|Device Job Market Cautious but Secure|
SALARY SURVEY 2008
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In a tough economy, the medical device industry manages to hold its own. The industry's job market is in stasis, but mostly because people are content where they are. According to MD&DI's annual salary survey, people are staying put. Respondents across all job functions indicate that they are tenured in the industry and remain loyal to their present organizations. The question is, are they content with their jobs or are they lying low until the bad times have passed? Part of the reason that people are staying in their jobs may be a feeling that they are lucky to keep the job they have.
“I am finding that many [candidates] have a ‘devil you know' view,” says Brian Walker, president of Wise Group (Fairfield, CT). He says device firm employees may be reticent to jump ship even if a new opportunity represents a major improvement over their current role. “There is just a lot of uncertainty.”
On average, the respondents to the survey have been involved with medical device or in vitro diagnostic manufacturing for 14.8 years, 9 of which have been with their current organization. Fewer than half (45%) have changed employers within the last five years.
“For some clients, we have seen a bit of a holding pattern,” says Jennifer McDonald, director of clinical and scientific for Yoh Co. (Philadelphia). “Relatively speaking, though, if you compared [the device industry] with IT, accounting, or finance, we are much more stable. People still age and get sick.”
Stable Market, Stable Jobs
Respondents' long tenures with their employers may reflect a sense of job stability as well as a stable market. The vast majority (84%) of respondents indicated that they feel their job is more secure now or about the same compared with 12 months ago. The majority of respondents in each job function are not even considering a job search.
Such stability is not surprising when you consider some findings about the medical device market. Medical device consulting firm Emergo Group (Austin, TX), recently surveyed 1000 medical device and related manufacturers. The survey found that despite data that show the world economy heading for recession, most medical device companies report positive domestic and international sales growth and continued optimism about prospects for the industry in 2009.
That's not to say that device companies are not being cautious. Walker says that the downturn in the economy is affecting the device industry's hiring decisions. “Based on my poll of some companies, they are scrutinizing their hiring needs,” he says. In almost all cases, he says, they are filling only positions that are absolutely necessary, or they are redeploying people's talents elsewhere in the organization.
“I would agree with the trend that people seem to be staying longer in their positions than they have in the past,” says Roger Brooks, president of Leading Edge Medical Search (Boulder, CO). “The willingness to take a risk for the perceived reward has gone down. But people continue to be very successful with medical device start-ups, and there are a lot of executives at the VP level and above that continue to see their net worth increase by a million dollars or more by being a key member of a successful start-up.”
And jobs are certainly available for those who are well qualified. Joseph Mullings, president and CEO of the Mullings Group (Delray Beach, FL) notes that the areas seeing the most demand continue to be clinical and regulatory functions. By contrast, Walker says that jobs on the manufacturing floor are the first to suffer. “These are the hardest hit. These are mostly hourly jobs that management sees as expendable and that can be ramped up as needed in relatively little time.”
Mullings says he has not experienced a slowdown in companies conducting searches. “The positions that typically go to search firms are those that are most critical,” he notes. “I do know, though, that ‘luxury positions,' or noncritical positions, have been put on hold with a number of companies as they evaluate where they are in this climate.”
“For the clinical and scientific industry, I have not seen a slowdown any more for this time of year than I have in previous years,” says McDonald. “This is [usually] the time that companies are trying to conserve on their budgets for the remainder of the year,” she says.
Mullings notes that bonuses have been affected, however, because some companies have not made their sales numbers.” He says that more importantly, though, the biggest change for compensation packages, especially for higher-level players, has been the options that were struck a few years ago and are now becoming vested. “Those options were established at a height of the market. Now we are at the bottom of a market and those options have no value.”
He says that the sales jobs have been affected most. “With acquisitions taking place and larger companies watching their costs, the sales function at the middle and higher levels has been affected more now than in the last 18 years our firm has been in the search business,” he says. “These people are out of work, and just last year they made $200,000–$300,000. It is a strange predicament for them, and this is a difficult market for them to reengage. Some are going into less-sexy device markets, such as low-tech ortho, dental, or basic monitoring businesses, where before they were in markets such as interventional cardio or neuro.”
Companies in certain sectors—and thus the jobs at those companies—are poised to weather the sluggish economy. Strong companies may carry the industry through the tough times. “Based on our search activity, I am finding that [the job market] is extremely strong for companies catering to our aging population,” says Walker. “Companies that design and manufacture products for spine and orthopedic needs in general are doing very well.”
Mullings says candidates may feel more secure because they aren't looking as aggressively. “Self-talk has them believing they have a great job and they will sit on it until the housing and financial crises pass.”
The Real Estate Market and Other Challenges
Brooks notes that one of the biggest changes in the last several months has been the sinking real estate market. It has affected executives' willingness to relocate because, he says, “their house is either under water or has been significantly devalued.” But rather than view this as a reason to avoid relocation, he recommends that they let it work in their favor. “I would say it might be smart for an executive to consider relocation right now,” he says, “especially to markets that have suffered a reduction in home prices. For example, this might be an opportune time to move to the Bay Area because real estate there is devalued.”
Mullings agrees that real estate is playing a big role in candidates' decisions. “The hit that the housing market has taken nationwide has candidates believing that it will be difficult to sell their homes,” he says. “Also, those who have purchased homes at the top of the inflated market have issues with mortgages, or not having enough for a down payment on new homes should they take a new position.”
Factoring in the Economy
How will this economy play itself out in this industry? “This is the million-dollar question, not just in the medical device market, but in all the markets,” says Mullings. “I know of a few device funds out there that have been seized because the money pipeline has been throttled down considerably. The impact to the start-ups that have been hoping to exit has also been punishing. At least in the past, some of these start-ups could posture that they were going to IPO as well as explore potential acquirers. Right now there is no real IPO market in place, so those companies lose an important negotiating chip and no longer have that option,” he says.
Mullings says that employees who had gone to specific companies in hopes of making a tidy sum on options are now in a market where they will not see anything near what they had hoped for. “Those key players—often top performers—are sitting tight, but also trying to determine where they will go to get their payout for their efforts.” They might look for new positions with a stock that is low now so that options are at a more reasonable price, he says.
He says it is also interesting to look at some of the stock prices of companies in addition to the debt they are holding. “There are a few interesting situations arising. Boston Scientific stock was trading in the $40 range a few years back, and, as recently as TCT show time, was trading at $7. That's crazy. Given the debt incurred with the Guidant acquisition, market instability, and the stock price, I would not be surprised to see BSC picked up by J&J or Abbott. Who would have thought that to be possible two years ago?”
McDonald says that despite the unsteady economy, she is still seeing a lot of candidates who want a different environment or want the opportunity to learn a new technology or new indication.
A Positive Outlook Ahead
Salaries and jobs are holding steady, as evidenced by the survey. As a whole, device employees are satisfied with their jobs. Average ratings are high overall and among those in each job function. Walker says his experience is that salaries are commensurate with the skill sets available and, of course, with supply and demand. “I'm seeing tremendous demand for design and engineering people. Innovation is key to growth, and this is where forward-thinking companies have set their sights.”
Where are the most jobs? “If you are a well-known, respected professional for regulatory affairs for getting medical devices approved, you're going to have a job. It's not uncommon to see a director of regulatory affairs position open for six months, but usually [it means] the client is being a little too selective,” says Walker.
Brooks notes that companies are watching their competition and are following the pack to remain competitive. The only departure from this mentality, he says, is in those companies with a strong or growing patient base. Baby boomers are positively affecting the bottom line of these companies and, as a result, hiring remains strong to support that growing demand for their products.
“I would caution both employers and candidates to be careful about taking salary surveys too literally,” says Brooks. “There are so many things that influence salary and compensation that it's important not to use the salary survey as the benchmark for your own compensation or for companies to look at it as their benchmark. Use the survey as a factor to take in to a prospective employer to ask questions.”
Salary Survey Categories
Order A copy of MD&DI's Salary Survey
A copy of the full MD&DI salary survey is available. It contains tabular breakdowns for the industry as a whole and previously unpublished tabular breakdowns for the seven surveyed job functions. Copies cost $195 each. For more information and to fill out an order form, visit devicelink.com/mddi/salarysurvey_order.