As CEO of a Contract Development and Manufacturing Organization (CDMO), I make it my business to know what my clients like and don’t like about CDMOs. So it was with great interest that I read a 2013 survey by Avoca which said that the most common complaint by sponsors of their outsourcing partners was that they were under-resourced and the staffs lacked adequate training, experience and qualifications.
The same probably applies to CDMOs. There’s a reason so many CDMOs have this problem. It’s the nature of the business. For most CDMOs, it’s feast or famine. You can’t stockpile work like the way Joseph stockpiled grain in the Book of Genesis for seven years of famine. Clients come to you because they need work done—now.
Your organization must be flexible. Like thermal contraction, a CDMO should expand to meet the circumstances, then contract again, without losing integrity in either state. This is where a lot of CDMOs fail their sponsors. They expand by taking on a whole lot of untrained part-time staff—it’s the CDMO equivalent of hiring those guys that hang outside of your local hardware store on Monday morning and bringing them in for a few days. No sponsor should accept this. An organization is only as good as its weakest link; it only takes a single mistake to spoil a batch.
As a contract development and manufacturing company, Xcelience has always employed a flexible workforce, but since we moved into clinical supplies packaging and logistics three years ago, we have had to take our elasticity to the bungee-cord level. Sponsors come to us precisely because we are small and flexible; our size gives us the agility to produce small to rapidly evolving timelines. Sometimes when we take on projects though, we may look a bit like a snake swallowing a mouse.
To be able to smoothly process these large projects without creating a weak link, we have had to completely rethink our culture at Xcelience. We have become what the Irish management guru Charles Handy refers to as a Shamrock Organization.
The Shamrock Organization
In the Shamrock Organization, each leaf of the organization refers to a type of employee. One leaf of the organization refers to the core of full time employees. These are the professionals, technicians and managers who define your core competence. When Xcelience was created in 2004, we were a one-leaf organization.
As we grew, we needed more expertise, but we didn’t always need it forty hours a week, 52 weeks a year. We added the next leaf, which is made up of self-employed professionals or technicians who are paid on a project-by-project basis. Many are consultants. They are paid in feed for results, rather than in salary for time. They often telecommute, receive no benefits, and the worker carries the risk of insecurity, though higher pay usually compensates.
The third leaf is the one that becomes central to our strategy recently, and that is our contingent work force. Your contingent workforce is very much tied to the external demand for the company’s services. There is no career track for these employees, and they perform fairly routine jobs. They are accustomed to short periods of employment and often longer periods of unemployment, and are paid by the hour, day or week.
Here’s the central point: All three leaves in the shamrock are integral to Xcelience. Inside the organization, we are all very clear on who is a core professional, who is a consultant, and who is contingent. But to the client, there is no difference. Xcelience’s reputation hangs on the performance of all three leaves. Not just the core. Most CDMOs focus only on the full time employee, while largely ignoring the others. That’s where the mistakes begin.
At Xcelience, we have categorized two types of contingents. The first we refer to as temps, though I think this is a bit of a misnomer. When you think of a temp you think of someone who may work for an organization for a few weeks or months and never return. Our temps are a single, stable group of employees who operate on something more like flex-time, returning to our workplace for project after project. They are well integrated into our organization. Even though their employment is temporary every time we hire them, we know them well.
We bring our temps in three months before the bolus of work is coming. During those three months, we train them extensively outside of any actual work on batches. When the real work comes, we work them in, in small numbers, sprinkled in with our core employees. They are never left amongst themselves. Then, after each shift, they are debriefed by the team leaders on things to improve. This process works so well that last month when we asked a client’s man-in-plant to spot the temps, he was unable to tell the difference. I consider our temps good candidates for full-time employment at Xcelience, though many of them prefer the flexibility of temporary work.
Then we have our reservists. Much like the armed reserves, they are on call as needed. They will be called upon to work weekends, nights, and odd days. They must stay completely up-to-date on their training. We keep their names on a training schedule and call them when a new job arrives. They are always mixed in with experienced Xcelience employees.
Because of the training requirement, they tend to be the same people time after time. I credit this pool of reliable, trained and available reservists to our location in Tampa, Florida. We use a lot of snowbirds, retirees, and other who have come to Florida for a work/life balance that offers plenty of free time. They want to work, the camaraderie, loyalty and attachment that comes with a single employer, without the commitment of a longer contract. I don’t think it would be possible to develop such a consistent, well-trained cadre of reservists in California or the Northeast, where the workforce is more transient.
In some cases, as in Xcelience, there can be a fourth leaf, which turns Handy’s shamrock into a four leaf clover. This fourth leaf includes those outside employees who draw salary from another company, and yet have thoroughly integrated themselves into our organization. Think of the people who sell mobile phones at Costco. At Xcelience, integrated business partners have been integral to our growth.
I’ll give you an example. Let’s say you decide that in order to bid effectively for a particular project you need a new software technology. Building that technology could take months, but the contract will be awarded next month. If you contract with a known supplier, there’s a chance you could make it happen in two afternoon meetings and a conference call. The software technicians become a part of your organization, sitting in on project meetings and are, in the client’s eyes, as much a part of your company as any other employee.
Becoming a truly flexible organization requires much more than just hiring and training a more flexible workforce. Over the past few years, our management team has adopted a radical shift in mindset. Becoming truly flexible makes you rethink every aspect of how you run things, from HR policy, to open-concept furnishings (you can’t make a cubicle for every temp and reservist), to company incentives and social activities. Should your temps and reservists be invited to the company bowling party? Should they be eligible for bonuses?
The CDMO that hires temps in front of your local hardware store is not a flexible organization, and that approach is destined to disappoint sponsors. The truly flexible organization is a single, elastic unit, able to expand and contract without sacrificing quality or integrity. It takes a major cultural shift within the organization to make that happen, but the outcome is an organization that is more adaptable, responsive and more cost efficient. It also creates a workforce that offers a variety of employment opportunities, including potentially fulfilling options for employees who seek a more flexible work/life balance.
Derek G. Hennecke is President and CEO of Xcelience, a CDMO in formulation development and clinical packaging and logistics located in Tampa, FL. Mr. Hennecke launched Xcelience as a management buyout in 2006. Prior to starting Xcelience, Derek worked as Vice President and General Manager of MDS Pharma Services, overseeing the pharmaceutical and biopharmaceuticals business in the Seattle and Montreal-based plant.