Consulting Project Genentech Inc PDF

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COVID-19 Pandemic Response: Genentech, Inc Case Study Assessment of Employee Engagement and Its Impact on Financial Sustainability August 8, 2021

Developed by Team Four Consulting, LLC

Developed for Genentech, Inc

Table of Contents

Executive Summary Introduction Analysis of Problem Key Issue 1: Communication Key Issue 2: Employee Engagement Key Issue 3: Training Employees Key Issue 4: Diversity Recommendations Conclusion

Executive Summary

Genentech is a biotechnology company creating new medicines and therapies for serious or lifethreatening diseases (Genentech, 2021a). In response to the COVID-19 pandemic the key leadership issue Genentech struggles with is adaptability to the needs of the employees during the pandemic and the company’s financial obligation. The key leadership issues identified were 1.) communication and transparency of strategic plan 2.) sustaining employee engagement after transferring to a work-from-home environment 3.) actualization of diversity and inclusion initiatives and 4.) employee personal and professional growth training. Widely differing governmental responses among nations and local regions to the COVID19 pandemic caused abrupt changes in work locations for many employees. Despite the leadership acknowledging the employees’ increased stress levels, the communication of resources were not readily available (Burks, 2020). Work-from-home (WFH) employees are subject to higher rate of burnout causing employee disengagement, causing upwards of $550 billion per year (Harter, 2021). COVID-19 pandemic has also highlighted the ongoing social and racial injustice of public health(Centers for Disease Control and Prevention, 2021). Genentech’s current workforce consists of only nine percent African American and four percent Hispanic (Genentech, 2021b). To mitigate employee stress, we recommend Genentech to create a communication plan for crisis situations detailing key strategies and processes. To address the disengagement of WFH employees, it is recommended to build and expand a centralized employee assistance program using the current employee wellness resources to provide social support and wellness guidance to all employees, including full-time WFH. To address current gaps in diversity and inclusion, a diversity and inclusion seminar is encouraged as part of employee orientation. To develop employee professional growth on an individual basis, it is recommended for employees to create a long-term professional development plan and work with managers to support professional goals. Introduction

Genentech is a biotechnology company creating new medicines and therapies for serious or lifethreatening diseases (Genentech, 2021a). In response to the COVID-19 pandemic the key leadership issue Genentech struggles with is adaptability to the needs of the employees during the pandemic and the company’s financial obligation. According to Fortune, Genentech rank, 72 in the “100 Best Companies to Work For” (Fortune, 2020). As global economies have been severely impacted by the COVID-19 pandemic, companies are pressured to provide resources for employee health management as well as maintaining shareholder interests (i.e. dividend payments). Company boards had to make difficult decisions when choosing how to pay dividends amidst uncertainty in cash flows and volatile market valuations (Paine, 2020). In 2019, 78% of American employees live paycheck to paycheck (The American Institute of Stress, 2019). Impacts of the world-wide pandemic increased the number of hindrance stressors employees, including Genentech employees, face on a daily basis. Amidst unprecedented economic and health fluctuations, Genentech is one of a multitude of companies struggling with balancing employee satisfaction and corporate fiduciary responsibility. In 2020, Genentech eliminated nearly 500 jobs last year as part of its own restructuring. The company could eliminate an additional 300 to 400 jobs (LaHucik, 2021). With a smaller workforce, potential layoffs, and various WFH plans (i.e. full-time, part-time, or none), employees are faced with increased challenges to maintain high levels of communication over various platforms to coordinate and translate information. Miscommunication was a factor in approximately 70-80% of all accidents in the last 20 years (Bauer & Erdogan, 2018). Using principles on communication, as well as data provided by Genentech, communication was analyzed to help foster transparency and trust among Genentech’s workforce. Genentech issued WFH orders before such orders were enforced (Burks, 2020). Full-time WFH employees often have higher rates of burnout and disengagement. Employee disengagement can cost

companies an average of $3,400 for every $10,000 the disengaged employee is paid, or 34% of the employee’s salary (Borysenko, 2019). Disengagement can also impede advancement in growth, existence, and relatedness, based on the ERG theory (Bauer & Erdogan, 2018). Genentech employs approximately 13,500 employees with an average salary of $115,000 per year (PayScale, 2021). If 50% of the employee base is categorized as full-time WFH, Genentech is losing $279.5 million per year. The cost of 300 employees at $115,000 per year is $34.5 million, approximately 12% of the cost of disengaged employees per year. Using principles of motivation and current data, this report analyzes employee disengagement and offers recommendations to ensure employee well-being and engagement. COVID-19 pandemic has also highlighted the ongoing social and racial injustice of public health(Centers for Disease Control and Prevention, 2021). Genentech has published its 2020 Diversity and Inclusion Report, in which it outlines specific goals to achieve by 2025. Genentech’s current workforce is comprised of only nine percent African American and four percent Hispanic (Genentech, 2021b). The proportion of bachelor’s degrees in science awarded to African American graduates remained flat at about 9% from 2001 to 2016 based on data from the National Science Foundation (Newsome, 2021). The current trends in minority representation in STEM could pose an issue for employee recruitment and retention. Based on the Acquired-Needs Theory, employees with a dominant need for affiliation could potentially become less motivated if they do not feel comfortable with the company’s racial and ethnic composition (Bauer & Erdogan, 2018). Using current data on diversity and ethnicity, this report analyzes diversity and inclusion and offers recommendations to ensure racial and ethnic diversity composition and retention.

While Genentech cannot control the employee’s feeling towards work, work environments can influence employee engagement and retention. Employee turnover costs approximately $600billion in 2018 and increases each year. Nearly 33% of the turnover was attributed to unsupportive management and a lack of development opportunities (Rogers, 2020). Genentech is a centralized and flat organization. Decisionmaking authority is made at the top of the organization. The span of control is wider with more employees

competing for the attention of their supervisor(Bauer & Erdogan, 2018). With limited time to engage with employees, professional growth is not nurtured on a one-to-one level. Genentech does not provide an easily accessible centralized employee portal to address professional growth. Using principles of designing motivational work environments, this report analyzes diversity and inclusion and offers recommendations to ensure racial and ethnic diversity composition and retention.

Communication: Coordination, Transmission, Feelings and Emotions Communication from organizational leaders is vital in order to coordinate employee actions and achieve goals. (Book) A lack of communication and transparency from organization’s leaders can create a detrimental work environment and affect the organization’s performance. Genentech struggled to communicate with its employees during the on-set of Covid-19. Communication is defined by the process by which information is exchanged between individuals through a common system of symbols, signs, or behavior. (Book) Genentech saw the impact of the lack of communication to its employees during Covid-19 pandemic and had to create new methods to connect to engage virtual and in person employees. Genentech and many organizations in the were in a unique position during the Covid-19 outbreak as many of the organization’s employees are deemed essential workers, some of these essential workers continued to report into the physical locations while others began to work virtually. “Communication fulfills three functions within organizations, including coordination, transmission of information, and sharing emotions and feelings.” (Book) Genentech struggled with three functions of communication, and we believe there are additional ways for Genentech to continue to improve their communication specifically in crisis situations. Coordination of Communication:

Many organizations have struggled with the best way to communicate with employees in the quickly changing information and environment during the Covid-19 pandemic. Poor communication from an organization’s leadership can cost money and waste time. (Book) Good communication increases a company’s market value and ongoing communication internally will result in more satisfied employees. (Book) Genentech’s lack of coordination of communication during a time of confusion may have affected the organization's performance. Transmission of Information: The transmission of information at Genentech changed with the Covid-19 pandemic. Many of their previous communications were in person settings. Genentech had to change their methods of communication with employees as well as be aware of additional barriers to effective communication. Two factors that were important for Genentech to focus on were noise and filtering in the transmission of information. Noise is anything that interferes with or distorts the message being transformed, while filtering is the distortion of withholding of information to manage a person’s reactions. (Book) Genentech initially struggled with both noise from employees and outside media as well as filtering and a lack of transparency from leadership. Eventually Genentech made adjustments to their communications with employees as Burke stated in their learned lessons, “Prior to COVID-19, the GEC connected with employees through emails, events, quarterly Town Halls and the occasional costume contest. During the pandemic, we’ve wanted employees to hear more frequently from us, even if we don’t have all the answers. The GEC now hosts virtual Office Hours twice a month. Employees can submit questions in advance as well as live through an interactive polling tool. The casual, authentic, real-time format has increased engagement in both directions -- employees feel leaders are more

accessible, and leaders feel more in touch with issues of the greatest and most immediate significance to employees.” (BURKE) Sharing of Feelings and Emotions: Building on the transmission of communication, communicating feelings and emotions specifically from the leadership level can help improve employee empathy and social support. Sharing feelings and emotions can convey transparency of the organization, and Burke acknowledged the importance of transparency, “As a leader, I’ve realized the impact and value of being transparent and vulnerable in talking about my own experiences. If I show that I’m struggling, it doesn’t take away from my credibility as a leader, but instead gives others permission to also engage in a genuine way.” (BURKE) In addition to Burke, the Chief Diversity Officer, Quita Highsmith, also acknowledged the lack of transparency in the communication in her discussion of the 2025 Diversity and Inclusion Commitment. Highsmith states, “Our 2025 Diversity & Inclusion Commitments speak to our people, our science and our societal efforts, and they serve as a transparent way to drive us forward.” (DIVERSITY AND INCLUSION REPORT) Although Genentech has struggled with transparent communication and the sharing of

feelings and emotions, leadership has recognized its importance to be transparent and help to prevent emotional disconnects in the future. Building social support is an effective way to manage stress and should be paired with other effective managing methods from the organizational level, but most importantly communicated to the employees.

Recommendations: Covid-19 is not a situation that can be changed or eliminated yet, but Genentech can create better resources to assist in communication to employees specifically in crisis scenarios. Burke recognized the need for change within Genentech, and said, “COVID-19 has tasked us with developing new ways of keeping our 13,500 U.S. employees safe, healthy and connected while

fulfilling our responsibilities to patients. Caring for our employees and their wide variety of needs during these unprecedented times has been difficult, but I have come to realize it has also presented an opportunity for personal and professional growth among leaders that will stay with us, making us even more effective as we guide the future of our company and our workplace.” (BURKE) Although Genentech has taken steps to increase employee communication resources, they did not establish a specific method of communication for crisis situations, and therefore does not address a long-term solution for communication between Genentech’s leadership and its employees in crisis situations.

The recommendation we have put forth for Genentech leadership is to create a communication plan for crisis situations. With a clear communication plan in place, it will be much easier for leadership to actively communicate with employees specifically in crisis situations. Whether it be a devastating storm, a virus, or other unforeseen situation, essential employees at Genentech will still be needed and therefore the continued need to communicate effectively and efficiently. By creating clear communication methods, it will increase the organization’s transparency and the employees’ empathy that Genentech will do the right thing in hard situations. Effective communication will save Genentech money and time in the future. Our recommendations include a company-wide portal that will inform all employees quickly and easily clear concise messages, landing pages for employees to find all the resources they need quickly and in one place, confidential communication methods for employee questions, and frequently asked questions area for employee reference. Issue: Employee Engagement

The year 2020 was full of many difficulties and unforeseen circumstances that had a negative effect on numerous firms and corporations, for they had to adjust their primary workforce from a commuter-based environment to a work-from-home (WFH) environment. Genentech was no exception to this change, for the primary workforce was also moved to a WFH environment. Having received several awards between 2020 and 2021 for: “Best Places to Work in IT” (2020), “Top Employer” (2020), “America’s Best Employers” (2021), “Best Workplaces for Commuters” (2021), and being listed on “100 Best Companies To Work For” (2021), employees at Genentech are generally satisfied with their employment and the work they do [4]. Despite the general satisfaction from the workforce, employee engagement has become an increasingly prevalent issue for those newly transferred into a WFH environment. It has been reported that employees who WFH nearly all or most of the time have experienced a massive amount of burnout [5]. In 2019, eighteen percent of employees who fully WFH reported burnout very often or always, which was lower than those who WFH some or none of the time [5]. In 2020, twenty-nine percent of employees who fully WFH reported burnout very often or always, which was higher than those who WFH some or none of the time [5]. Employees that fully WFH have greater flexibility with their time and can get more of their work completed. This can, however, lead to higher burnout for some employees because they may end up working longer hours than what they normally would if commuting. Sixty-one percent of employees who fully WFH, that have an overall low well-being, have a higher percentage of burnout [5]. Employee low well-being can range from a stressful home-life to other outside factors that affect the overall mental state of the employee. For example, an employee who WFH but also has children who are in Zoom classes will have their attention shifted from their work and cause a lot of stress. This stress is compounded with other

outside factors to lower their overall well-being which creates a higher burnout rate. The more an employee feels burnt-out, the lower their motivation and more disengaged the employee becomes. “Disengaged employees cost U.S. companies up to $550 billion a year” [2]. Recommendations: Employee Engagement As stated in the Issue Section for Employee Engagement, there are a multitude of negative issues that affect the workforce’s overall employee engagement. One of the most detrimental issues is employee burnout and well-being. Burnout is the state of emotional, physical, and mental exhaustion caused by excessive and prolonged stress [6]. It occurs when the employee feels overwhelmed, emotionally drained, and unable to meet constant demands [6]. These stressors, combined with other outside stressors, affect the employee’s well-being, or quality of life. The process of treating and preventing employee burnout is the result from the combination of both individual and organizational stress management. Eighty-nine percent of employees at companies that support well-being initiatives are more likely to recommend their company as a good place to work [2]. In fact, your company already has taken steps to manage stress by allowing employee sabbaticals, fitness and health apps, meditation and mindfulness resources, sleep improvement tools, resiliency training, coaching and mental health therapy sessions, and wellness reward programs. [3]. This step-in stress management will benefit the workforce that currently WFH, but there is always more that can be done, such as offering EAPs related to food insecurity [1]. “In 2018, an estimated 1 in 9 Americans were food insecure, equating to over 37 million Americans, including more than 11 million children” [7]. Food insecurity is defined as a lack of

consistent access to enough food for an active, healthy life [7]. In ERG Theory, this would fall under the category of existence which covers Maslow’s Hierarchy of Needs: physiological and safety needs [1]. Although food insecurity is closely related to poverty, not all people living below the poverty line experience food insecurity and people living above the poverty line can experience it [7]. This is a sensitive issue that several of your employees may not want to be public record, so discretion is key. Some employees of WFH must take care of their children as they work throughout the day, and this can lead to a lot of stress. Another stressor is that some spouses lost their jobs when businesses shut down during the pandemic and may be unemployed. Your company should offer an EAP that provides funds for meals, for both the employee and their family. This can take the form of a meal card, that is designed in a similar way to a credit card gift card, that has a set balance on it that can be used at a wide variety of food stores. By offering programs that address the personal crises that the employees face, Genentech will improve employee well-being and decrease burnout. Through the combination of social support, employee assistance programs, and wellness programs, your company will decrease employee burnout and support a positive well-being. The WFH environment can present many challenges that are not typically found in a commuter-based environment, so it is important to offer social support and empathy while also offering programs that support the employee’s life, health, and wellness. By completing these steps, Genentech will be able to motivate and actively ...