The constant ups and downs of the biotech and pharmaceutical industries can make keeping an innovative and contented staff difficult. In the current recession, each and every manager has to make the tough decisions about who gets cut and who gets to stay. This overall sense of insecurity makes for some very difficult team-building issues.

In this issue's column, I'll address the subject of how a manager deals with the human Resources matters that impact him or her during stressful economic times. Despite the difficulties, it is possible for a manager to keep a team together.

The Current Market

I recently asked a friend in a major bio/pharma marketplace what the trends look like for the next year. Mark D. Dibner, Ph.D., president of BioAbility, has always proven to me to be an excellent forecaster for the ups and downs of this industry. He describes the current atmosphere as guarded, with the potential for more layoffs, mergers and acquisitions.

Dr. Dibner's company, a consulting firm that develops strategic business information about biotechnology, is headquartered in Research Triangle Park, NC - a location that has seen a fair amount of upheaval in what has historically been a very strong region.

"There is no doubt that the current economic climate will fuel additional layoffs, mergers and acquisitions," he forecasts, "but unlike in the past, these will be fueled by the financial fragility of some companies and bargain hunting by others."(For most of us, working in a small company that looks like a "bargain" is just as dangerous to one's career as being in a big company that has announced layoffs.)

When asked about the consequences of this bargain hunting, Dr. Dibner indicated that more downsizing will result. He's already seen a lot of really good employees on the street and says that this recession will lead to new opportunities - and challenges - for the manager who will be charged with strengthening the company's ability to survive at the same time as doing good science.

"Steering a strong team through a difficult period is a tough job . . . much more difficult when, as in some cases, you are asked to pare down to the best potential staff. The challenge for most will be managing the most important resource of their companies, the human capital," he said.

Three Guidelines

Another acquaintance, a senior officer of a small biotech company, has been through some of these rough waters personally. He's come away with excellent experience that adds value to his own résumé - he guided his employer through severe layoffs, found another firm with a common interest, and pulled them together as a joined entity rather than as competing businesses.

"We're all engaged in R&D and need huge amounts of capital," he told me. "In fact, there are only two ways to get that money. For one, you can go to the equity market and sell stock to pay those bills. Or, you can look for complimentary partnerships where both parties have technology that fits together and where there is a synergy in the combination."

This fellow went through some gut-wrenching H/R issues in the process: "In a merger like this, or in any scenario where a company must cut back dramatically, there is a great effort to focus only upon vital projects; this leaves some people whose skills are no longer a fit. Project prioritization must take place, and this means that the manager must pick the best people possible to manage these."

When asked about what he might do differently and what lessons he learned along the way, he suggested the following guidelines for a manager faced with similar challenges:

Don't hold back on the first cuts. Time does nothing but hurt your company's progress and everyone involved, employees and management. As soon as you know that a staff reduction will be necessary, do everything that you can to move this along. Get it done.

Assemble the new team quickly. The period right after a merger or layoff is critical because this is the time when trust needs to develop. The only thing that can build trust between staff is to have these newly organized employees meet face-to-face as soon as possible. Personal interactions must occur quickly in order to break down the natural mistrust that builds up through the weeks or months of anticipation.

Get a clear delineation on project responsibility. Get the "who does what" question settled soon for each project so that there is no confusion about new roles in the organization.

"We lost some good people and learned a few lessons," my contact told me after the process was completed. He believes his company emerged stronger as a result, but regrets the time spent "contemplating" layoffs before they actually occurred.

"That's when many of our best people left," he told me.

Motivating a Reorganized Team with Incentives

It's easy to lose good people, even in the best of times. The difficulty is pulling them back together after a period of layoffs . . . scientists and engineers feel they are doing creative work, as opposed to assembling widgets. They need to feel that they are being given the opportunity to use their unique skills and particular gifts. And as a result it is certainly not only salary that will hold them together.

Salary is mighty important in making the decision to take a job, but it isn't the reason that people stay. (You'd be surprised how fast your newly reorganized team would fall apart if you did nothing other than offer them an 8% salary bump.) Instead, the major motivators after a period of turbulence are recognition amongst peers, the challenge of the work itself, responsibility, advancement and personal growth. These are the keys to "satisfaction-based" reward systems that work better than salary at holding people together after a layoff.

Read over my seven key screening factors below as you consider any incentive programs your company may implement to revitalize your affected teams:

Availability: To what extent are your rewards available to everyone across the board? Not all programs have to be applicable to the entire company, but where will the cut-off point be? How will those below that cut-off point feel about it? Are there enough awards to be meaningful?

Performance Contingent: To what extent are your rewards tied to the performance of the individual or team? The more performance-contingent your rewards are, the harder that creative employees will work toward meeting goals. You magnify the result when you tie the positive outcome as directly as possible to some desired behavior.

Timeliness: Will the recipient recognize the tie, or will it be separated by weeks or months before recognition? (An example of what not to do is the congratulation at the holiday dinner for a team performance that took place 10 months earlier).

Durability: After a layoff, the best rewards must induce behavioral change instead of just a short-term spurt in your team's performance. To what extent will the reward continue to act as a motivator over time? Your reward programs can get stale very quickly.

Reversibility: Examine how you are rewarding your team and ask yourself, "What would happen if we took this away?" Sometimes rewards have to go away in order to be appreciated.

Visibility: In what manner is the reward best given? Visibility adds a measure of prestige to the reward that is usually more important to the recipient than the reward itself. Too much visibility in a sensitive situation, however, can act as a de-motivator for the others on the same team.

Shared Values: Do your reward programs reinforce or contradict the shared values of your team? Perhaps your team of scientists are praised and rewarded for any risk-taking, creative act that results in progress. On the other hand, every time it comes to promote someone into a supervisory or management position, the company chooses the exact opposite sort of individual. This is an obvious contradiction in values.

Everyone running a project in a company that has had layoffs has the responsibility for bringing the reorganized team back together, producing more with less total resources. Incentive programs are just one piece of the manager's arsenal in order to get this accomplished.

The Down Side of the Roller Coaster

In any recessionary employment marketplace, there are always downsizing firms, as well as companies that are going through dramatic periods of growth. One thing remains constant through it all: No matter what your current position or whether you are in a biotechnology startup or big pharma, you will agree that we live in exciting times.

David G. Jensen is the founder and chief executive officer of CTI Executive Search, a unit of CareerTrax Inc. (Sedona, AZ). CTI is a leading recruiting firm in the biosciences. You can reach Dave at (928) 282-5366.