The hidden costs of replacing lab talent

Despite housing millions in analytical equipment and materials, a pharmaceutical QC lab’s most valuable assets are actually its people. Unfortunately, though, sometimes those people decide to leave and, to maintain a consistent output, lab managers must recruit replacement talent. In this blog post, we explore the hidden costs of employee turnover: replacing lab analysts is expensive, sure, but increasing the size of your workforce even after a departure can actually further decrease your capacity—at least in the short term.

In a rush? Here are the 3 key takeaways

1. 👉 The turnover of skilled lab staff, especially senior analysts, can be costly for pharma QC labs, as the onboarding and training process for new staff requires significant investment of time and effort
2. 👉 The costs of recruiting, onboarding, and training a new lab technician can be between 50% and 125% of that employee’s first year salary, and this can increase to as much as 300% when replacing a trained staff member
3. 👉 Counterintuitively, recruiting new staff into a lab actually comes with a short-term reduction in testing capacity due to the unproductive time of new staff during their 3-6 month training period and the time trainers lose to onboarding activities

Recruiting in pharmaceutical labs

One recent survey suggests that two-thirds of life science professionals start looking for a new role within their first year of employment—in a competitive and skilled field such as lab analysis, this can be devastating. While laboratory turnover is relatively low compared with some sectors and even other disciplines within the life sciences industry, its impacts are felt all the more acutely due to the high investment in expertise each new starter requires.

Lab staff—especially senior analysts—are typically postgraduates with previous experience of working for other employers. As a subset of employees, this makes them both attractive to competitors and predisposes them to consider moving to an alternative employer if better opportunities arise. Even though having previous pharma lab experience is an important prerequisite for such candidates, analytical test methods are rarely (if ever) transferable between organizations. As a result, new staff—even those in senior technical roles—can require a significant investment of time and effort for training.

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Training: a necessary but costly investment

It can typically take 3-6 months before a new member of analytical staff is sufficiently onboarded to be able to work independently and at full capacity. The associated training can involve multiple phases, each requiring more or less input from one or multiple members of staff. For example, a new lab technician might require three phases of training before being ready to work alone:

1. Orienting, in which the new recruit is guided through all the procedures they will need to know to fulfil their role. These can range from company/corporate practices, through site-, lab-, and product-specific processes, to the details of individual test methods. All of these require one or more established members of lab staff to be removed from the pool of potential analysts in order to support the onboarding activities.
2. Shadowing, in which the new starter experiences the hands-on processes associated with different tests by observing the day-to-day analytical tasks of an existing staff member. While, in theory, this is more of a passive training role for the established analyst and shouldn’t impact on their daily work, in reality it can reduce their usual capacity.
3. Evaluating, where the new technician takes the lead in testing but is actively supervised by the established analyst, again diverting them from their usual duties in order to oversee and assess the trainee’s work.

In total, recruiting, onboarding, and training a new lab technician can cost between 50% and 125% of that employee’s first year salary—and that applies mainly to a new starter recruited into a growing lab, rather than someone introduced to replace lost talent. The costs increase even further when replacing a trained staff member—by as much as 300% of their annual salary—because of the lost capacity due to the absence of the analyst who is being replaced.

How increasing your workforce decreases your capacity

Counterintuitively, recruiting new staff into a lab actually comes with a (short-term) reduction in testing capacity. None of the costs described above account for a new staff member’s unproductive time in their 3-6 month training period, during which they are not contributing in a substantive manner. Combined with the time trainers lose to onboarding activities, the resulting ‘capacity leak’ can be significant—a potential drop to below 0.5 FTE of value-add activity for 2 full time salaries over the course of the training period (see below example). The associated consequences for increased workload among the other lab staff can, in turn, escalate the workplace stress that further contributes to increased employee turnover.

Let’s illustrate this complicated scenario with an example in which a new analyst has been recruited to replace a lost member of staff, with an onboarding period of 21 weeks:

• There are three sources of testing capacity, each potentially providing up to 0.8 FTE of time towards value-add analytical activities):
  1. The Exiting Analyst
  2. The New Analyst
  3. The Trainer
• Prior to recruiting the New Analyst, there is 1.6 FTE of testing capacity (both the Exiting Analyst and Trainer)
• During the Onboarding Phase (total of 0.20 FTE for 7 weeks):
  • The Exiting Analyst has left, so no longer contributes to capacity (0.0 FTE)
  • The New Analyst is not yet trained, so does not contribute to capacity (0.0 FTE)
  • The Trainer spends three-quarters of their time providing training to the New Analyst (0.20 FTE)
• During the Shadowing Phase (total of 0.6 FTE for 7 weeks):
  • The New Analyst does not contribute to lab work (0.0 FTE)
  • The Trainer is being observed while walking the trainee through tests, so operates below normal capacity (0.6 FTE)
• During the Evaluating Phase (total of 0.6 FTE for 7 weeks):
  • The Trainer is dedicated to evaluating the New Analyst and is therefore not contributing to regular testing (0.0 FTE)
  • The New Analyst is being evaluated, contributing to testing but slowly building up to full capacity (0.4-0.8 FTE)

• In total, then, recruiting a new analyst to replace a single exiting member of staff can actually reduce lab capacity from 1.60 FTE to 0.47 FTE across two staff members over a 5-month period

This capacity leak is even more noticeable when replacing multiple staff members (for instance at the end of short-term contracts).

• In the below example, a team of 12 analysts is increased to a total capacity of 13 when 3 outgoing members of staff are replaced by 4 new recruits, leading to a one-third reduction in total lab capacity in the 5 months following onboarding:
  

Promoting employee retention

The cost of replacing lost employees can therefore be high—both from direct and indirect economic perspectives but also when considering the wellbeing of your established workforce. The motivation to keep as many of your trained staff in situ should therefore be clear. Thankfully, there are ways to get ahead of the competition and cultivate a positive working environment that fosters lab staff and their talents, promoting significant employee retention. Would you like to learn more about how to curb turnover in your lab?

Why not watch our recent webinar, “Win over, don’t turnover! Retaining lab talent in the life science industry”.