How To Hire The Right People The First Time

© Jon Feingersh/Corbis The new CEO of a small private biotechnology company had failed to keep the board up-to-date on what was going on inside the company. What's more, the former drug company executive-turned CEO neglected some important aspects of the operation, such as business development. A key board member had to roll up his sleeves and do the "dirty work" of getting the CEO fired. "He was a poor communicator," says the board member, who requested anonymity. "It was just a bad fit." Having the wrong person in the right job can be an expensive mistake. It cost the company time, money, and extra effort to oust the problematic CEO and replace him with a better fit, the board member says. As the biotechnology sector grows, so do the stakes involved when it comes to hiring the right people. The US biotech workforce of about 220,000 has grown by 8% to 17% per year, and could top 1 million by 2015, according to A. Stephen Dahms, who chairs the Biotechnology Industry Organization's national biotechnology workforce committee. Making sure those new hires are the right people is critical to the success of biotech companies large and small. Currently 1,400 US biotechs have roughly 190 products, with another 400 "protoproducts" in pivotal late-stage development, says Dahms, who is also executive director of the California State University Program for Education and Research in Biotechnology. A third of those products are expected to win Food and Drug Administration approval, but the success or failure can depend on a staff that knows how to navigate regulatory approvals, oversee offshore facilities, and design clinical trials. "Trying to get people together with extensive experience is key, and that's not easy to do, particularly in obscure parts of the world like Tucson," jokes Rob Ashley, CEO and president of the AmpliMed Corporation, a 15-employee Tucson, Ariz., company that develops anticancer chemotherapeutic agents. "For the CEO side of the operation, the days of a guy coming out of Big Pharma and jumping into the CEO role in a company like mine are over," says Ashley. Companies instead need leaders who can talk to Wall Street about raising money, as well as tend to the everyday nitty-gritty of running the company, he says. As companies outsource more functions, they are increasingly looking for talented people who have management experience and people skills, in addition to technological skills. And to track down the right people, biotechs are increasingly likely to use behavioral interviewing techniques to figure out how job applicants cope with stress and solve problems. Trends such as globalization, the rise of proteomics, offshoring, and the cap on H-1B visas for skilled foreign workers are also affecting companies' talent searches. THE H-1B DILEMMA In the biotech workforce, about 19% of staffers have PhDs, 17% have Master's degrees, 50% have Bachelor degrees and the remaining 14% have vocational or community college training. Despite a "rich pipeline" of PhDs, Dahms predicts persistent shortfalls in certain job niches that tend to be filled by international workers with H-1B visas. Up to 8% of the US biotech workforce is composed of H-1B visa-holders, who are particularly sought after in applied research and development. "H-1Bs are still a continuing solution to the industry for specialized individuals with skills outside the general labor pool," Dahms says. Source: Ernst & Young Through a company application process, workers with unique skills not available in the existing labor pool can get permission to stay in the United States for as long as six years; they can then apply for permanent residency. Surveys show that 80% of H-1B visa holders graduated from US universities, 85% eventually acquire permanent residency in the United States, and H-1B visa holders are paid as much or more than their US counterparts. H-1B workers are "critical" to the success and global competitiveness of biotechs because "they match the biotech industry's most pressing needs," says Dahms. After September 11, 2001, the cap on most H-1B workers, which was temporarily increased to 195,000 in fiscal year 2001, was allowed to relapse to 65,000, the level in the mid-1990s. Legislation that went into effect in May 2005 has removed this year's cap to allow another 20,000 H-1B visa-holders with advanced degrees from US universities. But Dahms says even more are needed. "As the biotech workforce shifts out of research-boutique mode into commercialization, the skill sets of the H-1B visa-holders exactly overlap the most pressing needs of the industry, which are not in molecular biology, but in the applied and development sector," he says. H-1B visa-holders tend to have top-notch, cutting-edge technological know-how or skills a company can't get elsewhere, says Holly Butler, senior staffing consultant for discovery research at Genentech, the South San Francisco biotech giant with 8,000 employees company-wide. "I recently hired a senior director from Australia that had a dual skill-set I absolutely could not find anywhere else in the world," says Butler. The combo involved molecular diagnostics and research pathology. Genentech gets most of its H-1B visa holders from northern and central Europe, Australia, and occasionally China and Canada, says Butler. "This year, I hired a couple from Sweden, Germany, and Finland ... I've been watching this like a hawk, because I live in the visa world." THE SHIFT TO PROTEOMICS Also affecting companies' quest for talent, says Dahms, is the shift from genomics to proteomics. "Now that we know 21,000 to 24,000 genes, we have a million proteins to determine their function, structure, and when and where they're expressed," he says. "This is a shift into big-machine chemistry. This is the third coming of the chemists – analytical, separations, instrumentation, big instruments – the baton has been passed." In particular, medicinal organic chemists with broad training and an understanding of general biology are in demand, according to Bruce Seligman, founder, chair, and chief scientific officer of HTG, a Tucson-based maker of gene-expression assay technology for the life science industry. There's also a need for "scientists trained as molecular biologists and chemists – so, a cross-breed." Like many companies, HTG looks for talented workers who also have people skills and a network of contacts. "You're always looking for how people get along with one another and work on teams," says Seligman. "With the growth of outsourcing, there are a lot of potential subcontractors out there, and half the job is finding the right one. What we're trying to do is find people with experience who already know who the right people are. There's no question, relationships are very, very important, and relationships travel with the people." More biotech firms are looking for people with problem-solving skills, not just the purely technical skills, says Hussam Hamadeh, copresident of Vault.com, a New York City publisher of career information online and in print. "The technology is changing so quickly that just hiring somebody with expertise in one scientific process is not enough. What you want is a person who can adapt." One trend is the increased use of behavioral interviewing techniques, which can help determine how a job applicant will behave in groups, under stress, and when faced with a challenge, according to Hamadeh. For example, a vice president who recently interviewed at a big biotech company was asked not just specific scientific questions, but questions such as: Can you describe a situation where you had to hide your emotions in a business setting? "The implication being: When did you bite your tongue and go with the crowd instead of challenging? Or maybe you were too challenging?" Hamadeh explains. Inventor-Scientists At the Top More than 50% of biotech CEOs started out as scientists, estimates A. Stephen Dahms, who chairs the Biotechnology Industry Organization's national biotechnology work-force committee. Argeris Karabelas, a partner at Care Capital, a Princeton, NJ, investment firm, says inventor-scientists need more attention than other types of CEOs, as they sometimes run companies as if they were postdoctoral programs. "When you're trying to hire the best in the field, you can't manage them that way," he says. In addition, inventor-scientists may not have had experience in handling crises, which can be a daily occurrence for CEOs. Karabelas is currently working with three companies headed by founder-scientists. "I'm on the phone with them twice a week, because in all three cases, I'm chairman of the company, so I have sort of a mentor relationship," he says. "You need a strong board chairman who has time to work closely with them on things like hiring decisions, obvious strategic decisions, but even decisions on when to approach the FDA or what exactly to say to the FDA, because they haven't done this stuff." Hiring the right person for a leadership post is crucial, particularly in small companies, says Argeris Karabelas, a partner at Care Capital, a Princeton, NJ, investment firm. His company handled four initial public offerings of biotechs in the United States last year and another four outside the United States. The right leadership at the top will enable a small company to attract the best people. "Nobody wants to work for an idiot, and nobody wants to work for somebody who will not involve them in strategy. So you've got to be the right type of leader," he says. "VIRTUAL" COMPANIES HAVE DIFFERENT NEEDS Outsourcing is putting more pressure on top managers, too. For example, AmpliMed operates virtually, in that it contracts out the manufacturing of its drug, but it monitors clinical trials in-house and does its own regulatory work. "We're seeing an increasing number of people adopting the virtual development model, and their hiring needs are really quite different from staffing up a manufacturing facility or an analytical lab," says Ashley. "People are looking to hire experienced managers of projects, so rather than the people who do the work, they want people experienced with outsourcing, subcontracting, and managing people rather than being the doers." On the flip side, there's a drive to bring clinical monitoring in-house, he says. The typical small biotech company with a product close to clinical development would have people managing regulatory issues and clinical development, Ashley says. Companies need experienced clinical monitors. "Not data management – that's outsourced. Not statistics – that's outsourced." In addition, the trend towards offshoring is also picking up steam and affecting the job market. "We're hearing more and more about biotech companies outsourcing positions that used to be in the US," says Hamadeh, whose company surveys thousands of biotechs and other employers. "In order to save costs, we're seeing biotechs beginning to outsource positions, scientific and research positions. That's new." Hamadeh says the trend hit IT professionals four or five years ago and was slower to catch on in biotech because of the collaborative nature of scientific work. "It's definitely costing jobs. Two or three years ago, this was very rare," says Hamadeh. "Now, we're seeing roughly four to five percent of new hires in biotech are abroad – in everything. "Biotech, unlike computer software programming, tends be very collaborative, so it's a little harder to outsource to China or India, but the cost-savings are so compelling that you're starting to see outsourcing, and it's hurting the job market. If you're in the market to switch jobs, your competition is not just Americans, but other people making a third or a quarter of what you're paid. This year, we're seeing five percent of biotech-manufacturing being outsourced outside the US, as opposed to about two percent last year," says Hamadeh. Genentech has begun manufacturing some drugs in Spain at a lower cost, Hamadeh notes. A Genentech spokesperson, Robin Snyder, says the company's manufacturing plant in Porrina, Spain, makes the anti-angiogenesis drug Avastin, and the company has two other facilities located in the United States. The plant is located in Spain because of capacity needs, not in an effort to save money, says Snyder. SUPPLEMENTING US BIOTECH WORKFORCE The good news is that as biotech companies mature, the United States will also need more biotech manufacturing workers, Dahms says, which means "the industry in the next three to four years is perhaps going to double its manufacturing capacity. We're going to be shifting to more manufacturing in the US and globally." The US Department of Labor is setting up a national system to beef up the biotech-manufacturing workforce. For example, Sonia Wallman, director of Northeast Region Bio-Link, heads the New Hampshire Community Technical College biotechnology program in Portsmouth, where the federal government is getting its new national biomanufacturing apprenticeship system off the ground. Wallman says her center, the National Center for Expertise in Biomanufacturing, trains high school graduates who don't necessarily want to attend a four-year college in biomanufacturing. "We're totally unique," says Wallman. "We're filling a real need." US universities, industry, and the government need to focus on properly targeted biotech-workforce development programs of all kinds, especially in applied research and development, says Dahms. New partnerships between industry, academia, and the government, more internships, new degree programs, improved math and science teaching, and new biotech-workforce training centers would help. "Part of the problem is inadequate production of appropriately trained Americans by US institutions of higher learning," says Dahms. "There is a need for new programs of all kinds."

How To Hire The Right People The First Time

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Clare Kittredge

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July 2005

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