Emerging Pharmaceutical Company

Question :

Emerging Pharmaceutical company’s revenue increased drastically in just 3 years. It’s projected revenue for the current year is $5 billion. But, at the same time employees are not satisfied working here, they are leaving the job as the competitor of the Emerging pharmaceutical, Medtronic Pharma is providing much better employment perks. This report will analyze the compensation and appraisal system of the Emerging pharmaceutical, compare the same with the competitor’s system and provide solutions that Emerging Pharmaceutical can implement to improve employee satisfaction thereby improving the attrition ratio. 

Answer :

Misalignment, Differences, and Gap

Misalignment is referred to as the lack of synchronization between the strategic or business objectives of the organization with that of its human resource practices such as planning, acquisition, engagement, retention, and others. The company is growing, which requires that it keeps it human resource decisions in line with the growth. However, it has been found that the employees are facing problem in getting advancement opportunities, proper career paths to grow, comfortable work hours, and costly health plans. The company’s goal to properly reward its employees is misaligned as well, which is evident from the focus group response. With the growth comes the need to retain higher number of employees, however, opposite is taking place in the company. Moreover, as per EVP, the company wanted to focus on competitive pay, but considering the difference with Medtronic Pharma (MP), it seems it has fallen behind. It does seem that the company is facing trouble in aligning what it says and what it does. 

Now coming to the key differences, comparing it with Medtronic will give some perspective on where the company is at present. This will help understand two aspects – the first is the current state or the baseline from where the improvements can be made, and the second is the position where the company is at present in comparison to the industry. Upon assessment of the data, there are top seven five key areas that have been found where Emerging Pharma (EP) is running behind. These are remote working, right pay as per market, professional development opportunities, tuition reimbursement, paid time off (PTO), training, and performance recognition. Employee of EP raised issue that tuition fee is too low in comparison to cost incurred as “just the textbooks can cost $1000” (Medtronic, 2018, p. 4). EP pays only $2000 for undergraduates and $3500 for graduates, but MP pays $3500K and $5250 respectively. Pay of MP is 50% higher than that of EP, which gives better opportunity to employees for career advancement as they can afford higher degrees for the position in the company where degrees are mandatory. Another employee concern was paid time off that is way too low in comparison to MP, which is double in MP (EP, 2018). Low PTO is leaving negative perception in older employees who can be considered as the real asset of the company because of the knowledge and experience they hold. As for instance, employees with less than 3 years of experience get 10 days PTO at EP, but 20 days at MP. Some of the other key differences with Medtronic is mentioned in the Appendix A. 

Considering the assessment it can be said that the current state of EP is not favourable for the employees, and this has been the reason that the employees are running away to competition. If the company covers this gap that exists between its current state and to that of the industry or competitors, then it is likely that the employees may stay. These gaps are in terms of various benefits that the company is providing such as PTO, tuition fee, recognition of performance, special offs, and others. Major gap in salary range in both the companies can be found and this has concerned employees as it was found through focus group study. Medtronic is paying comparatively higher in all positions.

Increased, Reduced, or Stay the same

The work from home concern of the employees is one aspect that the company may have to keep the same because it actually depends on the possibilities. Not all job profile can be sent to do work from home, and the employees have to understand this aspect. Moreover, controlling employees in work from home becomes more tedious, particularly for the profiles where constant interactions are required (Baker et al, 2007). PTO is one aspect where the gap can be covered and matched with that of Medtronic. It is quite understandable that if Medtronic can afford longer PTO than why EP cannot. Another is tuition fees where the gap should be managed. Company wants employees to stay and grow within, but if employees cannot afford to study, then it is likely that they will run away. These two plans are where the increase is needed. Third is the salary gap where EP needs to fill the gaps because employees are noticing this aspect and it becomes a great reason of turnover. Salary gap of clinical manager can be kept the same due to negligible difference. The company can reduce the vision plan on areas such as vision exam, and prescription glasses. Performance recognition is the area where the company should focus more (Cacioppe, 2019). It may help motivate employees to work with enthusiasm (Andrew & Kent, 2017).

Affected Population

Quantitative analysis is defined as “methods assign numerical values to compensable factors that describe jobs, and these values are summed as an indicator of the overall value for the job. The relative worth of jobs is established by the magnitude of the overall numerical value for the jobs” (Martocchio, 2017). While Qualitative methods “evaluate entire jobs and typically compare jobs with each other or some general criteria. These criteria are usually vague (e.g., the importance of jobs to departmental effectiveness)” (Martocchio, 2017). Appendix (B) is showing the demographic characteristics of the employees and impact of proposed changes. We can see in Appendix (B) that most of the employees of Emerging Pharma fall under the 31-50 age bracket. Thus, the proposed changes of the leaves and family holiday will have a maximum impact on them. This is the demographics with the families. Similarly, changes such as flexible work from home will also allow them to spend more time with the family. The changes in the allowance for education will impact both 30 and 30-50 alike. Females can be benefitted with healthcare plan changes where they can include their spouse in that. 

There is a need for Emerging Pharma to understand that it is operating in an environment where there are many companies looking for the employees. Thus, if it does not benchmark  

 itself to the nearest competitors and the industry then it is very likely that employees will go to a place where they feel valued more. The compensation should not only be in the form of monetary values but also non-monetary such as recognition and appreciation. Many of the employees have reported that they feel that their efforts are not being recognized by their manager. These issues must also be addressed as part of a larger exercise to improve the reward system (Leary 2014).  

Conclusion

The Compensation system followed by the Emerging pharma is not catering to the wants and needs of the employees. Also, it is not aligned with the competitor’s reward system which is much more diverse and giving each employee an opportunity to grow and rewarded accordingly. Thus, as a Reward director, I would suggest that Emerging Pharma should introduce a variable compensation system, improve health benefits criteria, strengthen the pension plan, increase paid days off, set aside some amount for employee development and provide working remotely opportunities. Taking all these steps would improve employee satisfaction thereby productive will increase and in turn the revenue. At the same time cost wasted in maintaining the office space would be better utilized in the tuition fees.

References

Andrew, D. & Kent, A. (2017). The impact of perceived leadership behaviors on satisfaction, commitment, and motivation: An expansion of the multidimensional model of leadership. International Journal of Coaching Science, 1(1), 35-56. doi: https://www.researchgate.net/publication/304576363_The_impact_of_perceived_leadership_behaviors_on_satisfaction_commitment_and_motivation_An_expansion_of_the_multidimensional_model_of_leadership

Baker, E., Avery, G. C., & Crawford, J. D. (2007). Satisfaction and perceived productivity when professionals work from home. Research & Practice in Human Resource Management.

Cacioppe, R. (2019). Using team-individual reward and recognition strategies to drive organizational success. Leadership & Organization Development Journal, 20(6), 322-331. Doi: https://www.emerald.com/insight/content/doi/10.1108/01437739910292634/full/html

EP. (2018, July 17). Draft case for OL 620, Emerging pharmaceuticals and Medtronic comparison SNHU. https://learn.snhu.edu/content/enforced/397386-OL-620-Q4319-OL-TRAD-GR.20TW4/Course%20Documents/OL%20620%20Emerging%20Pharmaceuticals%20Case%20Study.pdf?_&d2lSessionVal=0XgJbZYji0hSNI6KmPgciZIFk&ou=397386 

Leary, R. M. (2014). Introduction to Behavioral Research Method (7th ed.). Hoboken, NJ: Pearson Education, Inc.

Martocchio, J. J. (2015). Strategic compensation: A human resource management approach (8th ed.). Upper Saddle River, NJ: Pearson Education, Inc.

Medtronic. (2018, July 17). Draft case for OL 620, Medtronic benefits information SNHU. https://learn.snhu.edu/content/enforced/397386-OL-620-Q4319-OL-TRAD- 

GR.20TW4/Course%20Documents/OL%20620%202018%20Medtronic%20Benefits.pdf?_&d2lSessionVal=0XgJbZYji0hSNI6KmPgciZIFk&ou=397386