Survey Reports High Turnover Rates At Biotech Companies

Turnover among scientists at biotechnology companies remains high as this budding industry continues to spawn new ventures that allow personnel to shift jobs easily, according to a recent study conducted by the Emlyn Group, a human-resources consulting firm. Last year, the San Diego-based Emlyn Group surveyed 250 biotechnology companies in the United States and Canada and received responses from 23 firms. The results of the study were released earlier this year. Of the companies responding to the survey, 82.6 percent are independently owned firms and 56.5 percent are privately held. About 61 percent specialize in pharmaceuticals, and 26 percent focus on diagnostics. Some 17.4 percent supply equipment or materials, while 4.3 percent are in bioagriculture, including pesticides and vegetables. Software firms constituted 4.3 percent of the respondents. On average, the companies employ 140 people. About half (51.4 percent) of these employees are engaged in research, product development, quality assurance, manufac- turing, or some form of technical support. The other half consists of managers, administrators, and supervisors. The San Diego-based Emlyn Group's survey of 23 biotechnology companies from the United States and Canada yielded the following findings, among others: * Average number of employees: 140 * Average turnover rate: 28.9% (17.1% voluntary departures; 11.8% layoffs and firings) * Employees' average length of service: 3.1 years * Average scientist's salary: $38,500 * Average merit raise: 5.5% - 6.5% * 39.1% of companies offer stock option plan * 43.5% of companies offer performance bonus The companies reported their average turnover rate to be 28.9 percent of all personnel, including 17.1 percent voluntary departures and 11.8 percent layoffs and firings. Part of the problem, the Emlyn Group found, is that with executives from these young firms devoting more energy to business plans and other financial details, management con- tinues to have difficulty retaining scientists, who are lured by greater incentives offered by still-newer startups. The turnover rate is "pretty high," says Emlyn Group president Stan Sewitch. "Between 15 and 20 percent total is what you'd expect in a well-managed, high-growth, high-technology company." The respondents reported that the average length of service at their companies was 3.1 years. Of the responding firms, 26.1 percent have existed more than 10 years; 21.7 percent are between six and 10 years old; 39.1 percent are between two and six years old; and 13 percent have been around for fewer than two years. Sewitch says the high turnover is sometimes due to imprudent hiring. In the rush to get a new business or research program off the ground, "management doesn't always know what it wants," he says. "The urge is to fill the position, rather than do high-quality job selection." According to Sewitch, the task is complicated by the search process. Hiring candidates out of school is easy because applicants are plentiful, but assessing qualifications is also tricky. Moreover, experienced candidates aren't always so easy to find. This often tempts firms to hire scientists from a valued strategic partner, but that can jeopardize a needed business relationship. Most often, though, turnover is caused by the increasing pressure on new companies to meet financial goals, which causes managers to chase scientific talent with generous starting pay, bonuses, and other options. More than half (56.5 percent) of the companies said they were operating at a loss, and only 4.3 percent said they were breaking even. Some 17.4 percent reported making a profit, and 21.7 percent chose not to answer the question of their profitability at all. The survey found that 96 percent of the companies had formal business plans, with 45 percent to 55 percent of the operating capital assigned to labor and related costs, such as salary, bonuses, and payroll taxes. But not all these companies pay as close attention to personnel matters, according to Sewitch: Only 78 percent of the firms had a staffing plan. The respondents reported that the average salary paid to scientists was $38,500; merit raises have averaged between 5.5 percent and 6.5 percent during the past three years. This is over and above added pay for promotions or cost-of-living adjustments. In addition, 39.1 percent of the companies said that they offer some stock-option plan, while 43.5 percent offer a performance bonus. Many scientists, particularly those at the supervisory or senior levels, are also given relocation expenses. Such incentives continue to prompt scientists to sign on with the newest companies, in the hope that the stock options--offered lavishly during the startup phase--will provide a big payoff, the Emlyn Group president says. "The same thing happened years ago in the semiconductor industry," says Sewitch. "The turnover rate in biotechnology will improve as industry matures, unless there's some cataclysmic event, like layoffs or lots of mergers." Indeed, there are already signs that the maturation process will prompt more biotech firms to seek experienced Ph.D.'s. Among those hired, according to the Emlyn Group study, 13.6 percent had doctorates, 14.3 percent had master's degrees, and 39.3 percent had bachelor's degrees. The remainder were nondegreed personnel. "More and more companies are recognizing the need to evaluate people on technical talent and contribution as much as the sheepskin," says Sewitch, referring to the number of employees without bachelor's degrees. The overall job outlook, whatever a person's background, remains optimistic, Sewitch says. His firm predicts an average 25 percent growth rate in personnel at biotech companies for next year. This is fueled by previous industry growth rates: 36.4 percent in 1987, 56.1 percent in 1988, and 42.3 percent in 1989. To some extent, these high rates can be explained by the fact that so many firms are new. "Biotechnology is a young industry," says Sewitch. "Irrespective of economic ups or downs, it will be a growth industry into the next century." Projected growth rates for 1991 and 1992 are 28.5 percent and 36.8 percent, respectively. Areas that seem ripe for employment prospects include X-ray crystallography, which involves analyzing molecules, and fermentation, which requires an understanding of how to take laboratory-level cells and scale them up for large-quantity production. Fermentation personnel are needed in food and bioagriculture companies. Another potentially lucrative field is molecular modeling software development, which involves writing programs that model the behavior of molecules (see story on page 30). Each field requires some specific expertise, in areas such as such as microbiology, chemical engineering, chemistry, or computer graphics. But Sewitch points out that the overall differences among physics, chemistry, and biology are blurring at the molecular level. "Molecular genetics is like following a recipe; cloning is becoming routine," he says. "We're returning to a renaissance approach to education. Specialization is still important, but broad, conceptual abilities are becoming more important." Edward R. Silverman is a freelance writer based in Hoboken, N.J.

Survey Reports High Turnover Rates At Biotech Companies

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