CROs Face Issues with Talent Retention - Pharmaceutical Technology

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CROs Face Issues with Talent Retention
A recent survey shows that talent retention is an issue on industry level for contract research organizations (CROs), particularly for CROs located outside the United States.


PTSM: Pharmaceutical Technology Sourcing and Management
Volume 9, Issue 9

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Mitigating employee turnover and improving employee retention rates are important objectives of any business, but it is particularly important for contract services providers, which seek to present stable operations to prospective pharmaceutical customers. A recent survey of employee retention and compensation patterns among CROs shows difficulties in the CRO industry as a whole to limit employee turnover.

Preliminary results from a recent survey by HR+Survey Solutions, a compensation consulting and research firm, showed that CROs continue to struggle with ways to retain talent, according to an Aug. 19, 2013 HR+Survey Solutions press release. The initial findings of an HR+Survey Solutions study reveal that the employee turnover rate at CROs based in the United States remained stagnant in 2012 with 18.6% of employees leaving their companies in 2012 compared with 9.7% in 2011. The turnover rate among CROs outside of the US increased from 17.8% in 2011 to nearly 22% in 2012. The survey examined 20 public and private CROs with sizes ranging from firms with employees of fewer than 500 to organizations with more than 12,000 employees. Compensation data was collected and analyzed for 34 countries worldwide in addition to the US. The high turnover was found among all types of positions from clinical monitoring to data analysis. Project managers were an exception, however, with this group of employees experiencing a decrease in turnover from 21% in 2011 to 10.5% in 2012.

Although turnover rates remained high in 2012, the use of bonuses by CROs to attract and retain talent increased in 2012, according to the survey. There was a nearly 25% increase in companies that used recruitment bonuses (65% in 2011 and 88% in 2012). In addition, more companies used bonuses to retain talented employees. Fifty‐three percent of companies reported using retention bonuses in 2012 versus 29% in 2011. Companies reported using recruitment bonuses at salaries less than $60,000, and 30% of the companies used them for nonexempt employees.

“We often think of recruitment and retention bonuses being used at the top of the house, but in this tough job market, more and more companies are experimenting with bonuses to attract and retain employees at lower levels,” said Judy Canavan, partner, HR+Survey Solutions, in the company release. “And, with almost all companies planning to implement bonuses in 2013 (87% recruitment and 78% retention), the trick is for them to design the bonus program to meet the needs of the organization. This could mean including time or performance triggers,” she said.

The annual comprehensive survey reports compensation levels (base salaries plus annual and long-term incentives), employee turnover, annual and long-term incentive plan design, deferred compensation, benefit plans, and perks for 139 benchmark positions in 11 job families, including executive, biostatistics, business development/sales, clinical research, database management, medical affairs, patient recruitment, quality assurance, regulatory, safety/pharmacovigilance, and onsite operations.

Continuing the trend
The issue of talent retention, as reported in the 2013 HR+Survey Solutions survey, continues a trend from 2012. The CRO industry experienced a 12.5% voluntary separation (left for new position with higher compensation and/or greater opportunity) rate in 2012 as compared to a 1.5% national voluntary turnover rate based on US Bureau of Labor Statistics, according to a Mar. 28, 2013 HR+Survey Solutions press release. The 12.5% voluntary turnover rate was for all types of positions at CROs, but this figure was even higher for other positions. There was a 24.2% voluntary turnover rate of clinical research associates, according to the 2012 survey. Nearly 20% of project managers, and 13% of data managers left their jobs voluntarily.

Despite a fragile economy, employment in the CRO industry remained strong in 2012 with companies implementing sign-on bonuses to attract talent. The 2012 survey reported that 65% percent of CROs use sign-on bonuses to attract new talent, but less than one-third (29%) use retention bonuses to retain employees.

According to HR+Survey Solutions, high employee turnover rates can be particularly damaging to CROs as pharmaceutical companies assess their turnover rates when making decisions about outsourcing clinical trials. Additionally, the study found that the target annual incentives and projected long-term incentive (LTI) levels are markedly lower for CROs as compared to other industries. CRO industry executives with salaries of $250,000 were eligible for, on average, a target annual incentive of 26% of their salary and an LTI of 35% whereas similar executives in other industries were eligible for annual incentives and LTIs of 44% and 51%, respectively. Although the majority (90%) of executive-level employees (senior vice-presidents and vice-presidents), were eligible for annual incentives, only 50% actually received bonuses, according to the 2012 HR+Survey Solutions survey. Approximately 40% were eligible for LTIs, but only about 35% to 40% received a grant. At the manager level, 65% were eligible for annual incentives while 45 percent received bonuses. Six percent were eligible for LTIs, and only 2% received them.

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