Known and Unknown_ A Memoir - Donald Rumsfeld [134]
As the one making these decisions, I felt a responsibility to meet with as many of the people being let go as I could. I had already been out of a job several times in my life when I left the Navy and after several political campaigns, so I knew what it was like, particularly with a family to support. My words to them were what I felt would be helpful to me if I were in their shoes. I knew they would have to go home and explain their situations to their spouses, children, friends, and neighbors. I told them the truth—that the decision did not reflect on them. The reality was that the pharmaceutical industry and the company were both changing; U.S. companies, including Searle, needed to adjust to globalization. We were eventually able to provide many leaving Searle with outplacement assistance services to ease their transitions.
The rapid changes we were making at Searle caused heartburn for some, especially among our traditional investor base. I decided to freeze the company’s stock dividend. This was not a uniformly well-received decision, particularly by shareholders who were accustomed to receiving dividend checks that increased over the years. The idea was to gradually move our shareholder base away from investors focused on dividends to investors more interested in the company’s long-term growth.
I also decided to increase our investment in Searle’s pharmaceutical research and development with the money we received from selling off some of our subsidiaries. One of my concerns was that the research and development division had too few promising new products in the pipeline. A number of the patents on existing products were expiring and would begin to face competition from generic drugs. I knew we needed to invest more if we were to be a successful research and development–based pharmaceutical company.
One of the more underappreciated aspects of the pharmaceutical industry is the time and investment put into research and development. Time and again the pharmaceutical industry has been singled out as a villain in corporate America and as the main culprit in escalating health-care costs. In fact, pharmaceutical and drug costs are less than 12 percent of the total of health-care costs.3 I never cease to be amazed at people, particularly lifelong politicians of both political parties, most of whom have never created anything of value, savaging those who do. Successful pharmaceutical companies have to invest; that is to say they have to put at risk hundreds of millions of their investors’ dollars in an effort to discover new therapies to save lives, extend lives, and improve the quality of lives, and, yes, also to try to make a fair return for their investors while doing so. More often than not, many years of trial and error result in dead ends. But with expensive facilities and talented researchers, breakthrough discoveries do occur. And even when efforts are unsuccessful, they learn what need not be tried again. Because of companies like Merck, Pfizer, Searle, Gilead Sciences, and others, millions of people in our country and across the globe are living longer, healthier lives.
During my third year at Searle, no doubt because of the cost-cutting measures I was implementing, I found myself included in a Fortune magazine cover story as one of the supposedly ten toughest CEOs in the country.4 In some quarters it probably helps to be considered a tough boss. But I was uncomfortable with it.
I never thought that being tough was an appropriate or successful leadership approach, nor was it the way I managed. While I wanted everyone to feel the sense of urgency I felt, I found we achieved better performance when we treated everyone fairly and respectfully. Rather than being tough, my goal was to be effective, to achieve results, and to be willing to make difficult decisions even when there weren’t obvious, attractive options. Searle was becoming a leaner and more focused operation, and we were