Allergan Executive Takes Tough Road to the Top : ‘Put Her Job on Line’ for Principles, Now She Plays a Key Role

Virginia McDermott started collecting nicknames at Denny’s Inc. As corporate personnel director, she often found herself arguing toe-to-toe with top executives. Many employees called her “the corporate conscience” for the way she held her ground.

But the managers, said one of McDermott’s peers, saw it another way.

“Denny’s executives weren’t ready for someone like Virginia, who was always very aggressive,” said Kay Byrum-Ellerman, assistant to the president and chairman of the board of the La Mirada restaurant company in the late 1970s when McDermott worked there.

“Denny’s was not as aggressive and forward-thinking as many of the good women working there, so many of the good women left,” said Byrum-Ellerman, now executive vice president of Financial Services Unlimited Inc. in Newport Beach.

McDermott left Denny’s too, finding a more rewarding--if as controversial--niche at Allergan Pharmaceuticals. She joined Allergan, a fast-growing vision and skin care products company in Irvine, in 1979 as associate personnel director.

Although her style there earned her a new nickname--”dragon lady”--among some employees, she also built a reputation as a quick study and a good manager. Last November, she was promoted to director of U.S. operations, and reports to Allergan’s senior vice president. In her role, the 43-year-old executive supervises a division with 550 employees and six managers, and sits on Allergan’s executive committee.

McDermott’s division supports Allergan’s rapid growth by building the manufacturing facilities needed to produce new products as soon as they are developed. Her responsibilities are wide-ranging, from supervising the design and building of production lines to overseeing the construction of two new 7-story office towers on Allergan’s 30-acre, campus-like property. This year, McDermott is responsible for about $45 million worth of new construction. She learned about construction at Denny’s, where she hired construction crews and brought in the company’s first woman construction superintendent eight years ago. McDermott said she has capitalized on her people-managing skills in her rise through management levels, but admits that moving from the restaurant business to the pharmaceutical industry has been a challenge.

“Right now, I’m learning a tremendous amount about the pharmaceutical business,” McDermott said. “I have a lot of support from my management group.”

Allergan, founded in Los Angeles in 1948, was acquired by SmithKline Beckman Corp. of Philadelphia, Pa., in 1980 for $260 million. Since then, the subsidiary has been one of SmithKline’s shining lights. In fiscal 1984, sales increased to $235 million, from $202 million in 1983, at Allergan’s various operations, of which vision care is the premier group.

The division’s contact lens solutions are competing in a market, estimated at $190 million in 1984, that has been growing by 20% annually to serve the nation’s estimated 20 million contact lens wearers. Industry analysts consider Allergan’s solution products either first or second in most of their market categories.

Although SmithKline does not break out subsidiary earnings, David MacCallum, a senior technology analyst for Hambrecht & Quist in San Francisco, estimated Allergan’s 1984 net earnings at about $43 million. He said Allergan sales represented about 8% of SmithKline’s total revenues of $3 billion.

“Allergan certainly has been the gem in SmithKline’s business mix. (It) has been SmithKline’s standout company in the last three years,” MacCallum said.

Pursuit of Excellence

“We try to be on the cutting edge of ophthalmic products worldwide,” McDermott said in a recent interview. “We pursue excellence in the markets we’ve chosen by investing a lot of money to remain in the forefront.”

McDermott is well suited to the pursuit. On a recent tour of Allergan’s sprawling, impeccably landscaped grounds, McDermott walked so quickly it was difficult for a visitor to keep up with her. She said that being healthy and fit was practically a requirement to work for Allergan, where the complex includes tennis courts and an area for jogging and exercising. She does her part by riding a bike, swimming and working out in a gym.

Striding briskly into the packaging plant, she stuffed her platinum-colored hair into a paper hair net. She greeted several workers by their first names, pausing several times to chat with the employees.

McDermott thrives on the people side of the business, evidence of her beginnings in the personnel, or human resources, department. At Denny’s, she was responsible for the welfare of 1,200 corporate employees, and helped set personnel policies for 42,000 employees worldwide. Allergan has 2,500 employees worldwide and 1,300 in the U.S. About 1,200 of them work in Orange County.

Part of the Cost

“I can help people work through the system because I understand it,” she said. “Most of what a manager does is manage resources, and human resources are the largest part of the cost.”

To be sure he had the right person for the job, W. Richard Ulmer, senior vice president of U.S. operations and McDermott’s immediate supervisor, spent nine hours interviewing her. “There is unquestioned energy that flows from Virginia to the tasks at hand,” said Ulmer, who describes McDermott as a well-organized, careful planner who dislikes paper work, preferring to work with her personal computer.

McDermott began her career as Allergan’s associate director of personnel at a time when “personnel was No. 150 on a list of 100 priorities,” according to a former executive who agreed to talk freely about McDermott on the condition that he not be identified.

“Allergan was a small, entrepreneurial company totally dominated by a sales group,” the executive said in a recent interview. “There were no policies and no procedures. Competitive was not the word--they were animals.”

Nicknamed “dragon lady” for her tough-minded approach to dealing with sticky personnel problems, McDermott “brought some class to the damn thing,” he said. “And, you may have gone out of her office mad, but you came out thinking.”

Didn’t Mind Nickname

McDermott said she was aware of her nickname. In fact, a group of employees showed their support of her by circulating a poem singing the praises of the dragon lady. McDermott said she didn’t really mind the nickname. “You should have heard some of my others,” she said with a laugh.

McDermott said she earned her reputation as a fighter because, “I used to put my job on the line all the time to make a point. If something is wrong, it’s wrong. A job is not worth compromising what I believe in.”

Susan Meister, a former Allergan employee, said McDermott “attracts emotion and definitely polarizes the field.” Meister, a close friend of McDermott and now vice president of medical/health care services for Burson-Marsteller, a nationwide public relations firm, said “you would think someone so hard-charging would not be a funny, sensitive and vulnerable friend, but she is.”

McDermott believes that “if you challenge men you have to expect some strong reactions.”

Although she has experienced many of the difficulties faced by rising women executives, McDermott has not adopted the uniform of dark, skirted suits and bow ties. Instead, she favors brightly colored knit suits and silk blouses, accented by a collection of custom-designed diamond and white gold jewelry. “I love it and I wear it all the time,” McDermott said about her distinctive jewelry.

A Disadvantage at Times

She admits that being attractive, 5 feet, 7 inches tall, and blonde has worked against her in the past. “Sometimes, if I was cordial, I was read wrong,” she said.

As a young executive at Denny’s, McDermott said, she couldn’t understand why her male colleagues always seemed to know important corporate news long before she did. She attended all the same meetings and received the same memos, but somehow she was excluded.

She finally realized that most of the time things were discussed first in the men’s washroom, not in the conference room. McDermott eventually found other ways to plug into what she calls “the old boys’ network.”

Also, like many other women executives, McDermott, who was born in Los Angeles, had to sandwich her college education in between raising four children. She has an undergraduate business degree, with a psychology minor, from Cal State Long Beach, and an MBA from Pepperdine University.

Although McDermott has been making serious progress in the corporate world and earns as much as the president of a medium-sized company, she still has definite goals for her future. “I’m preparing myself to be the president of a division,” she said. That would be two or three steps up the corporate ladder for the woman who describes herself as a “change agent.” McDermott said she also has “a fabulous” idea for a business of her own someday.

Still Learning

Meanwhile, she is busy conquering the “steep learning curve” associated with the dynamic and competitive pharmaceutical business. To keep pace with the competition, Allergan is planning to introduce new vision care instruments, interocular lenses and some new prescription drugs. Last year, SmithKline tried unsuccessfully to acquire a contact lens maker, and analysts say the company will probably try again to enter that lucrative market.

“The day-to-day business has to be done no matter what,” McDermott said with a smile. “But you can impact the direction of the organization, and it will change over time.”