spend 5.73% and 7.09% respectively. In engineeringthe figures for the major companies follow a similarpattern: Roils Royce, 7.19%; VSEL, 4.31%; Vickers,4.03%; Smiths Industries, 6.69%. Glaxo is the onlyUK company in the top 50 international companieson the basis of R&D expenditure and spends a totalof 739 million compared to the 398 million ofGEC, the leading spender in the electronic and engin-eering sectors. In addition to the UK-owned compa-nies there are a number of major foreign-owned phar-maceutical companies based in the UK which alsoinvest heavily in R&D: Merck, 9%; Roche, 8.48%;and Pfizer, 37.8% [40]. Britain is regarded as havinga "particularly productive R&D culture" and, in thelate 1980s, six of the world's 15 top-selling drugsoriginated in the UK [41]. A report by the NationalEconomic Development Office suggests that the phar-maceutical industry typifies the "high-tech sunrisesector" which is essential to the future of the UK [42].For example, pharmaceutical exports amounted to2993 million in 1992 and provided a trade surplusof 1330 million, the second largest after power gen-erating machinery. Manufacturing industry as a wholehad a trade deficit of over 10000 million in 1992[43,44]. The pharmaceutical industry employed76 900 in 1992, which represented a 12% increasesince 1982. During the same period the numbersemployed in pharmaceutical R&D rose from 13 000to 19 000, which accounted for over 70% of theincrease in total employment [43].In comparison to other manufacturing sectors, thepharmaceutical industry is also unique in terms of itsprofitability and analysts regard the leading firms asbeing recession-proof. For example, between 1989and 1993 the average pre-tax profits, as a percentageof total sales, reported by the four leading companieswere: SmithKline Beecham, 19.5%; Wellcome,25.1%; Zeneca, 30.9%; and Glaxo, 36.6% [44, 45].

The pharmaceutical industry recruits a steady sup-ply of graduates and postgraduates, many of whomultimately move from R&D into other functions, mar-keting and line management. Hence, pharmaceuticalcompanies have been able to avoid the inherent short-termism of most British industries [46]. The leadingcompanies also maintain good relations with industry

analysts, ensuring that they understand the linkbetween R&D and long-term profitability andinforming them of new drugs in the pipeline. There-fore, the importance of the leading pharmaceuticalcompanies to the UK economy, both in terms of theirexport successes and as repositories of R&D bestpractice, cannot be overstated. As I have briefly out-lined, this success is heavily dependent on a continuedlong-term commitment to in-house R&D.

1 .7 R e s e a r c h m e l ~ o d sThere are approximately 20 pharmaceutical compa-nies in the UK which sell ethical (prescription) drugsand have a substantial commitment to R&D. The larg-est of these are UK owned: Glaxo, Wellcome, Zeneca,SmithKline Beecham, Amersham International andFisons. There are also a number of foreign-ownedcompanies: Ciba-Geigy, Hoechst, Bayer, Merck, Bris-tol-Myers Squibb, Roche and Pfizer. This researchconcentrates on major UK-owned companies andinterviews were carried out in six organizations, heredesignated 'PHARMA 1-6'. The respondents werethe senior managers with on-site responsibility forHR/Personnel issues specifically related to scientificemployees. The respondents agreed to participate onthe understanding that their companies were notidentified, and this constraint was accepted as theresearch objectives were to identify sectoral trendsrather than the policies adopted by individual organi-zations. The interviews were semi-structured in natureand the respondents were asked to reply to questionsabout various human resource issues related to R&Dscientists. The interviews were written up and copiessent to the interviewees requesting additional com-ments, amendments or corrections. The interviewswere supplemented by internal documentation relat-ing to the employment of R&D scientists.

2 . R E S U L T S2 .1 F r o m p e r s o n n e l m a n a g m o n t t o H R MThe emergence of HRM in the early 1980s stimu-lated UK universities and business schools to estab-

lish departments of human resource management [47].However, it is not clear that the practices of personnelmanagement have been superseded by humanresource management. Guest and Hoque [47] arguethat there is little evidence to suggest that UK compa-nies have made the switch from personnel to HRM.This research attempts to establish whether prac-titioners regard their activities as HRM and, if so, howthose activities differ from traditional personnel man-agement.In PHARMA2, the adoption of the term HRM hasled to a 'hardening up' of the function in two senses.First, there has been a shift away from the conven-tional personnel concern with welfare issues, such asvisiting sick employees or counselling and advisingthose facing personal crises [48], to greater emphasison a business-centred approach. According to therespondent, personnel staff were considered to be"nice people", who assisted with the unpleasantrealities of life such as ill-health, redundancy orT e d m v a t i o n o L1 6 N o .1 2 5


6/12

O . J o n e sb e r e a v e m e n t . T h e n e w b u s i n e s s - c e n t r e d H R Ma d o p t e d b y P H A R M A 2 a l l o w s a m u c h l e s s s y m p a t h -e t i c a p p r o a c h t o s c i e n t i s t s c o n s i d e r e d t o b e u n d e r -a c h i ev e r s . W h e r e a s i n th e p a s t l o w p e r f o r m a n c e m a yh a v e b e e n t o l e r a t e d , t h e H R d e p a r t m e n t i s n o w m o r e" r u t h l e s s ' 2 i n u s i n g r e d u n d a n c y a n d t r a n s f e r s t o o t h e rf u n c t i o n s s c i e n t i s t s n o l o n g e r a t t h e " c u t t i n g e d g e " .T h e s e c o n d w a y i n w h i c h H R M h a s l e d to a h a rd e n i n go f t h e p e r s o n n e l r o l e is m u c h g r e a t e r i n v o l v e m e n t i nb u s i n e s s - r e l a t e d d e c i s i o n s o f t h e r e s e a r c h g r o u p . T h eH R m a n a g e r a n d d e p a r t m e n t h e a d e x a m i n e b u s i n e s sn e e d s a n d d e c i d e o n l e v e l s o f r e c r u i t m e n t a n d t h et r a in i n g r e q u i r e d t o e n h a n c e o r r e f o c u s e x i s t i n g s k i l ls .T h e e m p h a s i s o f t r a in i n g h a s s w i t c h e d f r o m e x t e r n a lt o i n - h o u s e w i t h m u c h m o r e c a r e f u l e v al u a t io n o f i tse f f e c ti v e n e s s . T h e c o m p a n y o p e r a te s ' O p e n L e a r n i n gC e n t r e s ' w h i c h a r e u s e d f o r t he d e v e l o p m e n t o f p e r -s o n a l a n d m a n a g e r i a l s k i l l s ( i t w a s c l a i m e d t h a t a tl e a s t 1 0 % o f s t a f f a r e r e c e i v i n g t r a i n i n g a t a n y o n et ime) .

P H A R M A 3 c h a n g e d t h e t i t l e t o H u m a n R e s o u r c e si n 1 9 9 3 a n d s t a f f w e r e r e d e s i g n a t e d H R a d v i s o r s .T h e r e w a s n o ' f a n f a re o f tr u m p e t s ' b u t t h e re w e r es i g n i f ic a n t c h a n g e s i n t h e o p e r a t i o n o f t h e d e p a r t m e n t .T r a d i t io n a l l y , t he P e r s o n n e l D e p a r t m e n t r e t a in e d c o n -t r o l o f th e ' R u l e b o o k ' w h i c h w a s u s e d t o e n s u r e t h a tl i n e m a n a g e r s d i d n o t o v e r s t e p t h e m a r k a n d c l o s e l yf o l l o w e d c o m p a n y p r o c e d u r e s . F i r s t l i n e m a n a g e r s( F L M s ) n o w h a v e m u c h g r e a t e r a u t o n o m y a n dr e s p o n s i b i l i t y f o r p e r s o n n e l d e c i s i o n s a n d H R s t a f fa r e l e s s c o n c e r n e d w i t h w e l f a r e i s s u e s , w h i c h r e p -r e s e n t s " a c h a n g e i n t h e i r b e h a v i o u r " . T h e H R d e p a r t -m e n t s ti ll c o n t r o l s t h e ' c o r e c u r r i c u l u m ' o f t ra i n i n g :' b u s i n e s s a w a r e n e s s p r o g r a m m e s ' , s u p e r v i s o r y s k i l l sf o r F L M s , t e a m - b u i ld i n g p r o g r a m m e s f o r s c ie n t is t s( a ll o f w h i c h a r e c e n t r a l l y f u n d e d ) . F L M s h a v er e s p o n s i b i l i t y f o r t h e m o r e t e c h n i c a l / s p e c i a l i s t t r a i n -i n g w h i c h i s f u n d e d d e p a r t m e n t a l l y . A p p r a i s a l i s n o wt h e s o l e r e s p o n s i b i l i t y o f F L M s , w i t h s u p p o r t w h e nr e q u e s t e d f r o m t h e H R d e p a r t m e n t . R e c r u i t m e n t i sb a s e d o n a s y s t e m k n o w n a s ' t a r g e t e d s e l e c t i o n 'w h i c h i n v o l v e s t h e a n a l y s i s o f p a r t i c u l a r j o b s t o s y s -t e m a t i c a l l y i d e n t i f y t h e ' b e h a v i o u r a l d i m e n s i o n s ' .T h e s e d i m e n s i o n s a r e t h e n u s e d t o e s t a b l i s h t h eb e h a v i o u r a l r e q u i r e m e n t s a n d e a c h a p p l i c a n t i s r i g o r -o u s l y a s s e s s e d o n t h e b a s i s o f t h e s e ' b e h a v i o u r s ' .T h e c o r e f u n c t i o n o f p e r s o n n e l m a n a g e m e n t i nP H A R M A 5 i n v o l v e s w o r k in g c l o s e l y w i t h s e n io r a ndf i r s t l i n e m a n a g e r s ( S / F L M s ) a n d e n c o u r a g i n g t h e mt o t a k e o n g r e a t e r r e s p o n s i b i l i t y . T h e r e s p o n d e n t s u g -g e s t e d t h a t t h e d e p a r t m e n t h a d s h i f t e d a w a y f r o m t r a -d i t i o n a l p e r s o n n e l a c t i v i t i e s i n o r d e r t o e x e r t m o r ei n f l u e n c e o n b u s i n e s s - c e n t r e d i s s u e s . T h e d e m a n d t h a tP e r s o n n e l s h o u l d b e s e e n t o ' a d d v a l u e ' t o t h e b u s i -n e s s i n t h e s a m e w a y a s a n y o t h e r d e p a r t m e n t w a st h e d r i v i n g f o r c e f o r c h a n g e . T h i s h a s m e a n t m u c hg r e a t e r e m p h a s i s o n b u s i n e s s i s s u e s a t t h e e x p e n s e o ft h e w e l f a r e r o l e . A l t h o u g h t h e d e p a r t m e n t w a s s t i l lk n o w n a s P e r s o n n e l , t h e r e h a d b e e n a d e b a t e w i t h i nt h e c o m p a n y a n d t h e d e p a r t m e n t a b o u t c h a n g i n g t h et i t l e t o H R M . H o w e v e r , P H A R M A 5 h a s e s t a b l i s h e d' H R M G r o u p s ' w i t h r e sp o n s i b il i ty f o r d e v e l o p i n g th e

s t r a t e g i c p l a n s o f e a c h o p e r a t i n g g r o u p : r e s e a r c h ,d e v e l o p m e n t , m e d i c a l e t c .T h e r e s p o n d e n t s i n P H A R M A 1 a n d P H A R M A 6b o t h c l a i m e d t o b e p r a c t i s i n g H R M , a n d c h a n g e ss i m i l a r t o t h e o t h e r f o u r c o m p a n i e s w e r e c e r t a i n l ya p p a r e n t : g r e a t e r l i n k s w i t h F L M s ; m o r e p r o a c t i v ei n v o l v e m e n t i n m a k i n g r e c r u i t m e n t a n d t r a i n i n gd e c i s i o n s ; a ' c o n s u l t a n c y ' r o t e w i t h e a c h H R o f f i c e rl i n k i n g t o a p a r t i c u l a r p a r t o f t h e b u s i n e s s ; a n d a s h i f ta w a y f r o m w e l f a r e i s s u e s . H o w e v e r , t h e c h a n g e sa p p e a r e d t o b e l e s s f a r r e a c h i n g , p e r h a p s b e c a u s e t h ep r i n c ip l e s o f H R M h a d b e e n a d o p t e d r a t h e r l at e r i nP H A R M A 1 a n d P H A R M A 6 .T h e P e r s o n n e l D i r e c t o r c l a i m e d t h a t P H A R M A 4h a s n o t c h a n g e d i t s a p p r o a c h t o r e s o u r c e m a n a g e m e n ta n d t h e d e p a r t m e n t i s s t i l l k n o w n a s P e r s o n n e l .P H A R M A 4 h a s a l w a y s t a k e n t h e p e r s o n n e l f u n c t i o nv e r y s e r i o u s l y p e r h a p s b e c a u s e o f t h e p e r s o n a l a u t h -o r i ty o f t h e d i re c t o r, w h o h a s b e e n a m e m b e r o f t h eR e s e a r c h E x e c u t i v e f o r 2 0 y e a r s . W h i l e i t w a s a r g u e db y t h e d i r e c t o r t h a t p e r s o n n e l p r a c t i c e s h a v e n o tc h a n g e d s u b s t a n t i a l l y , t h e r e i s n o d o u b t t h a t t h e r eh a v e b e e n m o d i f i c a t i o n s i n r e c e n t y e a r s . F o r e x a m p l e ,t h e r e i s n o w a m u c h c l o s e r p a r t n e r s h i p b e t w e e n p e r -s o n n e l a n d F L M s i n m a k i n g d e c i s i o n s a b o u t r e c r u i t -m e n t a n d t r a i n i n g .

2 .2 f ix e d - te r m c o n t r a c t s a n d a g e n c y s ta f fT h e d a t a i n t h i s s e c t i o n a r e c e n t r a l t o d e v e l o p m e n t si n t h e i n d u s t r y a n d t h e p o l i c i e s a d o p t e d b y e a c h i n d i -v i d u a l o r g a n i z a t i o n a r e d e s c r i b e d i n d e t a i l . T h eP H A R M A I R e s e a r c h D i v i s io n e m p l o y s a p p r o x i -m a t e l y 5 0 0 s c i e n t i s t s b u t o n l y a v e r y s m a l l p r o p o r t i o no f t h e s e ( a b o u t 1 0 ) a r e o n f i x e d - t e r m c o n t r a c t s( u s u a l l y 2 y e a r s ) . A f u r t h e r 5 0 e m p l o y e e s a r e o ns h o r t - t e r m ( ' p i n k ' ) c o n t r a c t s f o r p e r io d s o f u p t o 2y e a r s , b u t t h e r e i s n o s e c u r i t y a n d a p o s t c a n b ei m m e d i a t e l y t e r m i n a t e d i f t h e c o m p a n y c h o o s e s . As m a l l p r o p o r t i o n o f t h e p i n k c o n t r a c t s a r e f u n d e de x t e r n a l l y b y b o d i e s s u c h a s t h e M R C ( M e d i c a lR e s e a r c h C o u n c i l ) a n d m o s t o f t h o se o n s u c h c o n -t r a c t s a r e r e l a t i v e l y i n e x p e r i e n c e d p o s t - d o c t o r a lr e s e a r c h e r s . T h e s e c o n t r a c t s 3 a r e o f t e n u s e d f o r t h es h o r t- t e rm e m p l o y m e n t o f o v e r s e a s p o s t d o c s s e e k in ge x p e r i e n c e o r , p e r h a p s m o r e o p t i m i s t i c a l l y , ' t h ee x c h a n g e o f s c i e n t if i c i d e a s ' . I n t h e p a s t m o s t o f t h o s eo n s h o r t - t e r m c o n t r a c t s ( f i x e d a n d p i n k ) h a v e b e e no f f e r e d p e r m a n e n t p o s ts b u t P H A R M A 1 i s n o w c o m -m i t t e d t o t h e ' i n c r e a s e d f l e x i b i l i t y ' g i v e n b y s u c h c o n -t ra c ts . T h e e a r li e r c o m m i t m e n t t o p r o v i d e a p e r m a n e n tj o b w a s ' u n s p o k e n ' a n d s h o r t- t e rm c o n t r a c ts w e r es e e n b y t h e c o m p a n y a s a ' t r i a l ' p e r i o d . P H A R M A 1h a s o p e r a t e d a j o b - f r e e z e o n s c i e n t i fi c p e r s o n n e l s i n c eJ u n e 1 9 9 3 a n d i t is b e c o m i n g i n c r e a s i n g l y d i f f i c u l t t oa t t r a c t p o s t d o c s o n s h o r t - t e r m c o n t r a c t s a s t h e r e a r ef e w p r o sp e c t s o f p e r m a n e n t p o st s. P H A R M A 1 d o e sn o t u s e a g e n c y s t a f f i n t h e R e s e a r c h D i v i s i o n a s t h e r ea r e " t o o m a n y i s s u e s o f s e c u r i t y " . U s e o f e x t e r n a lr e s e a r c h s t a f f i s o b v i o u s l y a d i f f i c u l t a r e a a n d i t se e m s

u n l i k e l y t o i n c r e a s e o t h e r t h a n f o r v e r y m u n d a n ew o r k . H o w e v e r , t h e r e w a s a c l e a r i n d i c a t i o n t h a t

2On reading his interview ranscript he respon dentcommented:"ruth-less looks quite startling when seen in black and white print".-~The co ntracts appear to hav e been used as an altemative to workpermits for overseas researchers, which are sometimes very difficultto obtain.

2 6 T e c h n e v a ln o L 1 6 N o . 1


7/12

S t r a t e g i c h u m a n r e s o u r c e m a n a g e m e n ts h o r t - t e r m c o n t r a c t s w i l l b e u s e d m u c h m o r e e x t e n -s i v e l y i n t h e f u t u r e .

P H A R M A 2 d i d u s e s h o r t- t e r m co n t r a c t s f o r a f e wy e a r s b u t t h e e x p e r i m e n t i s n o w r e g a r d e d a s a f a i l u r e :" m a n y o f th e s e c o n t r a c t s w e n t w r o n g " . I n p a r ti c u la r ,t h e r e w a s a l ac k o f c o m m i t m e n t a n d m o t i v a t i o n a ss c i e n t i s t s f o u n d t h e u n c e r t a i n t y a s s o c i a t e d w i t h s u c hc o n t r a c t s d e b i l i t a t i n g . T h i s w a s p a r t i c u l a r l y t h e c a s ef o r t h o s e i n t h e i r l a t e 2 0 s a n d e a r l y 3 0 s w h o w e r em a r r ie d a n d h a d y o u n g f a m il ie s . P H A R M A 2 d o e s u ses h o r t - t e r m ( o n e - y e a r ) c o n t r a c t s w h e n t h e r e i s a n e e dt o t e m p o r a r i l y a u g m e n t p a r t i c u l a r p r o j e c t t e a m s .H o w e v e r , t h e s e p o s t s a r e g e n e r a l l y f i l l e d b y e x p e r i -e n c e d s c i e n t is t s a n d m o s t a r e e v e n t u a l l y o f f e r e d p e r -m a n e n t j o b s . I n a d d i t i o n , t w o o t h e r g r o u p s a r e s t i lle m p l o y e d o n s h o r t - t e r m c o n t r a c t s :1 . T h e c o m p a n y h a s a b o u t 1 2 p o s t d o c s w o r k i n g o nv e r y s p e c i f i c b u s i n e s s a p p l i c a t i o n s b u t t h e y a r e' o n e - o f f ' p r o j e c t s a n d i t i s a l w a y s m a d e c l e a r t h a t

t h e j o b is t e m p o r a r y .2 . T h e c o m p a n y f u n d s a b o u t 2 0 0 p o s t d o c t o r a l a n dP h D r e s e a r c h e rs i n a n u m b e r o f u n i v e r s it i es w h oa r e w o r k i n g o n p r o j e c t s w h i c h a r e o f d i r e c t i n t e r e stt o t h e c o m p a n y .T h e g e n e r a l u s e o f s h o r t - t e r m c o n t r a c t s w a s n o tj u d g e d t o b e a s u c c e s s a n d i t a p p e a r s u n l i k e l y t h a tP H A R M A 2 w i ll p u r s u e s u c h a co u r s e o f a ct i o n in t h ef u t u re . T h e c o m p a n y d o e s n o t u s e a g e n c y s t a f f b u ts u b c o n t r a c t s c l i n i c a l t r i a l s w h e n i n t e r n a l r e s o u r c e sa r e s t r e t c h e d .P H A R M A 3 h a s m a d e m o r e u s e o f sh o r t- t er m c o n -t r a c t s i n r e c e n t y e a r s " b u t n o t s i g n i f i c a n t l y s o " . F L M sp r e f e r s h o r t - t er m c o n t r a c t s b e c a u s e t h e y o f f e r " a w a yo f i n v e s t i g a t i n g p a r t i c u l a r a r e a s w i t h o u t m a k i n g al o n g - t e r m c o m m i t m e n t " . T h e c o m p a n y u s e s s h o r t -t e r m c o n t r a c t s f o r p o s t g r a d u a te s a n d p o s t d o c s b u t t h i sa p p l ie s t o v e r y l o w n u m b e r s ( p e r h a p s 6 % o f it s U KR & D s t a f f o r a b o u t 2 0 s c i e n ti s t s) . T h i s v e r y l i m i t e dc o m m i t m e n t t o s h o r t - t e r m c o n t r a c t s i s r e g a r d e d a ss u c c e s s f u l b y F L M s . I t w a s t h o u g h t u n l i k e l y t h a tn u m b e r s w i l l i n c r e a s e f o r t h o s e e n g a g e d i n b a s i cr e s e a r c h b u t t h e r e w i l l b e m o r e u s e o f s u b - c o n t r a c ts t a ff ( 'a m a k e o r b u y d e c i s io n ' ) f o r d e v e l o p m e n tw o r k . T h e d e c i s i o n t o i n c r e a s e t h e u s e o f b o u g h t - i nR & D s e r v i ce s a t t h e e x p e n s e o f p e r m a n e n t s t a f f w a sc e r t a i n l y t a k e n a t t h e s t r a t e g i c l e v e l . T h e r e s p o n d e n ts u g g e s t e d t h a t , a l t h o u g h h e p e r s o n a l l y w a s n o t i n f a v -o u r , th e c o r e - p e r i p h e r y m o d e l [ 4 9 ] w o u l d b e a p p l i e dt o R & D a n d " t h e c h a n g e s c o u l d g o q u i t e d e e p " . I no t h e r w o r d s , t h e r e a r e a n u m b e r o f a c t i v i t ie s c u r r e n t l yd o n e i n s i d e t h e f i r m w h i c h i n t h e f u t u r e w o u l d b eb o u g h t i n .T h e r e s p o n s e i n P H A R M A 4 t o q u e s t i o n s a b o u t t h eu s e o f s h o r t - t e r m c o n t r a c t s w a s : " N o , w e h a v e n o tg o n e t h a t w a y a t a ll , f l e x i b i l it y i s n o t a n i s s u e " . T h eU K R & D f u n c t i o n w i ll c o n t i n u e to g r o w i n t h e f u tu r ea n d t h i s w i l l p r o v i d e t h e o r g a n i z a t i o n w i t h t h e n e c e s -s a r y f l e x i b i l i t y . R e c e n t l y , P H A R M A 4 " h a d t h e f i e l dt o t h e m s e l v e s " i n s e l e c t i n g n e w r e c r u i t s a s n o o t h e rm a j o r c o m p a n i e s w e r e r e c r u i t i n g a t t h e s a m e l e v e l .S o m e c l i n i ca l r e s e a r c h i s o u t - s o u r c e d a n d a m a j o rc o n t r a c t w a s r e c e n t l y a r r a n g e d w i t h a c o m p a n y i nD e n m a r k ( c l i n i c a l R & D i s s t i l l r e g a r d e d a s a c o r ea c t i v i t y ) . P H A R M A 4 w i l l c o n t i n u e t o o u t - s o u r c e

s o m e p r o c e s s R & D b u t o v e r a l l t h e p o l i c y i s t o r e t a i nc o n t r o l i n - h o u s e .A t p r e s e n t a s m a ll n u m b e r o f p o s t d o c s a r ee m p l o y e d b y P H A R M A 5 o n f i x ed - t er m c o n tr a ct s b u tt h e m a j o r i t y a re o f f e r e d p e r m a n e n t p o st s . H o w e v e r ,t h e id e a o f R & D b e i n g a ' m a k e o r b u y ' d e c i s io n isu n d e r a c t i v e c o n s i d e r a t i o n a t t h e h i g h e s t l e v e l s i n t h e

c o m p a n y a n d i t w a s s t r o n g l y s u g g e s t e d t h a tP H A R M A 5 w o u l d a l so e v e n t u al l y a d o p t th e c o r e -p e r i p h e r y m o d e l f o r R & D [ 4 9] . In e v i t a b l y , t h e c o m -p a n y h a d i d e n t i f i e d a n e e d f o r a m o r e f l e x i b l e w o r k -f o r c e ; f o r e x a m p l e , t h e r e w a s a c h a n g e o f e m p h a s i sf r o m t h e c o m p a n y ' s c o r e d r u g s , i n w h i c h o t h e r c o m -p a n i e s h a d n o w c a u g h t u p , t o o t h e r t h e r a p e u t i c a r e a ss u c h a s t h e c e n t r a l n e r v o u s s y s t e m ( C N S ) . T h i sc h a n g e l e f t th e d e p a r t m e n t " o v e r - l o a d e d " w i t h p h a r -m a c o l o g i s t s . T h e f u t u r e v i s i o n w a s o f a s m a l l e r , c o r ew o r k f o r c e s u r r o u n d e d b y ' s a t e l l i t e s ' ; u n i v e r s i t i e s a n ds m a l l b i o t e c h n o l o g y c o m p a n i e s . T h a t i s , th e r e w o u l db e f a r f e w e r p e r m a n e n t s c i e n t i f i c p o s t s a v a i l a b l e a tP H A R M A 5 a s t h e m a jo r i ty o f w o r k w o u l d b e s u b-c o n t r a c t e d t o o t h e r o r g a n i z a t i o n s . T h i s i n f o r m a t i o nw a s r e g a r d e d as ' V E R Y S E N S I T I V E ' b y t h e r e s p o n -d e n t . A t p r e s e n t P H A R M A 5 d o e s u s e s m a l l n u m b e r so f c o n t r a c t s t a f f in t h e a r e a o f t o x i c o l o g y .W i t h i n P H A R M A 6 a l l g r a d u a t e s , p o s t g r a d u a t e sa n d p o s t d o c s a r e r e c r u it e d f o r p e r m a n e n t p o s t s a s i ti s n o t c o m p a n y p o l i c y t o u s e s h o r t - te r m c o n t r a c t s f o rR & D s t a f f . I t w a s s t r e s s e d t h a t t h e c o m p a n y p r e f e r st o r e c r u i t s t a f f w h o a r e n o t l i k e l y t o s u f f e r a n y ' c r is i so f id e n t i ty ' w h e n t h e y st a rt w o r k . P H A R M A 6 r e g u -l a r ly u s e s a g e n c y s t a f f a n d a t p r e s e n t e m p l o y sa p p r o x i m a t e l y 2 5 . G e n e r a l l y , p e r m a n e n t s t a f f a r e n o tr e c r u i t ed f r o m t h e r a n k s o f t e m p o r a r y e m p l o y e e sb e c a u s e s u c h w o r k t e n d s t o b e a t a t e c h n i c i a n l e v e l .T h e c o m p a n y u s e s c o n t r a c t s ta f f t o o v e r c o m e p a r t i-c u l a r w o r k l o a d s r a t h e r t h a n a s p a r t o f a c o r e - p e r i p h -e ry s t ra t egy . I t appears tha t s c i en t i f i c work i s s t i l l s eena s a c o r e a c t i v i t y a n d i s u n l i k e l y t o b e s u b - c o n t r a c t e di n t h e n e a r f u t u r e .

2 . 3 ] h e s b ' a te g i c o l e o f H R MT h e k e y f a c t o r w h i c h d i f f e r e n t ia t e s H R M f r o m p e r -s o n n e l m a n a g e m e n t i s t h e e x t e n t t o w h i c h e m p l o y e e -r e l a t e d i s s u e s a r e i n t e g r a t e d i n t o c o r p o r a t e a n d b u s i -

n e s s s t r a t e g y [ 2 7 , 5 0 ] . C o n s e q u e n t l y , t h e r e s e a r c he x a m i n e d w h e t h e r o r n o t H R M w a s r e g a r d e d a s as t r a t e g i c f a c t o r i n t h e m a j o r p h a r m a c e u t i c a l c o m p a -nies .O f t h e s ix c o m p a n i e s s u r v ey e d , P H A R M A 5 h a d t h em o s t f u l l y d e v e l o p e d l i n k s b e t w e e n b u s i n e ss s t r at e g ya n d H R M . W i t h i n P H A R M A 5 , e a c h f u n c t i o n( r e s e a r c h , d e v e l o p m e n t a n d m e d i c a l ) h a s a n H R Mg r o u p , c o n s i s t in g o f t h e p e r s o n n e l m a n a g e r , a p e r s o n -n e l o f f i c e r a n d s i x d e p a r t m e n t a l m a n a g e r s , w i t hr e s p o n s i b i l i t y f o r d e v e l o p i n g t h e a n n u a l H R s t r a t e g i cp l a n ( H R S P ) . T h e s e p l a n s a r e l i n k e d t o a lo n g e r - t e r mf u n c t i o n a l s t r a t e g y d e s i g n a t e d ' R e s e a r c h 2 0 0 0 ' . T h es t r a te g i c p l a n s a r e i n t e g r a t e d w i t h b r o a d e r b u s i n e s sa n d c o r p o r a t e s t r a t e g i e s b y t h e f o l l o w i n g p r o c e s s : t h eH R S P s a r e p a s s e d t o s e n i o r m a n a g e m e n t w h o t h e nc o n s i d e r t h e l i k e l y i m p l i c a t i o n s f o r t h e b u s i n e s s .M o d i f i c a t i o n s ar e m a d e t o t h e H R S P s w h i c h a r e t h e np a s s e d b a c k t o t h e o p e r a t i o n a l l e v e l . It is p o s s i b l e t h a tt h e c o m b i n e d H R S P s m a y w e l l i n f lu e n c e b u s i n e ss

T e d m v a S e n Y e L , 6 N o . 2 7


8/12

O . I o n e ss t ra t e g y as s e n i o r m a n a g e r s b e c o m e a w a r e o f t h eh u m a n r e s o u r c e i s s u e s f a c i n g t h e i r o r g a n i z a t i o n .Never the les s , a s i l lus t ra t ed in F ig . 1 , the l inkage i sr a t h e r l e s s t h a n f u l l i n t e g r a t i o n a s H R s t r a t e g y i sd r i v e n b y b u s i n e s s s t r a t e g y .T h e a b s e n c e o f a h u m a n r e s o u r c e s d i r e c t o r i nP H A R M A 5 c o n f i rm s t h at H R M a n d b u s in e s s s t ra t e g ya r e n o t f u l l y i n t e g r a t e d : t h e H R G e n e r a l M a n a g e r s i t so n t h e ' H Q B o a r d ' b u t d o e s n o t h a v e a p l a c e o n t h eM a i n B o a r d . N e i t h e r d o f o u r o f t h e f i v e o t h e r c o m p a -n i e s h a v e p e r s o n n e l / H R M d i r e c t o r s a n d H R M i s s u e sa r e d e a l t w i t h a t a s u b - b o a r d l ev e l : P H A R M A 4 h a s aP e r s o n n e l D i r e c t o r w h o s i t s o n t h e R e s e a r c h E x e c u -t i v e w h i c h r e p o r ts t o t h e M a i n B o a r d ; P H A R M A 2 h a sa D i r e c t o r o f M a n a g e m e n t S e r v i c e s ( I T , l i b r a r y fa c i l i-t ie s a n d H R M ) t o w h o m t h e H R D i r e c t o r r e p o r ts ;P H A R M A 3 h a s a n H R D i r e c t o r b u t h e is n o t a m e m -b e r o f t h e B o a r d ; i n P H A R M A 1 t h e n e w l y a p p o i n t e dP e r s o n n e l D i r e c t o r i s n o t p r e s e n t l y o n t h e B o a r d b u tt h i s a p p e a r s t o b e a p e r i o d o f ' p r o b a t i o n ' a s t h e p r e -v i o u s i n c u m b e n t w a s a B o a r d m e m b e r ; P H A R M A 6h a s a D i r e c t o r o f P e r s o n n e l a n d A d m i n i s t r a t i o n w i t ha s e a t o n t h e B o a r d , b u t t h e r e w a s a s t r o n g i m p r e s s i o nt h a t H R M i s s u e s w e r e s e c o n d a r y t o c o r p o r a t e s t r a t -e g y .A l l r e s p o n d e n t s c l a i m e d t h a t H R i s s u e s w e r e c e n -t r a l t o t h e b u s i n e s s a n d c o r p o r a t e s t r a t e g y . H o w e v e r ,i t w a s c l e a r t h a t t h e " k e y i n d i c a t o r " [ 2 7 ] o f H R Mi n f l u e n c e o n c o r p o r a t e s t r a t e g y , t h e p r e s e n c e o f ah u m a n r e s o u r c e p r o f e s s i o n a l o n t h e c o m p a n y B o a r d ,w a s a b s e n t i n f i v e o f t h e s i x c o m p a n i e s .

2.4 H RM and R&D effeel~enessG l a x o ' s s u c c e ss i n r e d u c i n g t h e t i m e f o r d r u gd e v e l o p m e n t f r o m 1 0 - 1 1 y e a r s t o a p p r o x i m a t e l y 5y e a r s i s r e g a r d e d a s i n d u s t r y ' b e s t p r a c t i c e ' . C o m -b i n e d w i t h t h e e n v i r o n m e n t a l c h a n g e s d e s c r i b e d i n t h ei n t r o d u c t i o n , t h is h a s e x e r t e d c o n s i d e r a b l e p r e s s u r e o nt h e o t h e r c o m p a n i e s t o i m p r o v e t h e i r R & D e f f ic i e n c y .B e t t e r u s e o f I T i n a c c e s s i n g o n - l i n e d a t a b a s e s a n dt h e ro b o t i c s c r ee n i n g o f c o m p o u n d s a r e c o m m o n t oa l l t h e c o m p a n i e s . D e p a r t m e n t a l s t r u c t u r e s a r eo r g a n i z e d a c c o r d i n g t o s c i e n t i f i c d i s c i p l i n e( c h e m i s tr y , b i o c h e m i s t ry , p h a r m a c o l o g y a n d b i o l o g y )o r t h e r a p e u t i c a r e a ( c a r d i o v a s c u l a r , c a n c e r , i m m u -n o l o g y , C N S , i n f e c ti o n , p u l m o n a r y a n d a r th r i ti c ) b u ta l l c o m p a n i e s f o r m m u l t i - d i s c i p l i n a r y t e a m s o n c ec o m p o u n d s h a v e b e e n a c c o r d e d ' p r o j e c t ' s t a t u s . An u m b e r o f t h e o t h e r s i g n i f i c a n t i n i t ia t i v e s w h i c h h a v eb e e n a d o p t e d b y i n d i v i d u a l c o m p a n i e s a r e b r i e f l yd e s c r i b e d .P H A R M A I h a s a tt e m p t e d t o m a k e p r o j e c t s e le c -t i o n a m u c h m o r e r i g o r o u s p r o c e d u r e . T e a m l e a d e r s

tBusiness/HRPrinciples

B u s i n e s s S t r a t e g y

TF u n c t i o n a l O b j e c t i v e s

& S t r a t e g i e sT T

F u n c t i o n a l & H RP l a n s

F ig . 1 . H u m a n ~ s o u ~ e s a n d b u s i n e s s s ~ a t e g y .

( F L M s ) t a k e a v e r y a c t i v e i n t e r e s t in t h e w o r k o f e a c hs c i e n t i s t a n d t h e p o t e n t i a l f o r s u c c e s s i s ' g r a d e d ' a ta n e a r l y s t a g e . T w o m a i n q u e s t i o n s a r e a d d r e s s e d b yt h e F L M : i s t h e w o r k r e l e v a n t t o t h e p a r t i c u l a r t h e r a -p e u t i c a r e a ? I s i t v i a b l e ? I f th e w o r k i s n o t r e l e v a n tt h e n i t i s a b a n d o n e d a s s c i e n t i s t s a r e n o l o n g e ra l l o w e d t o c o n t i n u e w i t h p r o j e c t s t h a t h a v e l i t t l e o b -v i o u s c o m m e r c i a l v a l u e . P H A R M A 1 h a s a l s oi m p l e m e n t e d a ' b u s i n e s s - a w a r e n e s s s c h e m e ' , p a r tl y i nr e s p o n s e f o r r e q u e s t s f r o m n e w e n t r a n t s t o f i n d o u ta b o u t o t h e r o p p o r t u n i t i e s i n t h e b u s i n e s s b u t a l s o t ob r e a k d o w n t h e t r a d i t i o n a l i n s u l a r i t y o f r e s e a r c hs c i e n ti s ts . W h i l e i t is v e r y d i f f i c u l t t o m e a s u r e b e n e f i t si n t h e s h o r t t e r m , o n e n e g a t i v e o u t c o m e h a s b e e ns c i e n t i s ts ' g r e a t e r a w a r e n e s s o f w o r k i n o t h e r d e p a r t -m e n t s . M a n y y o u n g e r e m p l o y e e s f o u n d t h a t sa le s a n dm a r k e t i n g w e r e m o r e e x c i t i n g a n d ' s e x y ' t h a nr e s e a r c h a n d b e g a n t o q u e s t i o n t h e i r c o m m i t m e n t t os c i e n c e . O n e s e c t i o n s u b s e q u e n t l y w i t h d r e w f r o m t h es c h e m e b e c a u s e " w e h a v e l o s t t o o m a n y g o o d p e o p l ei n t h e p a s t " . A l l t h e o t h e r c o m p a n i e s h a v e i n t r o d u c e db u s i n e s s - a w a r e n e s s s c h e m e s , b u t p a r t i c i p a t i o n i s v o l -u n t a r y a n d t h e r e a p p e a r s t o b e l i t t l e e n t h u s i a s ma m o n g s t t h e m o r e e x p e r i e n c e d s c i e n t i s t s f o r i n f o r -m a t i o n a b o u t c o m m e r c i a l a s p e c ts o f th e p h a r m a c e u t -i ca l bus ines s .

P H A R M A 2 h a s a t t e m p t e d t o i m p r o v e s c i e n t i f i ce f f i c i e n c y b y a l l o c a t i n g ' e x t r a n e o u s ' d u t i e s , su c h a sb o t t l e - w a s h i n g , o b t a i n i n g m a t e r i a l f r o m s t o r e s , a n dt h e e l e c t r o n i c a c q u i s i t i o n o f i n f o r m a t i o n ( a r t i c l e s ) , t on o n - s c ie n t if i c e m p l o y e e s . A k e y c h a n g e t o H R p o l i c yh a s b e e n t h e i n t r o d u c t i o n o f a ' C h i l d c a r e S c h e m e ' t oa s s i s t w o m e n r e t u r n e r s ( n o t o n l y s c i e n t i s t s b u t , p e r -h a p s m o r e i m p o r t a n t ly f o r t h e c o m p a n y , s t a f f o n' t e c h n i c i a n ' g r a d e s ) . T h e s c h e m e h a s b e e n h i g h l y s u c -c e s sf u l a s 8 0 % o f p r e g n a n t w o m e n n o w r e tu r n t ow o r k a n d C h i l d c a r e is n o w ' in p r o f i t' . P H A R M A 3 h a si n t r o d u c e d a T Q M i n i t i a t i v e c a l l e d ' s i m p l y b e t t e r ' ,a i m e d a t i m p r o v i n g t h e e f f i c ie n c y o f p r o c e s s e s ( t os i m p l i f y a n d e l i m i n a t e w a s t e ) a n d e s t a b l i s h i n g b e t t e rl i n k a g e s b e t w e e n g r o u p s a n d d i s c i p l i n e s .P e r s o n n e l i n P H A R M A 5 h a v e i n i t i a t e d a m a j o rs c h e m e k n o w n a s 'P e r f o r m a n c e M a n a g e m e n t ' ( P M )w h i c h w a s d e f i n e d a s a n a t te m p t to c h a n g e t h e c u l t u r eo f R & D b y i m p r o v i n g i n d i v i d u a l e ff e c t iv e n e s s . P Mi s d e s i g n e d t o l i n k e a c h i n d i v i d u a l ' s r o l e t o t h e c o m -p a n y ' s b r o a d b u s i n e s s o b j e c t i v e s . T h e s c h e m e o p e r -a t e s i n t h e f o l l o w i n g m a n n e r : s e n i o r m a n a g e r s e s t a b -l i s h t h e b u s i n e s s o b j e c t i v e s f o r e a c h t h e r a p e u t i c a r e a ;t h e o b j e c ti v e s a re c o m m u n i c a t e d t o m a n a g e r s o f t h et h e r a p e u t i c a r e a s w h o i n c o r p o r a t e t h e o b j e c t i v e s i n t ot h e h u m a n r e s o u r c e s t r a t e g i c p l a n ; F L M s a r e t h e nr e s p o n s i b l e f o r e n s u r i n g t h a t e a c h s c i e n t is t c o n t r i b u t e st o t h e b r o a d o b j e c t i v e s . P M i s l i n k e d t o a ' R e w a r dP l a n ' f o r e a c h o f t h e b u s i n e s s f u n c t i o n s a n d t h e in d i -v i d u a l ' s c o n t r i b u t i o n i s a c k n o w l e d g e d b y f i n a n c i a lb o n u s e s w h i c h a r e a u d i t e d b y P e r s o n n e l .I n r e s p o n s e t o q u e s t i o n s a b o u t i m p r o v e d s c i e n t i f i ce f f i ci e n c y , t h e P H A R M A 4 R e s e a r c h D i r e c t o rr e s p o n d e d : " i s s u e s t o d o w i t h t h e m a r k e t a r e m o r ei m p o r t a n t " . H e t h e n s p o k e a b o u t " r e - e n g i n e e r i n g o u rc u l t u r e " to g i v e m u c h g r e a t e r m a r k e t f o c u s b y e n c o u r -a g i n g e n t r e p r e n e u r i a l a c t i v i t y w i t h i n t h e c o m p a n y : " ap a r a d i g m s h i f t " .

2 8 T o c h n o v a l~ o n o l . 6 N o . 1


9/12

S t T a te g ic h u m a n r e s o u r c e m a . a E e m e . t

3 . D I S C U S S I O NA N D C O N C L U S IO N3 . 1 D is c u s s i o n

O v e r t e v i d e n c e o f a s w i t c h f ro m P e r s o n n e l t o H R Mw as i n co n c l u s i v e a s t h r ee co m p an i e s r e t a i n ed t h et e r m s P e r s o n n e l D e p a r t m e n t a n d P e r s o n n e l D i r e c t o rw h i l e t h e o t h e r t h r e e c o m p a n i e s h a d H R M D e p a r t -m e n t s a n d H R M D i r e c to r s . H o w e v e r , o n l y o n e o f th es i x ' d i r ec t o r s ' a c t u a l l y h ad a p l ace o n t h e m a i n b o a r dw h i ch , a cco r d i n g t o P u r ce l l , i s e s s en t ia l i f t h ey a r e t oh av e r ea l i n f l u en ce i n t h e o r g an i za t i o n [ 5 1 ] . M o r es u b t l y , i n t e r m s o f t h e p r ac t i ce s ad o p t ed b y t h e s i xc o m p a n i e s , t h e e v i d e n c e w a s m o r e c o n v i n c i n g t h a tt h e r e h a d b e e n a c h a n g e f r o m p e r s o n n e l m a n a g e m e n tt o h u m a n r e s o u r c e m a n a g e m e n t . T h e r e h a s b e e n a' h a r d en i n g - u p ' o f p e r s o n n e l ac t i v i t i e s , w i t h w e l f a r ei s s u es g i v i n g w ay t o a b u s i n es s - cen t r ed ap p r o ach t oem p l o y ee r e l a ti o n s . E v i d en c e o f t h e ch an g e i s p a r t i-cu l a r l y ap p a r en t i n r e l a t i o n t o d ec i s i o n s a s s o c i a t edw i t h r ec r u i t m en t , t r a i n i n g an d ca r ee r d ev e l o p m en t .F o r ex am p l e , t h e p e r s o n n e l ap p r o ach w as t o p r o v i d et r a i n i n g f o r R & D e m p l o y e e s w h o r e q u e s t e d c o u r s e sw h i ch t h ey co n s i d e r ed t o b e i n t e r e s t i n g o r r e l ev an t .A l l s i x r e s p o n d e n ts c l a i m e d t o h a v e a d o p t e d a n H R Map p r o ach b as ed o n t h e i d en t i f i c a t i o n o f b u s i n es s' n e e d s ' a n d t h e u s e o f t r a in i n g a n d d e v e l o p m e n t t oen h an ce o r r e f o cu s ex i s t i n g s k i l l s an d co m p e t en ces .I n a d d i t io n , F L M s w e r e a c t i v e l y e n c o u r a g e d t o t a k eo n g r ea t e r r e s p o n s i b i l i t y f o r t h e ap p r a i s a l an d r ew ar do f t h e i r o w n s t a f f .T h e H R M l i te r a t u r e s u g g es t s t h a t l i n k s to co r p o r a t es t r a t e g y d i s t i n g u i s h h u m a n r e s o u r c e m a n a g e m e n tf r o m p e r s o n n e l m an a g em en t [ 50 ]. I n each o f t h e s ixc o m p a n i e s i t w a s c l a i m e d t h a t t h e H R f u n c t i o n h a ds t r a t eg i c i n f l u en ce w i t h i n t h e o r g an i za t i o n . I n r ea l i t yt h i s ap p ea r ed t o b e a o n e - w ay o r , a t b e s t a t w o - w ayl i n k ag e r a t h e r t h an a f u l l i n t eg r a t i v e l i n k ag e [ 2 8 ] a ss en i o r m an ag em en t e s t ab l i s h es co r p o r a t e s t r a t eg y an dt h e l i k e l y h u m an r e s o u r ce i m p l i ca t i o n s a r e t h en co n -s i d e r ed b y t h e H R d ep a r t m e n t : H R s t r a t eg y ' l ag s ' co r -p o r a t e s t r a t eg y . I n t h e f u l l y i n t eg r a t ed m o d e l h u m anr es o u r ce co n s i d e r a t i o n s a r e an e s s en t i a l co m p o n en t o ft h e s t r a teg i c d ec i s i o n - m ak i n g p r o ces s [ 2 8] a l t h o u g h ,acco r d i n g t o P u r ce l l an d A h l s t r an d , i n t eg r a t i o n o fH R M an d co r p o r a t e s t r a t eg y i s u n l i k e l y f o r m u l t i d i v i -s ional f i rms :B us i ne s s po l i c y i gnor e s t he hum an r e s our c ed i m e ns i ons : s pe c i a l i s t pe r s on ne l o r hum anr e s our c e m an age m e n t s tr a t e g i e s a r e pur s ue d , i ts e e m s , w i t h s c an t r e gar d t o t he w i de r bus i ne s sc on t e x t [52 (p.1)] .A s d e s c r i b e d a b o v e , l e a d i n g p h a r m a c e u t i c a l c o m -p a n i e s s p e n d b e t w e e n t w o a n d t h r e e t i m e s a s m u c ho n R & D a s o t h e r m a n u f a c t u r i n g i n d u s t r i e s . C o n s e -q u en t l y , t h e r e a r e c l o s e l i n k s b e t w een co r p o r a t e s u c -ce s s an d ac t i v i t i e s i n t h e R & D l ab o r a t o r i e s . I nad d i t i o n , s c i en t i f i c em p l o y ees a r e r eg a r d ed b y t h em -

s e l v e s a n d b y m a n a g e m e n t a s a g r o u p d e s e r v i n g o fp r e f e r en t i a l t r ea t m en t i n t e r m s o f t h e i r co n d i t i o n s o fem p l o y m en t . T h e r e f o r e , p en s i o n r i g h t s , o p p o r t u n i t i e sf o r f l ex i b l e w o r k i n g , ch i l d ca r e s ch em es an d s o o n a r ev e r y d i f f e r en t t h an t h o s e av a i l ab l e t o ' s h o p f l o o r 'w o r k e r s , r e f e r r ed t o b y K an t e r a s t h e ' s eg m en t a t i o n 'o f H R M [2 1].

T h e cen t r a l th r u s t o f t h e r e s ea r ch w as t o ex a m i n ec h a n g e s i n t h e n a t u r e o f e m p l o y m e n t i n p h a rm a c e u t -i ca l R & D . T h e r e i s c e r t a i n l y a t r en d t o w ar d s t h e u s eo f s h o r t - t e r m co n t r ac t s f o r n ew r ec r u i t s a l t h o u g h ,i n ev i t ab l y , t h i s p o l i cy h as b een p u r s u ed w i t h g r ea t e rv i g o u r b y s o m e c o m p a n i e s w h i l e o t h e r s h a v e b e e nm o r e r e l u c t a n t t o a b a n d o n t r a d i t i o n a l e m p l o y m e n tco n t r ac t s . P e r h ap s m o r e s i g n i f i can t i s t h e i n c r ea s i n gp r o p en s i t y t o s u b co n t r ac t R & D as a co s t - r ed u c t i o nm eas u r e . A t p r e s en t , t h e u s e o f s u b co n t r ac t an da g e n c y s t a f f is c o n c e n t r a t e d o n t he m o r e m u n d a n e a n dr o u t i n e ac t i v i t i e s ca r d ed o u t b y R & D d ep a r t m en t s .H o w ev e r , t h e r e i s l i t t l e d o u b t t h a t v e r y s i g n i f i can tch an g es a r e b e i n g co n s i d e r ed a t t h e h i g h es t l ev e l s i nm a j o r p h a r m aceu t i ca l co m p an i e s . U n t i l r ecen t l y ,R & D h as b een r eg a r d ed a s a co r e ac t i v i t y b u t t h i sp e r cep t i o n i s c e r t a i n l y ch an g i n g a s s en i o r m an ag e r sb e g i n to s e e R & D a s a n o th e r ' m a k e o r b u y ' d e c i s i o n .T h e ex t en t t o w h i ch t h e s i x co m p an i e s h av e ad o p t eds h o r t - t e r m co n t r ac t s an d s u b - co n t r ac t i n g o f R & Dac t i v i t i e s d o es v a r y co n s i d e r ab l y , an d i t w o u l d b ei m p o s s i b l e t o s u g g es t t h a t an i r r ev e r s i b l e t r en d h asb een e s t ab l i s h ed . N ev e r t h e l e s s , t h a t R & D i s n o wb e i n g co n s i d e r ed a s a m a k e o r b u y d ec i s i o n d o es i n d i -ca t e t h e s e r i o u s n es s w i t h w h i ch ch an g es i n t h e b u s i -n es s en v i r o n m en t a r e r eg a r d ed w i t h i n t h e i n d u s t r y .W h i l e s i g n i f i can t s tr a t eg i c ch an g es a r e u n d e r s e ri -o u s c o n s i d e r a t i o n w i t h i n l e a d i n g p h a r m a c e u t i c a l c o m -p an i e s , t h e r e h av e a l s o b een o p e r a t i o n a l r e s p o n s esd es i g n e d t o i m p r o v e t h e e f f i c i en cy o f R & D ac t i v it i e s .A l l co m p an i e s h av e i n t r o d u ced I T an d r o b o t i c s c r een -i n g an d a r e m o r e r i g o r o u s i n t h e i r p r o j ec t s e l ec t i o nt ech n i q u es . T h e r e h as a l s o b een a g en e r a l m o v e t og i v e s c i en ti s t s a k een e r aw ar en es s o f t h e co m m er c i a lr ea l it i e s o f R & D , a l t h o u g h t h e e f f ec t i v en es s o f t h e s ei n i t i a t i v e s i s o p en t o q u es t i o n . T h e w o r d m o s t co m -m o n l y u s e d d u r i n g t h e i n t e r v i e w s t o d e s c r i b e R & Ds c i en ti s t s w as ' i n s u l a r ' b eca u s e o f th e i r ap p a r en t l a cko f i n t e r e s t in n o n - s c i en t i f i c t o p i c s . T h e H R p r o -f e s si o n a ls r e c o g n i z e d t h e i m p o r t a n ce o f e m p l o y i n gR & D s t a f f w i t h a s t r on g c o m m i t m e n t to s c i e n ce .H o w ev e r , t h e r e w as a l s o a b e l i e f t h a t s u ch s i n g le -m i n d ed n es s m ean t t h a t m o s t s c i en t i s t s p r e f e r r ed t oi g n o r e t h e l i n k b e t w een s c i en t i f i c en d eav o u r an d n ewp r o d u c t s w h i ch i s f u n d am en t a l t o t h e co n t i n u ed s u c -ces s o f a l l m a j o r p h a r m aceu t i ca l co m p an i e s .

T h e i n i t i a t i v e s d e s c r i b ed i n t h e p ap e r a r e b a s ed o nt h e n e e d f o r p h a r m a c e u t i c a l R & D t o b e c o m e m o r ef l ex i b l e i n r e s p o n s e t o ex t e r n a l ch an g e o r t o a r ep o -s i t i o n i n g o f t h e co m p a n y ' s p r o d u c t p o r t f o l i o , a s i n t h ec a s e o f P H A R M A 5 . W h i l e i t m a y b e p o s si b le t o a c h i-ev e n u m er i ca l f l ex i b i l i t y b y s u b co n t r ac t i n g an d e s t ab -l i s h i n g a l l i an ces w i t h b i o t ech n o l o g y co m p an i e s , f u n c -t i o n a l f lex i b i l i ty m ay b e h a r d e r t o ach i ev e w i t h s u cha s p ec i a l i zed w o r k f o r ce . C l ea r l y t h e r e a r e p r ac t i ca lb o u n d a r ie s w h i c h p r e v e n t b i o l o g is t s b e c o m i n g c h e m -i s ts o r b i o c h e m i s t s b e c o m i n g p h a r m a c o l o g i s t s. H o w -ev e r , t h e f l ex i b i l i t y s o u g h t b y p h a r m aceu t i ca l co m p a-n i e s i s t o en d t h e d i v i s i v e d i s c i p l i n a r y i s o l a t i o n i s mw h i ch b l o ck s c r ea t i v i t y . T h e u s e o f m u l t i - d i s c i p l i n a r yt eam s i s a k ey m e t h o d o f en co u r ag i n g s c i en t i st s f r o md i f f e re n t s p e c i al i sm s t o c o m m u n i c a t e a n d c o o p e r at e ,l e ad i n g t o an o v e r l ap p i n g o f s k i l l s an d k n o w l ed g e . I nt h e w o r d s o f t h e r e s p o n d e n t in P H A R M A 2 : " g o o ds c i en t is t s c an t u r n t h e i r h an d s t o an y t h i n g " . T h e v i ewt h a t i t w as e s s en t i a l t o en s u r e s c i en t i s t s r em a i n ed

Tedmova'don oL16 No. 1 2 9


10/12

O . J o n e s

f l ex ib le and in teres ted in a b road range o f top ics wasem phas ized in a ll s ix o f the companies . In formal co m-municat ions are a l so encouraged by the des ign o fco mm u n a l a r ea s in w h i ch R& D s t a f f can mee t an dd i scuss the i r research p rob lems .

3 . 2 C o n c lu s i o nA number o f au thors sugges t tha t the pharmaceu t -ical industry is going through a period of very s ig-nificant change [6, 7 ,12]. P ressure s from the externalenv i ronment , par t i cu lar ly the des i re o f W es terngovernments to reduce heal thcare spend ing , a re com-b in ing wi th wider use o f b io technology to change thenature o f pharmaceu t ica l R &D . I t is sugges ted tha tl arge-sca le screen ing o f chemical compounds in g ian tl abora to r i es i s be ing rep laced by research on speci f i ctherapeut ic areas . This wil l lead to much greaterinvolvement of small f i rms and higher educat ion inst i -tutes (HEIs) in basic research with the resul ts thenpassed on to the ma jor compan ies [7 ] . Howev er , thesear rangements wi l l no t be s imple market t ransact ionsbu t smal l and l arge o rgan iza t ions wi l l become par t o fe labora te ne tworks .The com panies w hich were the sub jec t o f th i s s tudycer ta in ly have no t ye t made fundamenta l changes tothe wa ys in which they car ry ou t the i r R& D act ivi t ies .I t may be tha t the thes i s p roposed by del l a Val le andGambardel l a [7 ] i s more appropr ia te fo r medium-s ized con t inen ta l pharmaceu t ica l companies than i t i sfo r the major UK companies . Never the less , the v iewsexpressed b y the s ix responden t s ind ica te tha t l ead ingp h a rmaceu t i ca l co mp an i e s n o l o n g e r s ee R&D as acore ac t iv i ty . Th i s change represen t s an a t t empt toreduce R&D spending and improve ef f i c iency inresponse to the many ex ternal p ressures which facethe indus t ry . However , the success o f pharmaceu t ica lcom panies in the U K has been based on a s t rong com -mi tment to in -house R&D and the i r ab i l i ty to t ake along- term perspect ive wi th regard to tha t inves tment[46]. I t i s argued that the changes ident i f ied in thisresearch pose a ser ious th rea t to the un ique pos i t ionof pharmaceu t ica l compan ies in the UK. Betw een1982 and 1992 the num ber o f job s in manufactu r ingfe l l by 24% whi le employment in the pharmaceu t ica li n d us t ry g r ew b y 1 2% an d mo s t o f t h e se n ew j o b swere crea ted by R&D. In add i t ion , the indus t ry has asubstant ial t rade surplus which is also against thet rend in manufactu r ing as a whole . Changes in theemp l o y men t o f R&D s t a f f w h i ch p l ace g r ea t e remphas i s on shor t - t e rm cos t -sav ings a t the expense o flong-term investment wil l inevi tably resul t in adecl in ing HR repu ta t ion amongs t the l ead ing compa-nies . Furthermore, this decl ine in reputat ion couldh av e a m a j o r i mp ac t o n t h e U K as a b as e fo r p h arma-ceu ti ca l R& D . T h e r e s p o n d ent in PH A RM A 4 s u mm a-r ized the concern wi th which the indus t ry faces thefuture:We are all very anxious that the UK governmentdoesn't go 'over the top' in trying to keephealthcare costs down. I f it does, it may risk kill-ing the geese that lay the golden eggs in the formof royalties, exports and inward investment.Despi te such fears , ev idence o f the d i f fi cu l ty which

governments face in ho ld ing down heal thcare cos t s i sp rov ided by a repor t tha t d rug sa les increased by 5%in the wor ld ' s 10 b igges t market s be tw een Januaryand October 1994 compared wi th the same per iod in1993. In the U S, the r ise was 8% as a resul t of Cl in-ton 's fa i lu re to implem ent h i s heal thcare refo rms [45] .Clark [53] no tes tha t theore t i ca l model s o f HR Mcan be used in th ree ways : p rescr ip t ive ly , descr ip -t ive ly , o r concep tual ly . Th i s research fo l lows Hendryand Pet t ig rew [35] in a t t empt ing to descr ibe what i shappen ing in the pharmaceu t ica l indus t ry and concep-tua l ly compar ing these p rac t ices w i th a mode l o f s tra-t eg ic HRM, a l though i t has been po in ted ou t tha t theprofess ional asp i ra tions o f personnel p rac t i t ioners canlead them to exaggera te the i r impor tance wi th in theorganizat ion [53, 54]. W hile claim s o f s t rategicin f luence by HRM pract i t ioners may be ques t ioned ,there i s ev idence to sugges t tha t represen ta t ion a tboard l evel does l ead to more ef fec t ive corpora teman ag emen t i n t e rms o f p ro d u c t i v i t y i mp ro v emen t sand the career p lann ing o f sen io r managers [51] . Wi thregard to the da ta p resen ted here , exaggera t ion on thepar t o f responden t s seems un l ike ly as in i t i a t ives wi thregard to more f l ex ib le R&D are no t be ing p roposedby HRM specia l i s t s . In fac t , there was cons iderab leapprehens ion about the ef fec t such changes wouldhave on ind iv idual companies and on the indus t ry .Fo r ex amp l e , t h e r e s p o n d en t i n PH A RMA 3 s t a t ed :

I have a vision of just one eminent scientistremaining in the company while all other activi-ties are in the 'periphery'. I don't like this trendbut it might become a way of life.The reorgan iza t ion o f R& D i s be ing d r iven byenvi ronmenta l and market changes o r , a t l eas t , bysen ior managem ent ' s percep t ion o f those changes . Asindicated by their profi ts , achieved during a majorrecess ion , l ead ing UK pharmaceu t ica l f i rms are no tyet confron ted by cr i s i s . Hence , the companies area t t empt ing to be p roact ive ra ther than reac t ive inan t ic ipa t ing the l ike ly impact o f chan ge o n the indus -t ry. I t i s therefore suggested that the HR ini t iat ivesdescr ibed in th is paper can b e c lass i f ied as be ing s tra-tegic in nature [36, 38].

R E F E R E N C E S1 0 . J o n e s . The Determinants of DepartmentalReputation: A Study of R&D Scientists. M B S , P h DThesis , 1992.2 O. Jones . Creat ing innovatory c l imates : R & Dscient is ts in high-technology organisat ions. Crea-tivity and Innovation Management, 2(4) (1993)2 5 2 -2 6 0 .3 O. Jones and T. Sul l ivan. Establ ishing the deter-minan t s o f depar tmenta l repu ta t ion : the case o fR&D scient is ts . R&D Management, 24(4) (1994)3 2 5 -3 3 9 .4 M. Sharp . Pharmaceu t ica ls and b io technology :perspect ives for the European industry. In: C.Freeman , M. Sharp and W. Walker . Technologyfor the Future of Europe. Pinter, London, 1991.5 D. Green. Sweeteners for a bi t ter pi l l . FinancialTimes (31 January 1994).

30 T e d m v a t b n N . 1 6 N o . 1


11/12

S t r a te g i c h u m a n e s o u r c e m a n a g e m e n t6 A. Webster and V. Swain. The pharmaceuticalindustry: towards a new innovatory environment.Technology Analys i s and S t ra teg ic Management ,3(2) (1991) 127.7 F. della Valle and A. Gambardella. Biological rev-olution and strategies for innovation in pharma-ceutical companies. R & D M a n a g e m e n t , 23(4)

(1993) 287.8 E.W. Garnsey and S.M. Wright. Technical inno-vation and organisational opportunity. Inter-n a t io n a l Jo u r n a l o f Tech n o l o g y M a n a g em en t , 5(3)(1990) 267-291.9 K. Pavitt. Some foundations for a theory of thelarge innovating firm. In: G. Dosi, R. Giannetti andP. Toninelli (eds.). Technology and Enterpr i se ina His tor ica l Perspect i ve . Clarendon Press,Oxford, 1992.10 M. Sharp. Technological trajectories and corporatestrategies in the diffusion of biotechnology. In: E.Deiaco, E. Hornell and G. Vickery (eds.). Tech-nology and Inves tment : Cr i t ica l I s sues fo r the1990s. Frances Pinter, London, 1991.11 A. Sapienza. Technology transfer: an assessmentof the major institutional vehicles for diffusion ofUS biotechnology. Technovat ion , 9 (1989) 285-295.12 K. Randle and A. Rainnie. "I don't know what itis they are doing, but I do know that they are doingthings that I don't know about."--Control, contra-dictions and complexity in a pharmaceuticalresearch company. 1 2 t h A n n u a l La b o u r P r o ces sConference , University of Aston, March 1994.13 E. Whittaker and J.D. Bower. A shift to externalalliances for product development in the pharma-ceutical industry. R & D M a n a g e m e n t, 24(3) (1994)249-260.14 A.J. Shenhar. From low- to high-tech project man-agement. R & D M a n a g e m e n t , 23(3) (1993).15 J.F. Coates. The pharmaceutical laboratory of the21st century. Technology Analys i s and S t ra teg icM a n a g em en t , 3(4) (1991)427-438.16 J. Levi. Temps take over the laboratory benches.Th e O b s er ver (18 November 1990).17 B. Blackden. More than a temporary solution.Chemis t ry Today (September 1993) 776-777.18 P. Popovich and J. Wanous. The realistic job pre-view as a persuasive communication. A c a d e m y o fM a n a g em en t R ev i ew , 7 (1982) 570-578.19 J.P. Wanous. Organisa t ional Ent ry: Recru i tment ,Se lec t ion an d Socia li sa t ion o f New come rs .Addison Wesley, Massachusetts, 1980.20 T. Peters and R. Waterman. In Search o f Excel -lence. Harper Row, New York, 1982.21 R. Kanter. The Change Mas ters . Allen & Unwin,Boston, 1983.22 P. Blyton and P. Turnbull. R ea s s es s i n g H u m a nR es o u r ce M a n a g em en t . Sage, London, 1992.23 M. Beer, B. Spector, P. Lawrence, Q. Mills andR. Walton. M a n a g i n g H u m a n A s s e t s . Free Press,New York, 1984.24 C. Fombrun, N.M. Tichy and M.A. Devanna. Stra-t eg i c H u m a n R es o u r ce M a n a g em en t . John Wiley,New York, 1984.25 J. Storey. Developments in the management ofhuman resources: an interim report. W a r wi ck P a p -

ers in Industr ial Relat ions, No. 17. IRRU, SIBS,University of Warwick, 1987.26 D. Guest. Human resource management: its impli-cations for industrial relations and trade unions. In:J. Storey. New P er s p ec t i ve s o n H u m a n R es o u r ceM a n a g em en t . Routledge, London, 1989.27 C. Brewster. European HRM: a reflection of, orchallenge to, the American Concept? In: P.S. Kirk-bride. H u m a n R es o

hrm pharmaceutical r&d

Documents