Talent Management strategies are vitally important to understand and implement for companies that want to be successful and stay in business. Looking back over time there are numerous articles and plenty of data on the reason companies fail including an inability to raise capital, poor business planning, hiring the wrong people, poor pricing strategies, legal or compliance issues, not understanding the market landscape they are entering, and certainly, in the age of the Metaverse, those that don’t value data. Then on the other side, what are the traits of those most likely to succeed? Financial savvy is important, a clear mission and strong vision, dynamic leadership, empowered employees, strong innovation, and the ability to adapt have proven to be key metrics.
Don’t most of the other reasons come back to leadership in the end? What is the Right or Wrong Talent? Leadership IQ’s Mark Murphy shares in his book “Hiring for Attitude” that only 11% of mishires were considered bad hires because the candidate did not have the actual talent that they were hired to perform. The other 89% were due to low emotional intelligence, not being coachable, poor temperament (they did not play nice in the sandbox with their toys), and low motivation. Wow! That is remarkable. How important is it to hire talent that has the minimal technical skill required but additionally with high emotional intelligence, critical thinking skills, that like other people, and have a personal Why that matches the company, Mission?
While three large PBM’s make up 80% of the market share, there are over sixty smaller up and coming PBM’s and the global PBM market is projected to grow from 2022 to $740 billion by 2029 (a 50% increase), according to a Fortune Business Insights projection. The challenges for finding and hiring the right talent will impact PMB’s like every industry.
In a 2024 ASG Pharmacy article on recruitment trends, they noted the role of pharmacists were expanding to include clinical applications like chronic disease care and medication therapy management. With staff shortages, the reliance on technicians is causing an increased need for additional training and increased demand for tele pharmacy. These trends have caused challenges hiring pharmacists with a broader range of skills, hiring more technicians that want to grow, burnout due to increased workloads, and increase the overall competition for talent. Potential Pareto Principle amplifier, anyone? This makes compensation, benefits, and professional development a core focus of the talent in the marketplace. Those that hire for culture with a focus on strong soft skills and emotional intelligence will decrease AVT and have fewer wasted resources by investing in their employees.
Most leaders in business have heard the infamous Jack Welsh of GE share his perspective that companies spend more on the cost of mishires annually than their corporate taxes. The higher the level of responsibility in an organization, the more impact a mishire has relevant to opportunity cost and wasted resources. Replacing open positions is another challenge and, the more critical the position, the more companies spend on recruitment resources whether they use internal, external, or a combination of both to find, attract, and manage the process. Onboarding costs and training are substantial and significant relevant to wasted resources if the hire does not work out. In the Medical world, the issues are more pronounced because the cost of recruitment and training are higher while the retention rates are lower than other industries.
Annual Voluntary Turnover is a vitally important statistic to evaluate internally at a company because it helps as a comparison to overall retention rates while sharing other important data points that companies can use to bolster their talent management QMS. Within AVT, companies can consider company data versus different functional areas, leadership reviews, training, specifics of talent attraction, annual reviews, how long the person was at the company, and other relevant data points to help decrease AVT. Annual Voluntary Turnover has generally averaged 25% across all industries.
When it comes to PBM’s, the data around what candidates are looking for will directly impact the marketplace due to supply and demand. According to an article by Forrester in January of 2024, pharmacy benefits can play a significant role in recruiting talent and retention rates.
79% of employees stated pharmacy benefits were critical to consider before accepting a job and 74% stated it would impact if they stayed at the company.
66% of employees additionally stated that they were looking for improvements and better coverage in areas like fertility, diabetes, and weight loss.
72% of those surveyed said they felt healthier overall due to their benefits and 80% stated medications were more affordable with their PMB.
60% of employees preferred having a single pharmacy benefits provider to make the process easier and more user-friendly.
As important as hiring for culture is, Career Ladders, Leadership Training, a consistent message from the Top down on Mission/Vision, and Opportunities to grow a career horizontally, as well as vertically, are important if you want to keep your top Pareto Principle Amplifiers instead of losing them to other opportunities. Think about the data that a McKinsey study from 2023 showed; 95% of an organization’s value comes from the top 5% of the company! Incredible! Discount the power of the Pareto Principle at your own risk.
Too often, those leaving relevant to AVT are not the stakeholders you want to lose and can take longer to replace with higher costs.
The Top 4 reasons for AVT:
Immediate Leader
Do not Feel Appreciated
Doing Work for a Sustained period they do not want to do and/or did not Expect
They felt it was the only Option to Grow Their Career
The critical question every company should be asking internally is this: “If the QMS for your products and/or services you provide matched the QMS for your talent management processes, would that be a good thing or a bad thing? The data shows that too often it would not be a positive thing!
As important as mishires and wasted resources are, they may not be the most important risks. The cost of mishires are amplified significantly when considering risk management for warning letters, recalls, and industry fines. In the Medtech industry FDA warning letters average $5 Million per letter and annually account for over $6 Billion in fines to the industry. As one Chief Medical Officer told me this past month relevant to hiring for top talent, “It’s amazing that companies won’t pay for top talent to get it right the first time, but they are more than willing to waste resources doing the same project twice.” A few of the top ten reasons for PBM fines from regulatory audits are missing information on transfer orders, refilling a prescription too early, missing signature approvals, and failure to provide requested information prior to an audit. In the world of the PBM, as the desire for improved pharmacy benefits with greater efficiency escalates and with no sign of the labor shortage issues decreasing any time soon, talent management strategies will play a key role in success or failure.
The bottom line is If you do talent management transactionally, expect to get transactional results.
