Laboratory layoffs continue although at a substantially slower pace. Currently lab layoffs are due largely to industry restructuring. Nobody likes layoffs. That includes lower and middle level lab managers. Conducting layoffs can be very stressful for lab managers as well as their staff members. Even those who keep their jobs can be impacted by “survivor’s syndrome,” which reduces their productivity and psychological well being. After summarizing the reasons for lab layoffs, we’ll discuss what managers can do to mitigate their harmful emotional effects on their staff members as well as on themselves.


Reasons for Layoffs


When you boil things down there are four reasons for layoffs. The first is to reduce corporate spending. Contrary to the philosophy that lasted until the early 1970s, R&D is often seen more as an expense than an investment in the future despite corporate rhetoric to the contrary. Financial analysts reward investors when companies “make their numbers” and have profits that meet or exceed expectations. Companies give top-level managers large bonuses for the same reason. So when sales are sluggish, as they have been in the recent recession, companies cut expenses to fatten profits. By far the largest expense associated with R&D is salary. So substantially reducing R&D costs means cutting staff members. (In a future blog, we’ll discuss cost-cutting alternatives to layoffs.)


Unfortunately even upper-level lab and R&D managers can do little to counter corporate pressures to cut R&D costs.


The second reason for layoffs is corporate changes of strategic direction that result in the abandonment of entire areas of R&D. This has occurred in the last few years in the pharmaceutical industry as various “big pharma” companies have abandoned large areas of therapeutic research and laid off so many of their laboratory staff that they have closed research centers employing 1,000 people or more.


The third reason is mergers and acquisitions. The largest have occurred in the pharmaceutical industry but some have occurred in the chemical industry as well. One of the largest is Dow Chemical’s acquisition of Rohm & Haas. These consolidations result in some duplication of effort (and personnel) in various operations including the combined R&D programs of both companies involved. To eliminate these duplications and produce cost-saving “synergies,” companies reduce laboratory staffs. The most dramatic staff reductions have occurred in the pharmaceutical industry. As noted above, these have resulted closure of entire large research centers.


The fourth reason for layoffs is lab staff members having out-of-date skill sets. This is the only area that lab managers can have a significant effect on by helping staff members improve their job security.


Out-of-date skill sets


Staff members who let their skill sets become out of date will both reduce their job security and increase their difficulty in finding a new job. Out-of-date skill sets occurs as technology develops in new directions and R&D is increasingly done in new ways. For example, in many companies, staff researchers spend less time at the bench and more time in team meetings and other communications activities. They spend more time in meetings with customers and suppliers. Staff members with marginal communications skills that might earlier have done well in their careers are now increasingly at a disadvantage.


Using project management to improve efficiency is increasingly necessary. This is true if you are to lead a team of researchers or even in the course of your own work, Staff members who look quizzically at their manager when she talks about milestones or the critical project path will receive little professional respect and are likely experience limited career advancement opportunities.  


Twenty years ago researchers who resisted the computer or were reluctant to master computer driven presentation software were common. Now it is virtually impossible to find such researchers. A combination of out-dated skills and retirement - often involuntary - have driven them out of the workplace. As my high school Latin teacher used to say, “You can lead a jackass to water but you can’t make him drink. Managers can push staff members to update their work skills but are often limited in what they can accomplish.