Innovative products, and the research and development teams that produce them, are the lifeblood of firms in many industries. But leaders of the world´s largest and most successful high-tech, pharmaceutical, and consumer product companies confirm that R&D professionals are some of the most challenging to manage.

They are unusual in several respects:

• They have a high level of education and a scientific mindset.

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• They strongly identify with their scientific discipline.

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• They may be torn between scientific imperatives and corporate goals.

This article details the key areas in which R&D employees´ opinions differ substantially from those of employees across all other job functions and the implications of those differences for managing this group. The findings are based on the aggregated results of employee opinion surveys conducted by ISR on behalf of its client companies.

Looking Down on Senior Management
U.S. national norm data show that most employees have a more favorable view of their immediate supervisor than they do of company senior management. Only 57 percent of employees say they have confidence in decisions made by senior management, and less than half believe top management is doing a good job in such key areas as stating objectives clearly, establishing priorities, making decisions promptly, and providing leadership.

This tendency to rate supervisors more positively than upper management is substantially more pronounced for R&D employees. Compared with those in the U.S. national norm, employees in the U.S. R&D norm hold significantly less favorable opinions regarding the competence of senior managers and significantly more favorable opinions of supervisors. The reason: R&D employees tend to believe that only those with whom they interact daily and who have similar training and experience-their supervisors-can truly understand the unique nature of their jobs. They tend to respect R&D supervisors in particular, given that they are often principal investigators (PIs) on important projects and are often considered thought leaders in their field. It is not that R&D employees have an inherent dislike for senior management but that they generally value technical expertise over managerial ability.

The implication of those findings is that immediate supervisor input and direction are needed to effectively manage researchers, and that managing through directives from "on high" is likely to be ineffective. What is apt to work better is leveraging the positive PI-employee relationship by including PIs visibly in companywide initiatives.

Supervisors Suspect, Too
Both R&D employees and those in the U.S. national norm are hard on their supervisors. Only 68 percent of employees in both groups agree with the statement, "My supervisor manages people well." For the R&D group, a common complaint is that researchers are often promoted to supervisory positions based on their scientific accomplishments regardless of their people skills. A recent survey of an R&D facility with more than 5,000 employees reinforces that view. "Leading/inspiring people" and "dealing with people" topped the list of things those employees said their supervisors need to improve.

To address that issue, companies can provide training in people skills to current R&D supervisors and, even more important, reconsider the weight given to such skills when making promotion decisions. They could also give potential thought leaders opportunities early in their career that will prepare them to lead technical teams later on.

The Empowerment Equation
A second area in which R&D employees differ dramatically from others is empowerment. On two empowerment questions, for example, a smaller percentage of R&D employees report they believe management trusts the judgment of people at their level (-8) and believe their company has a culture that allows people to challenge traditional ways of doing things (-7).

Most R&D employees are trained in highly empowering environments, such as a university, where the emphasis is on the quality of one´s ideas and one´s judgment is respected. In the corporate world researchers find that standards around marketability and profit potential are used to evaluate their contribution. One researcher commented: "Resources are not allocated based on scientific merit but rather by the whims of senior management. This company will never be successful unless lab heads and division heads are empowered to allocate resources."

Thus, R&D managers may need to work harder than other managers to help their employees feel empowered. That may include taking time to explain the important risk-reward contingencies that guide research in a for-profit environment and the relative value of scientific versus business contributions. Managers can also benefit from listening to researchers´ perspectives. Scientists may see long-term market potential in areas management overlooks. Formally designating a minimum amount of researchers´ time for exploration into areas with less obvious near-term market potential may both enhance researchers´ feeling of empowerment and lead to discoveries with large market potential.

Appraising Innovators
For any manager, providing a high-quality performance review is extremely challenging. On all three performance-review questions, R&D employees score even lower than other employees by a margin of at least five points. That is not surprising, given that many performance systems require that reviews be scored to fit forced-ranking schemes or performance quotas. Receiving a poor review in a forced-ranking system is particularly galling for people who, having advanced degrees, consider themselves highly qualified. They may also bristle at the irony that many companies claim to hire only "the best of the best," then rely on an evaluation system that requires 50 percent of employees to be labeled as "in need of improvement." An additional drawback in R&D settings is that employees see forced-ranking systems as fostering a competitive work environment, whereas they see a collegial environment as key to innovation.

Of course, work within the R&D function may be fundamentally more difficult to assess. In many industries, commercially applicable breakthroughs may be few and far between and related to employee performance in a complicated way. Much R&D work is also done by small teams, which can be especially challenging to appraise. Furthermore, because much R&D work is highly specialized, some senior-level managers may have no real understanding of how to evaluate performance in the employee´s area. One scientist commented: "Upper management should have little or no input into job evaluations since they really don´t have any idea what an R&D employee does every day." Clearly, the involvement of senior-level managers in an individual´s review arises from the need to compare and adjust reviews across separate departments to maintain fairness throughout the company.

This problem is not easily solved. The use of standard measurement instruments across different R&D departments or projects, as well as more frequent measurements, will help make adjustments to ratings based on senior management review less necessary. Including peer evaluations in performance reviews, in the form of 360- or 180-degree surveys, can also help to increase review quality and combat the researchers´ criticism that "people who don´t understand what I do are evaluating me." It is clear that companies should expend more effort designing and implementing employee reviews, and those charged with completing R&D performance reviews need more training.

Employment Uncertainty
Sixty-three percent of U.S. employees say they can be sure of having a job with their current company as long as they perform well. For employees within the R&D function, that percentage drops 20 points, to 43 percent. That is not surprising. Several large companies that collectively employ thousands of researchers, including Lucent Technologies, Agilent, Hewlett-Packard, and Xerox, have initiated hiring freezes and large-scale layoffs in recent years. Federal funding for basic research has also been scaled back. More generally, researchers know that because R&D expenditures are viewed by senior management as discretionary and longer term, they can be easily cut "this year" without any immediate measurable impact.

The more concerned employees are about being laid off, the more probable it is they may embark on a "defensive" job search and, consequently, the less time and energy they will devote to discovering the "next big thing" for their current employer. Reassuring R&D employees of their job security is difficult, especially in the current economy. As always, honest and frequent communication is the best remedy.

Overall Satisfaction
In overall satisfaction, R&D employees resemble the broader U.S. national employee population. A similar percentage of R&D employees say their work gives them a sense of personal accomplishment and that they would recommend their company as a good place to work. For many scientists, research is a calling and a central component of their identity. The strength of that connection may offset R&D employees´ lower perceptions of management and empowerment, creating a degree of job satisfaction comparable to that of the average employee. Another contributing factor in overall satisfaction may be the opportunity cost of working elsewhere: corporate America typically offers the most sophisticated equipment and resources, as well as better pay than is offered by universities.

Thus, while addressing the areas in need of improvement, it´s important that managers avoid compromising the strongest components of the bond between R&D employee and the company. The key is to determine the aspects of the working environment that R&D employees value and to preserve those as much as possible. Companies can gather that information by talking with employees, conducting in-depth interviews, focus groups, or employee opinion surveys tailored to the R&D environment. Managers who supervise their companies´ innovators would do well to begin to build a framework to engage, excite, and retain this very important population. For the many companies whose competitive edge depends on the output of R&D professionals, that is a critical task.

ISR Benchmarks
Since 1974, ISR has surveyed more than 35 million employees in more than 2,500 organizations, creating a series of employee opinion norms, or benchmarks, that statistically represent a particular population. Each year ISR updates its U.S. national norm, which comprises U.S. employee data across all job functions from a diverse range of companies and industries. The data in that norm have been statistically weighted so that the benchmark is representative of the opinions of the broader U.S. workforce. In addition to that nationwide norm, ISR maintains norms comprising data gathered from employees in particular job functions, levels, industries, and geographic regions. The U.S. R&D norm, comprising information from employees in R&D functions across various industries, is one of these specialized norms.

The U.S. national norm currently consists of employee responses from 72 companies, and the R&D norm subset consists of employee responses from 21 companies. All are weighted to be representative of the industry and company-size mix that exists each year in the U.S. economy.

Copyright notice: Reprinted with permission from Pharmaceutical Executive, August 2003 pp.50-58. Pharmaceutical Executive is a copyrighted publication of Advanstar Communications Inc. All rights reserved.