Those Merck Layoffs Are Imminent For Some
14 CommentsBy Ed Silverman // September 19th, 2011 // 8:25 am
A few weeks ago, Merck disclosed plans to trim another 12,000 to 13,000 jobs by the end of 2015 in order to save up to $1.5 billion. This is on top of previously announced cuts (see here) although efforts to reduce headcount are forcing managers to accelerate their plans.
In a memo written the other day, Merck’s US Market president Mark Timney informs staffers that cutting expenses by eliminating vacant positions, by itself, just isn’t sufficient to meet targets. And so a handful of departments should brace for layoffs that will be decided by the end of next month. These include Marketing & Customer Solutions; Managed Markets & Policy; Strategy & Commercial Model Innovation; and the Neuropsychiatric and Women’s Healthcare specialty sales teams. These are located in Merck’s CIA-like headquarters in rural New Jersey. Volunteers, by the way, are encouraged to ‘hand raise’ if a package seems appealing.
This is hardly surprising, given the extent of the planned job cuts that Merck envisions over the next few years. The goal is to bring total headcount much closer to levels that existed before Schering-Plough was acquired; at the time, Merck employed about 53,000 people. As of the end of June, Merck employed about 91,000 people worldwide. Nonetheless, the move is certain to further undermine morale and his approach is prompting some criticism that Merck is being disingenuous about expressing concern for its employees. Here is the memo…
Mark Timney, President US Market
TO: All US Market Colleagues (HQ & Field)
DATE: September 15, 2011
SUBJECT: Update on Ongoing Changes to the US Market’s Business Operations
Dear Colleagues:
Merck is facing enormous challenges. The external environment is tougher than ever, with an unprecedented pace of change that continues to accelerate. Critical to Merck’s need to transform is our ability to fundamentally change how we operate our business, including managing resources differently and reducing our expense base. We must challenge and prioritize every single investment choice to ensure that we are nimble, flexible and streamlined as we drive profitable growth.
The US Market is taking additional steps to accelerate plans to manage our expense base, in part because our current vacancy management approach is not allowing us to reach expense targets quickly enough. In the coming weeks, we will restructure the following select HQ functions and field groups within the US Market: Marketing & Customer Solutions; Managed Markets & Policy; Strategy & Commercial Model Innovation; and the Neuropsychiatric and Women’s Healthcare specialty sales teams. Effective immediately, we will also increase the use of vacancy management by removing more open positions across the entire US Market organization. These necessary actions are part of and consistent with the important role we play in GHH’s contribution toward Merck’s overall transformation and, as I have stated previously, we cannot promise the avoidance of such activities.
We will move quickly in order to minimize disruption for customers, our business and employees. The restructuring exercise within the select areas will be completed and affected employees will be informed by the end of October 2011. Employee selection decisions will follow established company processes. We will also offer the opportunity for employees in the aforementioned select areas to proactively “hand raise” and be considered for separation.
Over the past few years, the US Market has made significant reductions in our organization. However, the unfortunate reality is that we must do more and move now if Merck is to be successful over the long term. Making difficult choices in select functions, based on an assessment of the business risks and opportunities identified within each area, will allow us to transform our business and capitalize on the most significant market opportunities in 2012 and beyond. In fact, we all must commit to challenging the status quo and be willing to make fundamentally different choices than in the past.
The Path Ahead
I know how difficult this is for our organization, particularly the people who are directly affected. Though this exercise affects select groups within the US Market, I’ve always committed to you that I will be transparent and open, and keep everyone up to date on important actions within our business. That is why I am sending this message to all colleagues within the US Market. I will continue to keep you updated as appropriate.
The US Market remains committed to growing our business over the long term and achieving our 15×15 goal in line with our values and standards. Our strategy, which remains unchanged, reinforces the need for us to change our underlying operations and enables our ability to grow. We will continue to sharpen our core business focus and invest in growth opportunities that optimize value for patients, customers and shareholders.
The US Market is a high-performing and resilient organization. I know that I can depend on you to continue to make leading contributions to Merck’s long-term success and to helping our customers help their patients be well.
Searching2000
Ed:
You can learn something new everyday on the Pharmalot. This catch phrase was new to me:
“We will also offer the opportunity for employees in the aforementioned select areas to proactively “hand raise” and be considered for separation.”
I wonder what form of the English language “hand raise” that represents? American, British, Orwellian? Or perhaps it is a way to counter the old saw - “Never volunteer?”
original industry insider
Searching, the Orwellian definition of “hand raising” means that if you raise your hand first you will be provided with a broadsword to decapitate your fellow employee so that you can keep your job. As applied in 2011, the definition means that if you volunteer to be severed (figuratively, not literally) first then you will receive greater severance benefits than if you wait until the stern of the good ship Merck sinks beneath the waves.
Searching2000
oii:
Are you perhaps implying that this style of management is …. real? OMG!!
http://dilbert.com/2011-09-11/
You're Pfizered
I love the term ‘restructuring exercise’.
original industry insider
If you’re an EU employee the last thing you want to hear is that you’ve been made “redundant”. I thought redundant was limited to certain phrases, such as “general consensus” and to people with anomalous sigmoid colons, but also applies to people.
Having been on the planning side of these things a few times, here’re how management classifies employees for purpose of upcoming layoffs: 1) the overly eager. These are people who jump ship too early, losing out on potential severance benefits, thus saving the company money; 2) those who leave at “the right time”, which would include the hand raisers; 3) those who wait too long, become redundant and get pink-slipped. Though the proportions of employees in the three groups vary among companies and the type of benefits package, the phenomenon of these three groups is quite reproducible over time, although with the economy tanking there are fewer chances to jump ship, and hence more employees are waiting to the bitter end.
Asset Tag 0455869
I wonder how many jobs they are cutting in China and/or India.
original industry insider
Asset, Merck is actively hiring in emerging markets to offset layoffs in the the US and EU.
http://money.cnn.com/galleries/2011/news/economy/1108/gallery.china_jobs_american_companies/5.html
company insider
Pfizer would not let the Wyeth reps even volunteer. THey either took them or did not take them, most they did not take.
Vet Rep
The people affected by the “restructuring exercise” are the victims of extraordinary incompetent management. This “condition” is rampant throughout the pharma industry. There are so, so many people in upper management that are so far in over their heads, that it’s frightening! Now, the rank-and-file must pay for these idiots poor decisions.
C. Cheddar
Not lost in this announcement is that most of the employees in these 2 specialty divisions are former Organon and Schering Plough people. Merck would love to get rid of all of them if they could and protect legacy Merck employees. JMO.
mrwhippy
When you want to become the Wal-Mart of the pharmaceutical industry you don’t want those high paid workers in such locations as commercial development, research or quality.
After thinking Merck is not even going for Wal-Mart, they are too successful K-Mart may be the better example.
Even if you are a “hand raiser” there is no guarantee they will take those people. Thus disenfranchising twice as many employees. But keep working hard and don’t stop until the axe chops your head off….
yet Merck management keeps scratching their head as to why employee satisfaction surveys come back poor. Even though they tie the survey to merit increases.
mrwhippy
The layoffs are happening as I write this 9/21/2011 was told they wanted them completed by the end of Sept for some locations.
Son of Sam
Employees are considered troublesome and increasingly unnecessary as contract workers will do the same work without benefits. These “restructuring exercises” at Merck and everywhere else will result in mobile workforces cycling through one company after another.
original industry insider
Son is correct. In the future there will be no more full time equivalent employees. Strategic planning will be done on a project by project basis, thus if you are an experienced project manager you may keep yoour job. A quota of contractors will be hired specific to that project and they will receive no fringe benefits. Their term of service will expire at the end of the contract. There will be no more temp to perm as their used to be with 1099 employees.