The High Cost of Cutting Corners: The Short- and Long -Term Effects of Underpaying Talent in Clinical Research

 

Introduction: The Post-Pandemic Financial Squeeze

 

The financial constraints of 2023 and 2024, brought about by economic uncertainty and rising operational costs, have forced many clinical research organizations (CROs), sponsors, and biotechnology firms to do more with less. One common cost-cutting measure has been offering compensation below market averages for employees and contractors. While this approach provides short-term budgetary relief, the long-term implications for operational efficiency, workforce stability, and innovation can be devastating.

In 2025, where hiring trends reveal a shift towards skills-based hiring, flexible staffing models, and competitive compensation, underpaying talent is increasingly unsustainable. This whitepaper delves into the psychological, operational, and financial impacts of underpaying employees and contractors in clinical research and offers actionable strategies to mitigate labor costs without sacrificing quality.

 


 

Short-Term Benefits: The Appeal of Immediate Savings

For companies grappling with tight budgets, underpaying talent can seem like a quick solution. Some perceived benefits include:

  1. Immediate Budget Relief: Lower salaries or contractor rates allow companies to allocate funds to other high-priority areas, such as trial expansion or advanced technologies.
  2. Access to a Larger Talent Pool: By advertising roles with lower pay, some organizations may attract candidates willing to compromise on compensation for other benefits like flexible work arrangements or entry into the clinical research field.

 

However, while these benefits provide short-term fiscal breathing room, the risks and costs of underpaying far outweigh the initial savings.

 


 

The Long-Term Fallout of Underpaying Talent

  1. Turnover and Its Costs High turnover rates, particularly among Clinical Research Associates (CRAs), remain a significant challenge. Industry data shows a CRA turnover rate of 26%, with each departure costing companies an estimated $65,000 in replacement and onboarding expenses. Employees who feel undervalued are more likely to seek better-paying opportunities, exacerbating the turnover crisis and increasing the workload for remaining team members.
  2. Decline in Work Quality The clinical research industry demands precision and reliability. Hiring individuals at below-market rates often results in engaging less experienced talent or those less committed to their roles. This can lead to:
  3. Reputational Damage Underpaying employees can harm a company’s reputation, making it less attractive to top-tier candidates. In an industry where quality and reliability are paramount, companies that fail to attract skilled professionals risk falling behind competitors.
  4. Psychological Impact on Existing Teams Human psychology tells us that people dislike losses more than they appreciate equivalent gains. If employees see peers leaving for better pay, it fosters resentment, reduces morale, and leads to decreased productivity.

 


 

The Hidden Cost of Hiring “Bargain Talent”

Employees willing to accept below-market rates often signal a lack of confidence in their abilities or desperation for employment. These candidates may:

  • Require additional training, increasing onboarding costs.
  • Be less invested in organizational goals.
  • Struggle to meet industry standards, jeopardizing trial outcomes.

 

In a field where patient safety and regulatory compliance are non-negotiable, these risks can have profound implications.

 


 

Trends Reshaping the Clinical Research Workforce in 2025

The industry is undergoing a significant transformation in how it attracts, compensates, and retains talent. Key trends include:

  1. Skills-Based Hiring Employers are focusing on specific competencies rather than traditional qualifications, allowing them to identify high-potential talent and fill roles efficiently.
  2. Flexible Staffing Models Organizations are increasingly adopting contract-based and Functional Service Provider (FSP) models. These approaches provide scalability and access to specialized talent without the overhead of permanent roles.
  3. Remote and Hybrid Work Remote work remains a top priority for job seekers. Companies offering flexible arrangements are better positioned to attract diverse and geographically dispersed talent.
  4. Investment in Retention To combat turnover, many companies are increasing pay transparency and investing in employee development. Competitive compensation and clear career progression paths are becoming standard.
  5. Integration of AI and Automation Advanced technologies are reshaping job requirements, necessitating a workforce skilled in data analysis, AI tools, and automation.

 


 

Sustainable Strategies for Managing Labor Costs

Instead of underpaying, organizations can adopt cost-effective measures that align compensation with productivity and ensure long-term sustainability:

  1. Upskilling and Reskilling Investing in current employees’ professional development enhances productivity and loyalty. Upskilling reduces reliance on external hires and mitigates the costs of turnover.
  2. Rewarding High Performers Offering top talent slightly above-average pay can yield significant returns. For example, a CRA earning 10% more but producing 30% greater output within quality metrics is a profitable investment.
  3. Hiring Entry-Level Talent Strategically Partnering with staffing experts to identify and train high-potential entry-level professionals ensures a steady pipeline of qualified talent while controlling costs.
  4. Leveraging Flexible Staffing Models FSP models enable companies to scale resources based on project demands, maintaining quality while managing labor expenses.

 


 

Conclusion: Prioritizing Talent in 2025 and Beyond

In the competitive and innovation-driven clinical research industry, talent is the most valuable asset. Underpaying employees may offer temporary relief but results in long-term operational and reputational damage. The solution lies in adopting strategies that balance cost-efficiency with employee satisfaction and productivity.

By investing in workforce development, embracing flexible staffing solutions, and aligning compensation with performance, organizations can position themselves as leaders in an increasingly competitive field. These measures not only protect trial quality but also foster an engaged, skilled, and loyal workforce essential for long-term success.

Facebook
Twitter
LinkedIn
Email