GlaxoSmithKline Employees Fume Over Latest Round of Layoffs

GlaxoSmithKline is historically terrible at handling layoffs news, and the round of job cuts that appears imminent is no exception. (Update: the official announcement is coming on Wednesday.) As usual, the news is being debated all over the net before management has gotten out of bed (just like last time).

Let’s check GSK’s internal human resources intranet (often referred to as Café Pharma). One of the most fascinating and active posts is titled “An honest insider post, the REAL future at GSK…..” which was begun a year ago and has had 199 responses so far, continuing today. The original poster seems to be some sort of GSK-based Nostradamus. It begins:

I have had access to executive level discussions regarding the GSK layoffs. I am posting this information from an anonymous “business center” computer location. I won’t say anymore, except that my credibility is legitimate. I understand that rumor, speculation, and misinformation is running rampant right now through out the entire GSK organization. I feel that the lack of communication with our sales force regarding the true intentions of this company is regrettable. I personally know quite a few of the excellent employees of GSK that will be terminated.

It then goes on to describe in some detail an entirely plausible corporate strategy for layoffs — most of which has broadly come true in the last 12 months. Check this nugget:

So you ask, “Why not just lay every one off now?” There is a good answer. The GSK Senior Executives very closely studied the Pfizer layoff from last year. Do Executives from different companies talk with each other? Yes, they do. Pfizer management noted that after the layoff, a significant portion of the sales organization was demoralized. This resulted in many subsequent resignations as Pfizer sales people found new jobs on their own. This resulted in Pfizer not having to pay these people severance packages. The net: Pfizer saved a tremendous amount of money by having a layoff followed by enhanced attrition. GSK is planning the same situation.

The result is that with a steady drip of redundant employees leaving GSK sites all over the world, GSK now appears to be in a frenzy of job-cut gossip. Some believe the news is coming today. Here’s what another speculator thinks the new structure will look like:

Just found out from a friend in legal that we will no longer have an in house primary care sales force. We will have internal Vaccines, Oncology, HIV, Institutional, CNS Specialty, CV specialty, and Resp specialty sales forces. Some current reps will get rolled into these roles, but most will be laid off. We will then just contract out our primary care sales force since it is mostly sample drops and no access. Very little return on investment for primary care sales in todays market.

Another in the same thread adds:

Merck is doing it with products that are money makers, but nearing the end of their patent life. You do not need to ’sell’ these products typically…..but you need to have a gentle reminder for docs and some samples too. Even though this is the typical daily activity for a ‘professional’ rep, no use paying the extra salary, commission and benefits when you can just rent-a-rep for less. From a business standpoint, it makes total sense.

Lastly, here’s a rather sad commentary from a GSK veteran:

I have been with this company for 23 years, through all the mergers, etc. I have never seen morale like it currently is. Due to the lack of communication by management, sales people are spending most of their time talking with each other to find out info rather than selling what we have today. Managers certainly do not back their people anymore or fight for us with regards to raises, promotions, etc. I regret the young people in this business have not had the opportunity to feel the professionalism that this business used to represent. Yes, I am reminiscing…great memories. Let’s all hope the phone call on Wednesday is supportive, informational and upbeat. I am afraid it will not be.

Why is this happening? A number of reasons. GSK is shrinking the amount of drugs it expects to pass phase 3, which is bound to mean that fewer reps are needed. Tykerb’s use has been curbed in the UK, and the company found the drug is a little more risky than it first thought. Also, Alli was supposed to be a blockbuster but has turned out to be a dog.

The company’s net income is still generally down from its peak of $1.3 billion a quarter to the current $1 billion. If you do a little math, you’ll find that over that same period the effectiveness of the sales force went up from $3.39 earned for every dollar spent on marketing to $3.54, proving that you can, in fact, do more with less.

Not all GSK employees are taking it lying down. One team of reps is, allegedly, actively sabotaging the company’s sales:

I hope they wait a little longer. My entire pod has a policy now that since the goals are impossible anyway, we are each only working 2 hours a day just to grab a couple of sigs. We are hoping to continue this through the holiday season. The company has clearly waited so long tell us anything in hopes that we are all busting our ass to try and save our jobs. This thinking is, as usual, false. Our team is actively tanking our numbers in hopes of setting the bar so low, that once we come out of this we just start working again and look like heros. Sure one or two of us might get cut, but that decision has already been made and it no longer matters what we do now. This is just our little way of punishing GSK for their lack of transparency.

(See the comments section below: One reader claims he made the last post up.)