Study: CROs increase pay in the face of escalating employee turnover
Turnover in the U.S. for clinical monitoring jobs (the function that monitors participants' health during a clinical trial) at CROs jumped up to 25.4% from the previous year's reported low of 16.4%, according to the 17th annual CRO Industry Global Compensation and Turnover Survey, conducted by HR+Survey Solutions, a specialty compensation consulting and research firm. While that number is below the four-year high of 29.4%, it is significantly higher than estimates of overall U.S. professional turnover of 15.7%.
Salaries for professional positions (non-management) at CROs jumped 7%—far more than the average U.S. company budgeted merit increase, which has been hovering around 3%. In addition, 75% of the surveyed companies are using sign-on bonuses to attract new talent to fill the void.
For countries outside the U.S., turnover in clinical monitoring increased to 17.9%, on average, from the previous year's rate of 14.2%.
U.S. overall turnover at CROs increased from 14.4% to 19.5% (all positions at the CROs). Outside the U.S. the overall turnover rate increased from 15.3% to 16%. Globally, average turnover at CROs was above 10% in all but one of the surveyed countries. Almost half the countries surveyed (22 of the 45) have average turnover of 20% or more.
According to the survey, the top 10 losers for the war on talent (and 2014 turnover percentages) include the following countries: Hong Kong 48%, Thailand 36%, Singapore 34%, Malaysia 31%, Japan 29%, Taiwan 27%, Mexico 27%, China 25%, New Zealand 25% and India 25%.
With U.S. unemployment continuing to decline since it peaked in 2009, CROs will have an uphill battle. According to Judy Canavan, managing partner, HR+Survey Solutions and the author of the study, turnover is extremely costly to CROs. She said, "The jump in salary levels and heavy use of sign-on bonuses indicates that companies are scrambling to stop the revolving door—it’s a real business issue. High turnover can undermine the relationship with a sponsor or lose a bid for new work."
The number of registered clinical trials has skyrocketed from 24,939 in 2005 to 203,193 in 2015, according to ClinicalTrials.gov research trends. Drug approvals have been at all-time highs with 41 approved in 2014 and 38 approved as of the end of November 2015. CROs play a very important role in all of this; according to the Tufts Center for the Study of Drug Development, clinical trials conducted by CROs are completed on average 30% more quickly than those conducted in-house which results in an average time savings of some four to five months, translating to $120 million to $150 million in increased revenue potential. All this points to growth in the CRO industry, but attracting and retaining talent is critical to a successful business model.
The study also found that while large companies tend to pay a bit more in salaries for professional/non-management positions (about 5% more), the big pay gap is in bonuses. Smaller companies are less likely to pay annual incentives than larger companies. Over 60% of professional level positions at the larger U.S. CROs received annual incentives versus 40% at smaller companies.