Although turnover rates in the CRO industry are still high, they appear to be trending down, according to the 16th annual CRO Industry Global Compensation and Turnover Survey, conducted by HR+Survey Solutions, a Reading, Pa.-based specialty compensation consulting and research firm.
Over the last three years, U.S. turnover in clinical monitoring (the function that monitors participants’ health during a clinical trial) has dropped from 29.4% to 16.4%, and globally overall company turnover has dropped from 27.2% to 14.2% on average.
For the companies that provided turnover statistics for both 2012 and 2013, their overall U.S. turnover dropped by an average of 3.8%. However, not all companies are winning the talent war; over the last four years, half the companies included in the study experienced an increase in their turnover rates. Globally, turnover was above 10% in most countries.
The top 10 losers for the war on talent include Switzerland, 87%; New Zealand, 50%; Hong Kong, 43%; Mexico, 34%; Denmark, 33%; Japan, 32%; Belgium, 32%; Colombia, 30%; Netherlands, 28%; and the U.K., 26%.
According to Judy Canavan, managing partner, HR+Survey Solutions and the author of the study, turnover is extremely costly to CROs. She said, “High turnover can undermine the relationship with a sponsor or lose a bid for new work. The industry puts high demands on their talent including long hours, extensive travel, high performance expectations and tight budgets, yet pay programs provide only modest opportunity for performance-based rewards—the incentive opportunity is about 40% less than the opportunity provided in general industry.”
Canavan suggests CRO companies do their homework with regard to their compensation programs if they want to stop the talent hemorrhage. “CRO management would be well-served to see compensation as a tool to help manage resources and create a strategic advantage,” said Canavan.
She recommends management seek guidance from their HR partners to solve the talent retention challenge. “When people are your primary resource, HR is no longer ‘just a staff function.’ It has responsibility for the largest resource of the company. Heads of departments with high turnover need to proactively reach out to HR to develop creative compensation plans that will help hold on to key staff.”
The study also found non-management employees of large and small companies are paid comparable salaries. Conversely, smaller companies are less likely to pay annual incentives than larger companies. Nearly 88% of director level positions at the larger U.S. CROs received annual incentives versus 65% at smaller companies.
“The CRO with 200 employees is competing for talent against CROs with 10,000 employees. Smaller companies should be using variable pay to help them compete against larger companies for top talent while controlling fixed costs,” said Canavan.
The study also found U.S. turnover in clinical monitoring was 29.4% in 2011, 24.4% in 2012 and 16.4% in 2013. Global turnover in clinical monitoring was 27.2% in 2011, 15.6% in 2012 and 14.2% in 2013.
Annual incentives for CROs tend to be less (40% lower) than those for general industry. Average salary levels in the survey only increased by 1% for non-management positions. CRO pay for executives is more heavily weighted toward fixed pay (salary) than in general industry (45% in CRO industry versus 31% in general industry). On average, the bonus for smaller companies is almost 25% less than that for larger companies; however, the size of the awards for smaller companies that pay bonuses tends to be similar to that of the larger companies (with the exception of the SVP/VP level).
The 16th annual CRO Industry Global Compensation and Turnover Survey was conducted by HR+Survey Solutions in 2014. A total of 24 public and private CROs with fewer than 500 to more than 12,000 employees participated in the niche study. Compensation data was collected and analyzed for 45 countries in addition to the U.S.