Tagesanzeiger in an Interview with Erik Wirz
Erik Wirz in an interview with the Tagesanzeiger, Novartis Job cuts 2022
by: Isabel Strassheim
For many employees, the job cuts at Novartis are a blessing in disguise.
The 1,400 job losses in Switzerland may sound dramatic, but about half of them are executives who are likely to be able to negotiate higher salaries when they move to other pharmaceutical companies.
Novartis CEO Vasant Narasimhan has announced drastic job cuts.
One in three executive positions in Switzerland is filled by headhunters. When a company starts to wobble, they are usually the first to feel it. The job cuts officially announced by the pharmaceutical company were expected by many. Since last autumn, headhunters have seen an above-average number of Novartis managers contacting them to announce their intention to leave the company.
"We sensed this very early on," says headhunter Erik Wirz. However, Novartis is not experiencing an increase in employee turnover, which remains stable at around 7 percent.
At the end of 2021, reports emerged suggesting that Novartis CEO Vas Narasimhan was on shaky ground. At that time, some employees began to anticipate a new wave of job cuts. Job cuts are often a personal drama for those affected. They worry that they will not find a suitable position in the region and will have to take a pay cut or relocate.
For many Novartis managers, however, the situation is much better: if they leave the company, they are likely to receive a higher income in the forced relocation. The exact amount depends on their individual profile.
Novartis and Roche are the top companies in the Basel job market and, according to various insiders, offer the most attractive total packages. "If a top manager leaves Novartis for another company, he will demand a higher salary and a signing bonus," explains Wirz. Because top talent typically loses their long-term bonuses if they leave voluntarily, they want to compensate for that loss. Taking a base salary of 500,000 Swiss francs as an example, a long-term incentive of 150,000 Swiss francs or more is not uncommon.
It is only in the pharmaceutical industry that researchers are not attracted by high salaries, but rather by the laboratory equipment and the high-calibre composition of the team. While managers and employees in the pharmaceutical industry emphasise the importance of meaningful work, as in other industries, corporate culture has become an increasingly important criterion for young professionals when looking for a job. Novartis and Roche, in particular, have made significant changes in this regard in recent years. Researchers in particular value the scientific reputation of their team. For other employees in the pharmaceutical industry, however, the level of income is usually the decisive criterion. According to one manager, successful and meaningful work is indeed reflected in the salary.
The recently announced mass layoffs at Novartis do not affect research staff, but rather administrative and marketing positions. The company is merging divisions, and about half of the announced cuts are targeted at managers. Cancer medicines will be marketed together with other prescription medicines. In addition, manufacturing and administrative functions will be merged. This will result in the elimination of a number of middle management positions in addition to the reduction of salaried positions. In total, Novartis plans to reduce its workforce by 1 400 positions in Switzerland and 8 000 positions worldwide over the next three years. A separate social plan will be negotiated for managers.
Non-executive employees in finance and accounting who lose their jobs at Novartis will enter the regular labour market. They may have to accept a reduction in salary when they leave the pharmaceutical industry.
It's a different story for pharmaceutical executives, who are in high demand in Basel. And this is a feast for headhunters.
"Of course, we always have a need for qualified personnel in all areas of the company," says Roche spokeswoman Nina Mählitz. The income level depends on the job profile and cannot be answered categorically.
Start-ups see the Novartis job cuts as an opportunity. Headhunters are also being hired by venture capitalists to find executives for start-ups. Top talent usually prefers the two Basel-based pharmaceutical giants because of the compensation. Assuming a theoretical base salary of 200,000 to 500,000 Swiss francs, there can be additional monetary benefits of 10 to 15 percent - such as pension plans, company cars, Swiss rail passes, lump-sum expenses, shares, fitness memberships, participation in training and sabbaticals. For the pension plan, there can be a so-called "Belle Etage" solution, where the employer pays up to twice the required contribution.
Start-ups, on the other hand, can only offer stock options and the prospect of rising share prices. There is also the issue of corporate culture, which is different in start-ups. Headhunter Wirz says: "Now they have a chance to score with top pharma people, because the Novartis cuts are causing a lot of movement in the market.
