CHICAGO–(BUSINESS WIRE)–Clinical Research Outsourcing (CRO) companies are battling high turnover levels, but a new report from BDO USA, LLP, finds that compensation strategies generally have not made significant enough adjustments to their compensation strategy to address this issue.
The 2018/2019 CRO Industry Compensation, Turnover, and Plan Design Trends Report, which will be available in January, examines compensation and benefits trends in the CRO industry over the last 10 years, with a special focus on clinical research associates (CRAs). The report analyzes and summarizes data from the last 10 years of our annual CRO Industry Global Compensation and Turnover Survey. This survey provides companies with valuable information about the industry, enabling effective benchmarking of compensation and benefits programs. The 2018 survey results were published this September.
Total cash compensation for CRAs increased an average annualized rate of 2.3 percent per year between 2009 and 2018, with pay increasing at a faster rate over the last five years. Pay increases for CRA historically average close to 3 percent (based on the CRO Industry Global Salary Planning Survey). Overall, pay levels for more senior positions increased at a much faster rate than junior-level positions.
Meanwhile, turnover remains problematic, with turnover levels at or above 20 percent for seven of the past 10 years. Findings from the 2018 survey show that turnover levels for clinical monitoring positions in 2017 (25.5 percent) were higher than that for project management (21.3 percent) or database management jobs (12.3 percent).
Turnover rates were higher in the U.S. than outside of the U.S., where turnover levels hovered around 14 percent in 2017. However, the 10 countries with the highest turnover levels, which lie at or above 28 percent, are well above the U.S.
“One clear take-away is that pay levels aren’t increasing as fast as expected, given the high turnover rates,” said Judy Canavan, managing director and leader of BDO’s Compensation Surveys practice. “CRAs have a particularly fast learning trajectory in the first few years of their careers, so standard pay increases are not keeping pace with the increased value of the employees.”
Annual incentive (AI) plans have been used fairly consistently over the past decade, while long-term incentive plans have more sporadic use. Since privately held companies comprise much of the CRO industry, long-term incentive (LTI) plans are not as common; however, some private companies do offer long-term bonuses or phantom stock.
The report also examined attraction and retention bonuses and found that attraction bonuses are used with a much higher frequency to attract new employees. The average number of sign-on bonuses in a year ranged from 68 to 163 per company, whereas the number of retention bonuses offered by companies averaged between two to 104.
“Companies may want to re-think their use of bonuses as a way to help improve retention rates. A well-designed plan that focuses on both team and individual performance can provide a nice reward to good performers,” added Canavan.