Where CRO Size Doesn't Matter - Glassdoor.com
Glassdoor.com was acquired earlier this month for $1.2B by Recruit Holdings. Since its debut, Glassdoor said it has accumulated data on more than 770,000 companies in more than 190 countries. To be honest, I had no idea Glassdoor was that large or would have earned such a frothy valuation. I always peeked on the site from time to time to see if we received any meaningful employee feedback while I was at Theorem Clinical Research. The feedback was somewhat useful but a little sparse. Times have changed, as CEO of Clinipace, I use the Glassdoor app daily so I am up to speed on all new reviews. However, I can honestly say I wasn't prepared for this:
When making the decision to join Clinipace, I discussed a lot of topics with my wife. All the usual ones, travel, how we will manage our 4 kids with my increased responsibility workload, is the job and company the right fit,etc.... Being publicly graded and commented on was not on my radar. Fortunately I have 4 kids and was able to get out of the gate strong with their reviews. All kidding aside, while being publicly graded can be a humbling experience - I like the feedback and the engagement with current and former Clinipace employees. I find the reviews informative and I share them with the Clinipace Management Team and Board of Directors.
Clinipace's Glassdoor page receives between 3,500 - 5,000 page views per month (with a high of 5,980 last October presumably driven by our CEO change).
Glassdoor truly is a window into our company - feedback from our human resources organization is that numerous employee candidates referenced reviews and my comments (I have recently tried to respond to all reviews - positive or negative). When you consider employee turnover in the CRO industry is approximately 20%, Glassdoor can positively or adversely impact a company's turnover AND its ability to recruit new talent. Considering that the average cost per hire (per the Society for Human Resource Management) is approximately $4,129, with an average time to fill a position of 42 days - we can quickly calculate the financial impact of turnover & recruitment.
The below schedule calculates the potential recruiting costs under multiple turnover and growth scenarios for a CRO with 800 FTE (I used Clinipace as a proxy). To keep it simple, I haven't included the cost of training or lost revenue driven by turnover (while these are very material costs). Here are my assumptions:
Total FTE 800
Tunover percent ranging from 15% - 20%
Growth ranging from 5% - 10%
Recruitment cost of $4,129 per FTE to replace
A few observations:
The difference between 15% and 20% turnover is roughly $165,000 ($660,640 - $495,480)
Growth can be expensive - the recruiting cost jump from 5% to 10% is $165,160
Managing turnover and the cost of recruitment can have a significant impact to a CRO's bottom line (not to mention overall continuity for customer service, quality and satisfaction levels.
For further references, below is a chart that summarizes all the potential scenarios depicted in the calculations above. As you can see the high end of recruiting costs would be $990,960 (20% turnover / 10% growth) and a low end of $660,640 (15% turnover / 5% growth). The optional scenario is $825,800 (15% turnover / 10% growth), while the worst case scenario is also $825,800 (20% turnover / 5% growth). The worst case scenario utilizes the same costs to fund more employee replacement versus growth.
Data and reviews from Glassdoor can help leaders make cultural and procedural adjustments that can reduce the costs of turnover, growth and recruitment.
CRO Differentiation - Size Doesn't Matter
I written many articles in the past discussing the differences between mega/large and mid-size CROs. Apparently, Glassdoor reviews (and reviewers for that matter) do not care about CRO size, revenue, profits or scale. Glassdoor has a comparison feature, so I have the ability to compare Clinipace's average scores by category versus Parexel or Syneos (for example). Naturally, I was curious so I used the functionality to compare Clinipace to the following CROs:
Before I provide a few observations, a few important points about the data:
The results are compared to an overall Glassdoor average. So green are results above the average, yellow right around the average and pink/red are below average. Dark greens and red are better/worse than light green and pink.
The data (if I am correct) is tabulated over Glassdoor's history (with the CEO approval rating being the one obvious exception). So for example, if a company had poor reviews 3 years ago, but has recently received numerous favorable reviews, the scores would be averaged. I recommended reading recent reviews for a particular company if you want to get the most recent intelligence.
Lastly, the numer of reviews vary a great deal. For example, since Syneos Health is new, there are only 56 reviews. While TFS only has 11 reviews - not much activity.
A few observations:
New CEOs seem to bring a positive reaction - Clinipace, Parexel and TFS all recently hired new CEOs - each have CEO approval ratings way above the 68.8% Glassdoor average.
Size doesn't matter, Covance, Medpace and Worldwide Clinical Trials all have overall ratings below the average. However, the total range was tight - between 3.0 - 3.4 for all CROs, with the exception of Medpace at 2.4.
Profitability doesn't matter as Medpace had an overall score of 2.4 even though it has consistently been one of the most profitable CROs (as a % of EBITDA) in the world.
Culture matters as 3 CROs (Covance, Medpace & Worldwide) all scored below 3.0 on culture and values and correspondingly scored low on "Recommend to a Friend?"
Work / Life balance is an area, all CROs can do better. 60% of the CROs had below average scores in this area (which I'm sure helps contribute to increased turnover).
Lastly, on a positive note, CRO employees are optimistic about their respective company's business outlook, 80% of the CROs were in the green range. Makes sense as the CRO industry is still growing.
Do I think that Glassdoor.com is a perfect human resources dataset? Of course not. Reviews are common in the social media / e-commerce age - understanding the strengths and weaknesses of the data is important. Especially when numerous unhappy employees or former employees can skew that data for a large organization. I don't believe that Medpace, Worldwide or Covance are weak organizations because they don't have strong Glassdoor scores. I have friends who work at these organizations and are quite happy with their experience and situation. I do believe that Glassdoor can be an effective tool for organizations to:
Gain insight into their organizations - particularly in geographically sprawling organizations such as CROs where it can be difficult to understand local challenges from afar.
Improve CEO engagement with current and former employees/
Stay current on positive and negative trends that may be impacting the organization.
Data is everywhere, analyzing, interpreting and understanding the source of said data is important. When the information is coming directly from former and current employees, I recommend all executives treat Glassdoor as an important source of intelligence. One more observation: I'm sure ignoring employee feedback with result in a downward trend of my CEO Approval scores (which I need to stay high as I currently rank 7th in my own household behind our dog Ranger).
Jason Monteleone is CEO of Clinipace & President at Pivotal Financial Consulting, LLC. Clinipace is a global mid-size CRO with operations in the Americas, Europe and Asia-Pac serving small and mid-size pharma and biotech sponsors. Pivotal provides Divestiture Assistance, Acquisition Advisory Services and Strategic Planning to the Pharmaceutical Outsourcing Industry. Jason can be reached at firstname.lastname@example.org. Follow me on Twitter @JMPivotal. Sign up for Jason's latest blogs and updates at my www.pivotalfinancialconsulting.com.