Reskilling employees to address talent gaps can help a company retain the bulk of its operations workers and empower them to take advantage of a new world.

n a world experiencing unprecedented technological change, have pharma operations been left behind or are they participating in the radical advances? Some might argue that the industry has been stagnant, with little transformative change over the past 50-plus years: a tablet-compression machine today looks a lot like one from the 1950s, microbiologists and chemists run many lab tests in the same old ways, and the industry continues to face challenges in using data to draw meaningful insights. However, we believe there is ample evidence that it is changing dramatically.

The unprecedented pace and scale of technological disruption brought on by the fourth industrial revolution is affecting the operations function across all industries. Manufacturers are introducing advanced technologies, automating and digitizing processes, and applying advanced analytics to data. Pharma is also facing its own disruptions—for example, new business models (such as direct-to-customer sales and personalized medicine) and new product modalities (for instance, cell and gene therapy).

These macro trends are generating major shifts in the skills the operations workforce must have and forcing companies and their employees to accept new ways of working. Occupational profiles are changing too: some jobs are disappearing as a result of automation while entirely new jobs are emerging. Even now, an estimated 50 percent of existing work activities in the pharmaceutical- and medical-manufacturing industry could be automated. In ten years, more than 90,000 jobs could disappear, while a different set of 90,000 to 120,000 jobs may be created.¹ Over the next decade, pharma executives expect an annual increase of 27 percent in the percentage of roles affected.

Such changes, which affect not only the supply and demand of labor but also job profiles, often lead to public tensions. Yet they could have a positive impact on patients, employees, and manufacturers. Across industries, technological shifts promise more efficient and effective operations; for example, labor markets can use digital talent platforms to match workers with jobs. Technology also creates new jobs and income possibilities—although demand for manual and physical labor is decreasing, demand for socioemotional and technological skills is growing. In pharma specifically, the new industry models aim to improve the patient experience and outcomes.

Pharma companies have been slow to address talent gaps

The most significant disruptors in pharma operations have been and will continue to be new product modalities (such as cell and gene therapy), digitization, and advanced analytics. These disruptors have already created a skill mismatch in more than 80 percent of pharma-manufacturing companies. Executives perceive only a fraction—10 percent—of the impact of disruption that frontline employees say they are experiencing firsthand (see sidebar “About the study”). In fact, more than half of all frontline workers already feel the impact of this disruption on their roles, and an additional 25 percent expect their roles to be affected within five years. But few executives anticipate such an extensive impact.

Digitization is already reducing the amount of manual data entry, a change that improves both the data and fact-based decision making. This development has been especially beneficial for managers and people in expert roles, such as engineers and scientists, though the benefits have not yet cascaded down to shop-floor employees. Even so, the job satisfaction of frontline workers remains high, and more than 70 percent have positive expectations about the changes to come

Pharma companies struggle to predict where they will see the talent gaps these disruptions create, though a majority monitor key trends and track talent needs. Only a minority of companies (40 percent) believe that they really know which skills are needed now, let alone in ten years (less than 25 percent). Although demand for social and emotional skills is projected to increase by one-third in the next ten years,² pharma operations executives do not yet see these skills as a priority. Frontline workers, on the other hand, do rank social and emotional skills (for instance, comfort with change and continuous learning) as critical for success. Other skills frontline employees consistently cite as important are advanced data analysis, critical thinking, and decision making (Exhibit 2). The good news is that these are relatively coachable skills, and companies could address them through targeted reskilling programs.

While almost all companies have or are developing strategies to deal with industry disruptions, less than 40 percent have scaled-up solutions; the majority are stalled in “pilot purgatory.” Pharma is not alone in experiencing the challenges of scaling up; other operations-intensive industries report a similar degree of difficulty shifting from pilots to broad adoption. In a focus group, executives also indicated that early-stage strategies typically emphasize enabling technologies and use cases, not the talent or people aspects required to support such strategies.

Although all companies regard the talent gaps as a priority, current efforts at most of them may be missing the mark. To transform how work is done, a company must go beyond status-quo training programs by implementing innovative approaches to managing its workers’ transition to new skills. Early leaders in addressing talent gaps have created tailored, cross-functional centers of excellence to reskill workers.

Companies are turning primarily to traditional methods, such as hiring or partnering, to fill the gaps. However, while pharma has historically appealed to new talent, the industry now faces more competition from tech companies and start-ups.

Demand for data analysts, data scientists, and data engineers is expected to be four times higher than supply, so hiring is a less effective strategy.

Still, only one-third of the companies surveyed have launched reskilling efforts. Even these companies have covered fewer than 10 percent of the workforce and invested less than $5 million each. These levels are far below those of companies like Amazon and AT&T, which have invested $5,000 to $30,000 per reskilled employee.

Multiple challenges face reskilling programs, such as balancing their demands with those of the rest of the business (cited by half of the respondents), scaling up, and uncertainty about which skills are needed. Furthermore, focus groups with executives confirmed that new-product launches often take priority (in attention and investment) over operational improvements. That of course adds to the challenge of making the necessary investments in reskilling.

Challenges aside, it is important for pharma executives to be aware that their frontline workers are eager to learn new skills but need organizational and management support to do so. Further, these employees are motivated more by intrinsic factors (such as doing the job well or self-improvement) than by extrinsic ones (for instance, better job security or additional employment opportunities). That is useful information for designers of reskilling programs.

Reskilling programs need a boost to move forward

Research by the World Economic Forum Lighthouses project indicates that organizations must prepare the workforce for this transition, retool their educational systems, and invest in training and lifelong learning to create a mobile workforce that can benefit from the opportunities the fourth industrial revolution has been creating. That will help not only workers but also companies, since a shortage of skills is the most frequent barrier that prevents the scaling up of technologies.⁴

Early technology adopters (within the first five to seven years) have a significant advantage over laggards, so a properly skilled workforce is even more critical to ensure that companies can achieve these large-scale advantages.⁵

Companies can use a three-phased approach to address the skills gap: scout, shape, and shift.

• Scouting means determining the skills required to achieve the future vision and identifying the gaps between demand and supply. Most pharma companies report being in this phase—a critical step before scaling up.
• Shaping is designing the program architecture to close the demand–supply gap.
• Shifting refers to scaling up and rolling out the infrastructure to hire, reskill, or upskill people across the organization.

Exhibit 3 highlights the ten key steps of the scout–shape–shift approach, which organizations should take to design and deploy reskilling and upskilling programs.

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1. Scout

In this initial phase, the predominant activities are identifying roles that will generate the most value, evaluating the gaps between the demand for and the supply of talent, and deciding how to fill those gaps. A survey showed that manufacturing and quality roles warrant the initial focus in pharma operations. The priority skills and mindsets identified include advanced data analysis; comfort with change, adaptability, and continuous learning; and critical thinking and decision making.

2. Shape

Instead of conducting reskilling programs in a vacuum, companies should tie them to their overall business and digital strategies. There is already evidence that companies are reskilling the workforce, and the pace of these efforts is increasing (see sidebar “Reskilling in other industries”). Historically, the global reskilling rate has been approximately 1.4 percent of employees a year. In the future, it is expected nearly to double, to 2.7 percent. Within pharma, executives expect to increase the number of workers reskilled by two or three times, rapidly scaling up the initial efforts.

3. Shift

Companies have found creative ways to deploy a workforce in transition. One good practice to follow is establishing a central unit (such as a talent-transition hub) to manage the workforce transformation. This central group has three primary management responsibilities:

• project-based deployment: facilitating the deployment of underutilized employees in time-bound assignments to apply existing and new skill sets
• role transitions: matching displaced talent with open skill-adjacent positions and transferring talent with skills in high demand to unfilled critical positions in the organization
• skill development: identifying the highest-priority critical skills for the future and closing organizational skill gaps by matching people with formal learning journeys and on-the-job training

To remain competitive, it is critical for pharma companies to address their workforce skill gaps by ensuring that their employees have the skills required to operate and benefit from digital technologies and increased automation. This imperative is also driven by corporate social responsibility. If the degree of automation in pharma operations reaches projected levels, some roles of the current workforce could become obsolete. Addressing the gaps by reskilling employees can make it possible to retain most of them and empower them to take advantage of the new digital world. Companies that succeed will be rewarded with a win–win outcome: maintaining their business advantage while also fulfilling their obligations to current and future employees.

Source: https://www.mckinsey.com/industries/life-sciences/our-insights/pharma-operations-creating-the-workforce-of-the-future