Why pharma needs a revolution in culture

James Dempsey breaks down the misconception that culture can’t be measured, and gives tips for how companies can implement a clear culture strategy.

In 2014, six years after the global financial crisis forced the world’s biggest financial institutions into some serious navel gazing, the CEO of a major international bank was despairing: “We’ve put in place a best-in-class compliance system, but we can’t stop our people acting badly. It’s killing us.” He was referring to his business’ share of misconduct related fines that, between 2009 and 2017, topped $342 billion across the US and Europe.

As we come up on a year and a half of the COVID-19 pandemic, with the global roll out of vaccines slowly gathering pace and big pharma riding high in the opinion charts, the biopharmaceutical sector would do well to learn lessons from the banks. As the sector looks to maintain its momentum, it must be wary that positive messaging and increased scrutiny does not end up as a recipe for a hard fall.

Critically, the risks of conduct related issues that weighed heavily on the reputation of pharmaceutical companies prior to COVID-19 have not gone away, for example the minimising of side effects, price manipulation, or healthcare system fraud amongst others. Moreover, fines levied for these activities, while not quite as hefty as those faced by the banks, nonetheless amounted to $50 billion from 2008 to 2018.

Compliance systems by themselves are not enough. One surprisingly simple reason for this is that people choose whether to follow rules or not. Of course, having rules is necessary. Telling people about them and encouraging, even incentivising, them to follow them is even better.

But experience from financial services to big tech shows that ‘formal’ systems are largely ineffective if all the other information that people receive in their day-to-day roles points in a different direction: how they see others behave; what behaviour (actually) gets recognised and rewarded; who gets a free pass for bad behaviour; who turns a blind eye; whether it is safe to challenge people in positions of authority. People make decisions based on what the organisation values, and this is not necessarily what the rules say, and often even less what the corporate website claims.

A related reason that compliance systems alone are insufficient is that while rules are often black and white, decisions rarely are. There is often room for charitable interpretations that confirm the favoured course of action. That is, until the regulator comes calling.

The shorthand for all these factors that come together to influence an individual at the point that they make a decision is ‘culture’. Culture can be hard to measure, but even harder to gauge accurately if you do not try: “I never thought we’d get the feedback we did,” says a senior executive at one professional services firm, “even though we see similar issues at a lot of our clients.”

But – for the biopharmaceutical companies – it is crucial to get a grip of culture now so that in six years’ time CEOs are not sat writing out more nine-figure cheques with their reputations back in the dirt and wondering what went wrong.

Understanding and measuring culture

One worry that often comes up is that culture is not something that can be assessed, measured, or quantified, and as such an organisation’s current culture cannot be clearly defined, and there is little hope of shaping what it will be in the future with any precision. This is not the case. And indeed, it is possible to set out some rules of thumb for how such an exercise should be achieved.

As a starting point, think of the high-level questions that a comprehensive assessment of culture should be able to answer. For example: Are people given appropriate responsibilities and held accountable for how they use them? Are people in the organisation capable of making informed decisions? Are people motivated to do the right thing?

Breaking down these questions can help identify the core themes or elements that establish a model of culture. Consider a theme of ‘authority’. This could, for example, cover the clarity and comprehensiveness of ownership for decisions within the organisation, the ability of people to challenge authority, and the openness of leadership to challenge.

Another theme could be ‘expectations’, covering the clarity of expectations on employees, the reasonableness of those expectations, and the consistency of leadership communication on conduct and behaviour.

Establishing a detailed understanding of culture in this systematic way provides the basis from which to identify quite specific capacities or behaviours that are expected of a good or healthy culture. And such specifics are susceptible to monitoring and measurement which can, amongst other things, form the basis for establishing quantitative metrics. This opens further possibilities for benchmarking between organisations, and for monitoring of progress over time.

With an approach to assessing culture defined, the final step is to put in place practical tools and methods to bring that approach to life. And the first thing to do is to look at the data you already have. Most organisations will have relevant datasets generated internally (such as employee satisfaction surveys) or externally (for example from websites like as Glassdoor). While in their original form they may not give great insight into culture, when properly mined and mapped onto a good model, they can be a great starting point.

Secondly, consider carefully what bespoke data you want to collect, and how it enables insights that will help you achieve your assessment aims. And thirdly, think about what insight you might be able to gain by connecting the culture data gathered in this way with other key data sets and indicators. Typically, a well thought out and executed set of culture metrics exhibits predictive connections to key business and compliance indicators, for example incidences of misconduct.

Thinking about this range of tools and methods that might be applied to culture assessment not only enables a well-rounded approach, but also one that is flexible and scalable – allowing everything from a small pilot exercise to a full-scale culture assessment.

Culture as a strategic foundation

Emerging evidence shows that over the course of the pandemic there has been divergent performance across the biopharmaceutical sector in the trajectory that cultures are taking. Analysis of sentiment on company culture submitted by employees to Glassdoor.com shows that the number of companies classified as 'culture champions' over this period was almost the same as those classified as 'at risk'.

Today, and for the immediate future, it is the big-ticket decisions by CEOs and Boards focused on continuing the admirable response to the COVID-19 pandemic that will continue to make the headlines and shape the narrative. But in the medium to long term the success of the sector – and whether it can grasp this opportunity to reshape its image – will be determined in large part by the conduct of individuals throughout those organisations. That is not something executive teams can control directly, or even indirectly through compliance programmes.

It is only by having a clear strategy for understanding, measuring, monitoring, and shaping cultures that consistent conduct that meets compliance requirements will be achieved. The best organisations will establish their culture as a strategic foundation that both informs, and enables the achievement of, their strategic goals. Indeed, some already are.

About the author

James Dempsey is a principal at Principia. James started his career at Accenture Consulting before returning to academia to complete a PhD in philosophy at the University of St Andrews, and a post-doctoral fellowship at the University of Warwick, where he also taught at Warwick Business School. His research has focused on responsibility in business organisations, and its connection to organisational culture.