Biotech's R&D Talent Opportunity
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[This post was originally published on Forbes.com on April 6, 2015]
When it comes to hiring, Pharma’s woes are a boon for biotechs. With the fallout from M&A and changes in corporate strategy, experienced R&D hires are flooding the market, especially in hubs like Boston.
But this is no time for biotechs to get complacent about HR – especially when it comes to filling mid-level R&D positions. It's notoriously hard to attract and retain top performers at these levels, and even with an apparent supply glut, biotechs need to devote serious, senior-level effort if they want to nab the best talent for these key roles.
And make no mistake – these mid-level R&D roles are key for biotechs’ success. Once a biotech hits 20-40 people or so, the CEO and CSO can’t both lead the company and manage day-to-day R&D execution, as much as they may want to. Lab techs, junior scientists, and newly-minted medical directors need too much oversight to provide leverage – so the key is to hire some experienced R&D lieutenants to fill the gap.
But that’s easier said than done – which forces many biotechs to choose between two unappealing options. More tenured Pharma researchers may be more comfortable providing “strategic input” and attending meetings than actually rolling up their sleeves to revise the preclinical experimental plan, critique the latest data, or keep tabs on the clinical CRO. But go too junior, and you’ll get execution muscle without judgment, experience, confidence, or independence.
And even if you find the perfect R&D “leader-doer”, it can be hard to recruit him or her to a biotech. A typical mid-career medical director with six years of Pharma R&D experience, for example, spent up to 10 years in clinical and scientific training previously – and Pharma’s cash-rich “golden handcuffs” can exert a powerful pull when there are mouths to feed and bills to pay. Even when these folks are displaced, many strive to remain in Pharma and keep the salary and (apparent) security to which they’ve become accustomed.
What's a biotech to do? For starters, understand that “span of control” is the key motivator for mid-level R&D folks coming from Pharma. They crave the independence to make decisions without constant oversight and "death by teleconference" – which is one thing a biotech can offer that no Pharma can match. This means that senior biotech R&D execs have to be ready and willing to cede some control to new mid-level players – because that’s the price to pay to get leverage from someone who’s good enough that you’d want to hire them. Get the span of control right, and you’ll have experienced R&D folks lined up around the block to trade in their Pharma ID badges.
Equally importantly, biotechs also need to nail the compensation package for mid-level hires. At the highest and lowest rungs of a biotech, an equity-based “lottery ticket” can be a great motivator and attraction. But many mid-level R&D folks join biotechs mainly for the organization and culture, not financial upside – and, as noted previously, equity in lieu of cash can actually be a major impediment to making a move. (This is a particular challenge in biotech compared with, say, the tech industry, where many “mid-level” hires are still in their late 20s, and don't yet have such significant financial responsibilities.) It can be hard to match Pharma’s bloated cash compensation, but the closer biotechs can come to making the take-home pay more equivalent, the bigger pool of top talent they’ll access.
Finally, biotechs need to maintain relentlessly high standards for R&D hires. The best mid-level folks in Pharma have worked with plenty of mediocre deadweights – and if they smell them in a biotech, they’re not going to join (or stay for long). Hire the wrong R&D VP – who’s either too senior to be hands-on, or too junior to lead effectively – and you’ll be far less likely to recruit top performers to fill out the rest of the lineup. And in the current climate, there’s not just a surplus of talent, but also a surfeit of second-rate players, which raises the risk of a senior-level hiring misstep.
Overall, biotechs can learn a lot about recruiting and retaining mid-level R&D hires from the tech world. With the fierce competition for talent in tech, young companies have long recognized that success often depends more on their hiring practices and organizational structure than their engineering mojo. In fact, the table of contents of The Hard Thing About Hard Things, venture capitalist Ben Horowitz’s engaging guide to running and growing small tech firms, reads like an HR handbook for managing key mid-level technical personnel (“Why startups should train their people,” “Titles and promotions,” etc.). Horowitz’s book sends a clear message that’s been embraced in the tech industry: the “hardest thing” about running and growing an early-stage company is building and sustaining the middle of the R&D organization. Biotechs that take that message to heart have a golden opportunity to capitalize on the current upheaval in Pharma, build high-functioning organizations, and catch up with or surpass many well-funded competitors. Let’s hope they don’t squander it.