
The Bureau of Labor Statistics announced that U.S. employment fell by a less than expected 247,000 jobs in July – obviously good news. But its even better for those of us in the medical device industry… (Read Full Report at http://www.bls.gov/news.release/empsit.htm)
After studying the unemployment report issued this morning, I wanted to share some thoughts on the prospects for medical device hiring for 2010-2011.
UNEMPLOYMENT FOR COLLEGE GRADS is 4.7%
Best news of all – total unemployment among degreed professionals with a Bachelors or higher is 4.7%. While it doesn’t speak specifically to advanced degrees, my anecdotal data tells me that Masters or higher status unemployment may be a hair less. (Remind me to send this to my kids…- and yes, Lauren, I’ll pay for law school….).
HEALTHCARE HIRES GROW BY ANOTHER 20,000
The derivative allocated to Healthcare showed an increased by +20,000 in July, which is about the average monthly gain for the first half of this year but down from an average monthly increase of 30,000 during 2008. Keep in mind that “Healthcare” includes data from SIC codes attributable to clinical, acute and long-term care are other sub-segments and that data (best I can tell) for the SIC codes we are most associated with from our recruiting practice (the 38XX codes) fall into manufacturing in some cases.
NEW GRADS SKEW JULY FIGURES A BIT…. BUT….
And while the unemployment rate for management, business, and financial operation occupations (non specific to medical, of course), remained relatively steady at 4.7 for degreed professionals, the unemployment rate for other professional and related occupations, however, jumped from 5.1 to 6 percent after a similarly sized jump last month, most likely the result of new graduates entering the still stagnant job market..
MINIMUM WAGE JUST ROSE: WHY THIS MATTERS TO YOU
While this doesn’t directly affect our level of candidate and clients, effective July 24, the U.S. minimum wage increased from $6.55 an hour to $7.25 an hour with economists estimating that it will impact 2.8 million workers earning between the current federal minimum wage and the new standard. However, the 2.8 million figure doesn’t account for the millions of workers whose wages are tied to the minimum standard and may also go up in a “trickle up” effect.
WHAT I’M HEARING FROM SENIOR EXECUTIVES IN MEDICAL DEVICE
The conversations I’m having with our clients in the past few weeks are vastly different from even Q1, especially in light of the July 5, 2009 study released that indicated that a full 54% of U.S. said they are likely to look for new jobs once the economy rebounds. WOW. This blows me away – but mirrors the conversations I’m having with Mid to Senior level people EVERY DAY. I guess companies will be saving on “gold watch purchases….”
HIGH DEMAND FOR QA/RA/CA
Last year, 71% of our hires were on the “Commercial” side (Sales/ Marketing/Product Management/Operations, etc). This year, as we just closed out our 1H of 2009 – it is nearly directly inverse. I’m still quantifying exact ratio, but about 4/5 of our hires this year, so far, have been on the Pre-Commercial side: R&D, all aspects of engineering, QA (very strong) RA and more and more clinical affairs.
HOWEVER, our upcoming assignments for Q4 look increasingly like a tilt back to commercial hires.
MARKETING AND SALES ARE PICKING UP .. BUT..
As a salesman for JNJ 20++ years ago, I remember the then President saying to a company-wide gathering of top salespeople “You are the only department in the company that BRINGS revenue to the table, so you will always be compensated fairly.”
Things of changed in many ways – and companies are now increasingly deriving revenue from other sources. For instance, Service Revenue is growing appreciably, and one senior level executive from a Fortune 100 medical capital equipment company told me just this morning that Service accounted for 44% of revenue in FY 2009 just ended.
That said, judging from the surge of calls from exhausted salespeople covering twice the territory they used to with half the clinical and technical support, sales hires will again be a strong component of 2010-2011 hiring. (Incidentally, the “I’m overworked but happy to be employed refrain is one that I hear at all levels).
.COMPANIES ARE RAISING THE BAR ON MARKETING HIRES TO INCLUDE “NEW MEDIA”In terms of marketing there has been a strong uptick in requests for resumes of marketing professionals with formal marketing training AND those who have served in a consumer marketing company like P&G or Coca Cola or in a consulting company like BCG or Bain. The rationale seems to be that social media marketing is creeping into healthcare in insipid ways – and that a pedigree MBA or MSME/EE with 3 years at Dell or Microsoft or Target early in his/her career and knowledge of how to move the needle strategically will impact revenues. For the most part, I agree. The “medical marketing experience only” factor seems to be quieting for more senior level Marketing hires as companies are looking to expand their knowledge base. Just today, Biomet announced an “outsider” as the new President of 3i – Maggie Anderson – who has an engineering degree and ten years with General Motors as well as a Consulting/VC background. Top talent transcends industries.
THE ‘OBAMA-CARE” FACTOR IS STARTING TO RISE – plus a new wrinkle….
One of President Obama’s growing initiatives includes passing healthcare legislation that would reform our current system. I’m not sure what to think of this – but I have a pending assignment for a Business Development / Clinical Marketing position with a new criteria I’ve not seen before: “3+ years in a consulting, lobbyist, public policy or government affairs function….” Wow. Can’t wait to get started on this one…
DOJ, INCREASED REGULATION AND LESS TOLERANCE FOR “GRAY” ETHICS
Boy. Conventions and Trade Shows aren’t as fun as they used to be. At AAOS this year, one of my friends from Smith & Nephew commented that entertaining surgeons was like “curfew check at a Catholic Girls School : One minute past 5:00 and you were in deep trouble.” (I loved that phrase!). Today (August 7, 2009) it was Stryker’s turn in the hot seat with another subpoena from NJ seeking information on the financial interests and arrangements of the physicians participating in clinical trials. Medtronic and JNJ got hit this week, too. I had a very talented Product Management executive get fired over a comment made in a public forum by a surgeon who went “off script” and former Synthes colleagues facing significant legal matters. Our clients are asking more and more for “clean” candidates in senior level positions – and they are less concerned about college infractions than more recent actions that could result in stiff fines. It’s a whole new world out there.
TURNOVER IN MEDICAL DEVICE
There were lots of 10-Qs and earnings calls this week. I listened to several of the earnings calls and reviewed the reports in our sector and found that “employee retention” for FY 2011-2012 is a topic on lots of Executive Compensation Committees’ agenda.
Did you know that, on average, it costs a company 130% of an employee’s salary to replace them? That number goes up if the employee leaving has significant company knowledge or possesses a unique and/or rare skill set.
RETENTION IS BECOMING MORE OF A CONCERN FOR 2011-2012
The Hansen Medical 10-Q filed yesterday was among those who made mention of employee retention” as a component of earnings for the near future.. Page 39 of the filing said: “…in the third quarter of 2008, the first quarter of 2009 and in July 2009, we reduced our work force. This may make it more difficult to retain and attract the qualified personnel required, placing a significant strain on our management. Accordingly, retaining such personnel and recruiting necessary new employees in the future will be critical to our success. There is intense competition from other companies and research and academic institutions for qualified personnel in the areas of our activities. If we fail to identify, attract, retain and motivate these highly skilled personnel, we may be unable to continue our development and commercialization activities.”
Has the tide turned? Maybe. Is there still alot of head-count pressure on medical device firms (especially in big-ticket capital equipment driven companies). Yes. Have we seen the bottom? Who knows – but I do know that my conversations are just starting to change in complexion and tone. It’s an early indicator. But I observed first hand that the most of the truly great companies used this recessionary period to peel off a lot of non performers – and several super stars were caught up in consolidation and cost-cutting measures. And great people will ALWAYS be in demand. ALWAYS.
Best Regards,
Paula Rutledge