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Published on 4 July 2008

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Pharma worst for employee misunderstanding

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UK and US employees are costing businesses USD 37bn (EUR 23.5bn) every year because they do not fully understand their jobs, and the pharmaceuticals industry suffers more than any other sector.

This is according to a new white paper commissioned by Cognisco, the world’s leading intelligent employee assessment specialist.

USD 37 billion: counting the cost of employee misunderstanding reveals that the pharmaceutical industry has one of the highest potential costs of employee misunderstanding. When extrapolated to the whole sector, it found that UK pharmaceutical companies could lose USD 46.8 million (EUR 29.8m) each year.

The biggest impact of employee misunderstanding for pharmaceutical companies was unplanned downtime, with 37% reporting loss of business as a result.

One UK pharmaceutical company surveyed for the white paper learned an expensive lesson when “a procurement error resulted in significant production downtime. A dedicated production facility could not function without a chemical catalyst. This oversight left us with no option but to shut down production”.

Respondents from the sector also said their company was affected by poor procurement practice (18%); industrial tribunal settlements (17%) and personal injury (11%).

Mary Clarke, CEO of Cognisco, said: “The UK pharmaceutical sector is under increased pressure to remain competitive, from the threat of developing countries entering the UK market through to the NHS driving cost efficiencies and pushing down prices.

“The news that their bottom line is under further attack will not be welcome. However, the board of pharmaceutical companies can take action to reduce the cost of employee misunderstanding.”

The findings also highlighted that the real cost of employee misunderstanding may be even higher when costs such as impact on brand, reputation and customer satisfaction are taken into account.

Nine out of ten pharmaceutical companies said employee misunderstanding increased exposure to injuries to their personnel or the public, and loss of sales (96%) over the past 12 months. Plus, around 89% said they had been exposed to reduced productivity and 85% cited impaired reputation.

“An organisation’s greatest asset is its employees but if any one of them misunderstands or misinterprets their role, this significant asset can be easily eroded.” said Clarke. “This can have serious repercussions in the boardroom, ranging from loss of business to impaired reputation, as demonstrated by the response from the pharmaceutical companies surveyed for the white paper.”

Cognisco

Your comments: (Terms and conditions apply)

“Indeed it does. As the industry becomes more competitive, employee misunderstandings will have a greater impact on productivity and the reputation of the industry.” – Ainsley Brown, London, UK

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