MD+DI 2009 Salary Survey Results

Update: 2010 salary survey results; 2011 salary survey results

Medtech Jobs: Hiring Yes, But the Market Is Tough

With the roughest year in recent memory now past, experts say that hiring will return, but companies will be much more diligent in their selection of the right person for the job.

Sherrie Conroy

The medical device industry job market has definitely been affected by the economic downturn in the past 24 months. One expert characterizes 2009 as a “settling in” year. “Prior to that, the device industry came out of a very robust five years. Companies were making healthy profits. If profits were good, that money was put back into the company to drive top line,” says Joseph Mullings, president and CEO of the Mullings Group (Delray Beach, FL).

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Then, he says, the bottom dropped out of the economy in general. “Drafting behind the consumer and banking markets, the device world felt the effects, especially in Q4 of 2008 and into Q1 of 2009. Budgets were locked down, management evaluated every line item, and the device market was frozen in place.” And even though the firms that survive will do well coming out of this crisis, Mullings says the industry will see a continued reduction in the manufacturing-related work forces and the device sales forces.
 
“Historically unemployment is a lagging indicator. It is normal to see unemployment continuing to rise going into a recovery. Prior to this last downturn, growth in the device industry had been robust and in hindsight, difficult to sustain. It’s clear that structural events are going on in the device manufacturing environment that may materially change how companies scale up moving forward.”
 
In the meantime, it is an employer’s market. “The biggest thing I am seeing—and have been preaching—is that employers are really taking advantage of the current job market,” says Brian Walker, principal of the Wise Group (Fairfield, CT). “I’m not talking about it being a buyer’s market, although that is the case. Employers are working their employees harder and longer than ever. The reason? They can. Employees are simply happy to have a job these days, and they know there are hundreds of people just waiting for the opportunity to get those jobs.”
 
“Bonuses are being frozen, raises have been reduced, and in some cases eliminated, with management citing the need to stay competitive. New hires are hit especially hard because companies are exploiting the job market,” Mullings says.

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“A CEO needs to justify any compensation to the board,” says Roger Brooks, President and CEO, C-Suite Executive Search, Leading Edge Medical, Boulder, CO. “They’re still going to do what they need to do to get the right person but they will stay within industry benchmarks. Our clients are making fair industry standard offers and are not making low offers because of the high unemployment rate.”
 
Mullings points out that the good news for the device industry is that the medical device market is not as severely subject to consumer influence as most other industries. Rather, the device industry revolves around the management of patients and their health. With that in mind, he says, his firm is seeing the hiring of certain disciplines within the device space coming back strong, while others are lagging.
 
Mullings says a review of the searches his firm completed over the past 12 months showed that R&D, clinical, and regulatory positions were the strong leaders coming out of this challenging time. “It was our observation that at the start of this downturn, companies froze R&D expenditures. They also pulled in the reigns on new clinical initiatives and reevaluated those ongoing clinical efforts, stopping those that were not promising.”
 
He says that companies reduced manufacturing head counts as inventories were cut, new product launches were slowed dramatically, and leadership of these companies demanded increased efficiencies.
 
Brooks has seen similar trends. He says the companies he works with are preserving their capital and slowing down the hiring process. “They’re slowing down their hiring due to capital preservation, and they are concerned about the next round of financing—when it’s going to come and what kind of round it will be. Start-up, early-stage companies are trying to be really smart about their resources to make sure they’re spending wisely.”
 
Mullings says that the device space is realizing that the sky is not falling and that profits are coming back. “If ‘cash is king,’ then ‘technology development is queen.’ We have watched hiring return to R&D as companies pursued what was put on hold. With that, clinical and regulatory efforts have been reengaged.”
 
According to Brooks, there are three major challenges in trying to find these people right now, especially when they need to be relocated. One is that the drop in the cost of housing has caused some relocation problems. “Somebody may be upside down in his or her house. That perceived value is something they want to make up. The idea of selling it now after it’s down is psychologically difficult for that person—even though the huge advantage awaits them if they can,” he says. “A second challenge is that once you have a job, you really want to keep that job and you become more risk averse. So the idea of making a change for a job that could disappear after six months, and the fear of the unknown is stopping them. Third, people aren’t hearing stories about the fantastic stock gains from start-up companies. We used to read about that all the time—somebody just got bought, people are making all this money—and they are hearing less of that and so it’s making them feel like ‘I’m ok here. I don’t need to make that change.’ Those three challenges are making it much more difficult to pull key talent—A players—right now.”
 
Mullings also says that it has become quite clear that the device industry has become more global than ever before. This past year his company did a lot of work in Europe staffing clinical, regulatory, and early-stage marketing and business development efforts. He notes that overseas and U.S. companies have aggressively partnered with each other in an effort to survive the downturn, opening up both markets to new opportunities.
 
From a search firm perspective, Mullings breaks device companies down into three categories. He believes the professional staffing over the next 12–18 months for these companies will fit into three categories.
 
The first category comprises the companies that manufacture and sell products. Their R&D efforts tend to be acquisition-centric versus substantial, internally driven organic R&D initiatives. When these companies are profitable, they typically expand their manufacturing and sales teams to increase top line sales. These are companies that rely on huge sales forces, distribution advantages, and commodity products that are based on price more than anything else. He says they tend to be sales-team heavy, cumbersome on the operations or logistics side, and not nimble enough to shift quickly when a once-in-a-century crisis hits. Such companies have seriously cut manufacturing and sales activities as well as overhead that were not labeled as mission critical. In doing so, he says firms have cut back to profitability and increased efficiencies. The reduction in head count across the company lines has allowed them to remain profitable. They also reduced their acquisitions. Therefore their business development, marketing, and sales forces are lean and are likely to come back slowly, if at all. Professional opportunities in these types of companies will be limited in the near term, he says.
 
The second category, he says, includes device companies that manufacture and sell their products and that also have strong internal R&D initiatives that are potential game changers in their respective therapy or diagnostic space. These companies rely on internal development and typically are a culture of R&D-driven initiatives. That means product development, clinical, and regulatory professionals are the cornerstone of their businesses. “Those positions, if threatened at all during the downturn, were preserved at all costs. These companies have reduced some of their sales organization, but not by much,” says Mullings. “We believe these companies will come out of this more quickly than [those in] any other category and will seriously take advantage of market openings. We also believe that with current valuations being at an all-time low, these companies will be prime acquisition targets.”
 
The final category encompasses the start-up or emerging technology companies. He says these organizations are in the device space to develop a specific product addressing a perceived market need. They bring in outside investors, develop a focused technology, and then resell that product or technology to an acquiring company. “We believe that the start-up companies that were able to manage through this time and adjust their business plans, budgets, and expectations should do well,” he says. “Transactions will be adjusted down because the IPO market is not a threat to acquirers anytime soon. Potential acquirers with cash to spend in the next 6–12 months won’t be tripping over each other either.”
 

Where the Jobs Are

 
Walker disagrees that cardio and ortho are less active. Mullings notes that technology companies with a strong presence in the peripheral disease markets, some of the interventional cardiology markets, and also some of the minimally invasive general surgery markets have been leading the charge in hiring. He says that companies in orthopedics (spine), neurology, and cardiac surgery have been less active.
 
“The growth areas, as far as my experience is concerned, are still ortho and cardio and people recognize that,” he says. “As a result, [firms] are moving into those markets. Ask yourself, where would you go if you were looking for a job? Of course, you would look for a company with sellable products and that is exactly what these markets offer. The problem is that everybody wants in. I am talking with more and more people who are specifically asking about roles in these areas because this is definitely where opportunities exist.”
 
He also sees potential in the neurology job market. Walker says that many job candidates come from different areas in the medical device market, but that doesn’t stop them from wanting in. “In fact, I would say that neurology has yet to hit its stride. There is a lot of ground for it to cover to seen as a viable option for investment, as well as reimbursement. Disciplines that remain strong are engineering and research because these are the areas that lead to innovation and differentiation. Obviously, once there is a market for those products, sales in the next important piece.”
 
“We’re seeing some strength in the spine and orthopedic areas—probably a lot to do with the aging population and the expected growth in the number of procedures,” says Brooks. “With the changes at FDA and healthcare insurance environment overall, the value of really good clinical data is ever more important than it has been in the past. So the investment into [hiring for] good the clinical studies seems to be increasing. This is a high burnout space position due to job pressure and high travel.”

 

The Job Hunt
 
Mullings says that for the candidate in the medical device space, the past 12 months have been the most challenging he has seen in his 20 years in the executive search industry. “The compression of opportunity across the board has been at an all-time high,” he says.
 
According to Mullings, manufacturing overheads were under attack, sales forces were greatly reduced, R&D initiatives were put on hold, and outside investors were nowhere to be found. “There were no safe havens. The big companies were shedding employees in large numbers. Smaller companies were just holding on in a literal day-to-day existence. For the first time in our experience, we saw real A players being let go from companies at a rate that was new to the device space.”
 
Moreover, he says, the market continues to be flooded with exceptionally skilled workers. “In the past, from a search firm point of view, there was a stigma attached to presenting unemployed candidates to a client. In fact, in our 20 years of search in the medical device space, we have placed maybe four unemployed candidates in the 3000-plus searches that we have completed. In 2009, we placed four in a single month. This shows that really talented people are out of work in large numbers and that companies are hiring them.”
 
Brooks also sees some top talent in the job market, but not all candidates are, and it actually makes it harder for companies to find the right fit. “Companies are still very challenged to find the right people with the right skill set. Mullings says his clients began hiring again after the first quarter of 2009. The process, he says, has certainly been more diligent: the relocation budgets for candidates have been cut and each position has had to stand up to justification on nearly every level. Searches for clinical, regulatory, R&D, and international positions have been leading the charge. Positions for sales, manufacturing and operations, and downstream marketing have been on a much slower uptake.
 
Walker says there has been a lot of geographical movement based on people trying to find work. “Connecticut is seeing a lot of people leave because companies too are leaving. I wouldn’t say people are making these decisions prematurely because most will exhaust every possibility before picking up roots. That brings me to an interesting point. One thing I recommend is to create your own opportunities. What I’m telling them to do is to not say you are consulting, but actually do it. That means setting up a business and getting back to work even if you intend for it to be temporary.
 
“I am also advising people to team up with others who provide complementary services and start a virtual consulting firm whereby you can capitalize on their business contact and employ your skills while getting a paycheck—in some cases a better one than what you had. This is especially true for older workers who the bias that is out there and let’s face it—it is real. So rather than fight it, use all that experience you’ve gained over the years and put it to good use. Some people have landed a full-time role as a result.”
 
Brooks says that most people are sending their resume out through all the great online tools now available. But, he says, there’s a big problem with that if you’re on the hiring side and you see 50 resumes. “A candidate’s true worth may get lost because the potential employer can see experience but is not able to determine how well that person would perform at their company. The people that know how good you really are are the people that have worked with you in the past. Job seekers need to connect with these people in a meaningful fashion. Ask those references to send your resume to people they know with a nice note of recommendation.
 
He urges candidates to do more than just e-mail or call such colleagues. Take them out to lunch or dinner. He notes that if a candidate makes a quick phone call, that person may not have time to get their head around what the candidate is looking for as far as new employment. At lunch, the focus is more on what’s going on with the person looking for a job. For example, the contact may be able to ante up some suggestions to help enhance the candidate’s network. “Get names from those people you know and respect, and drop their names when you’re calling other people. You have to be a name dropper of the right people and get out and take as many people to coffee as possible and don’t rely on the Internet to find your next job,” Brooks says.
 
He says that you can see job ads on Linked In, which can be helpful, but that 75–90% of high-level professionals get their next job from their network, and job seekers should focus on their network. “The big mistake is when job seekers spend all their time sending their resume on ads and little time working their network. If a company is hiring on Linked In, that would be the time to reach out to somebody [at that company].”
 
He says the trick is to match your experience with other companies or divisions you’ve worked with and with companies that are going to see that company name and respect it. “So use the brainpower of Linked In to study where people are going and where they came from. “You can look at a company and say, ‘they’ve been hiring people from this company, and my company is really similar to that company. Don’t go out of the box. Follow the momentum of the stream and get yourself into companies that respect your experience,” advises Brooks.
 

A Tough Road Ahead

 
Mullings describes the events of the past year as working against this candidate market. “Hiring is definitely taking place. We are as busy as ever,” says Mullings. “The market is full of talented candidates that are competing for positions as companies ramp back up in critical early-stage technology development roles. Relocation has become prohibitive for most candidates as the likelihood of selling a home in this market has been greatly impacted—whether it is the ability to obtain a mortgage, or sell a house at a reasonable price.” He also notes that companies are not ready to spend $70,000 on a mid-level relocation when they can shop local. “Candidates are required to look locally in a market that is flooded with A players.”
 
However, Mullings says that companies have not cut salaries due to the supply-demand equation. Candidates who in the past would only look at a minimum salary level relative to where they thought they should be paid, have come down in their expectations and secured positions at a level and pay rate they may never have considered before. Now candidates who would only have looked at vice president positions are considering director or manager positions in order to stay in the game. “That equation works all the way down the hiring chain. That further floods the market with competition. It doesn’t drive down salaries, but it does greatly increase the value the hiring company gets for its dollar.”
 
The result is that the device market continues to emerge as a formidable survivor from this economic crisis. Mullings points out that good companies have pivoted on their strengths and shed their excess. “All in all, it was painful for a large number of people. Pain always seems to bring clarity though. Hiring is occurring in the early-stage upstream technology roles, including design, development, clinical, regulatory, and some upstream marketing roles.”

 

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