mercer sirs 2012 survey results … ls...mercer sirs® 2012 survey results connecting the dots...

MERCER SIRS® 2012 SURVEY RESULTS CONNECTING THE DOTSSEPTEMBER 12, 2012

Chicago, IL

MERCER 1

Agenda

• Welcome

• Mercer SIRS® Survey Process

• Industry Trends

• Economic Context

• 2012 Survey Results and Trends

• Year-over-Year Trends

• Incentives Analysis

LIFE SCIENCES RESULTS MEETINGMERCER SIRS® SURVEY PROCESS

MERCER 33

Mercer SIRS® Survey ProcessOverview

• 126 participating organizations (6% increase) • 5,094 incumbents (3% increase)• 126 reportable benchmarks

• 126 participating organizations (6% increase) • 5,094 incumbents (3% increase)• 126 reportable benchmarks

Executive Survey

Executive Survey

• Improved ease of use of the Survey Questionnaire and Audit Workbook for participants

• Provided PDF version Benchmark Manual and SIRS Guide with data submission materials

• New compensation fields added to the survey output: Sales Incentive Eligibility, Sales Incentive Target Percentage, and Target Total Cash Compensation

• Added North Carolina to Standard Geographic Location market scopes• Added the ability to run analysis in PayMonitor based on Job Family, Category

and Level• In the Executive Survey, enabled Quick Report and pre-defined query analysis

capabilities in PayMonitor

• Improved ease of use of the Survey Questionnaire and Audit Workbook for participants

• Provided PDF version Benchmark Manual and SIRS Guide with data submission materials

• New compensation fields added to the survey output: Sales Incentive Eligibility, Sales Incentive Target Percentage, and Target Total Cash Compensation

• Added North Carolina to Standard Geographic Location market scopes• Added the ability to run analysis in PayMonitor based on Job Family, Category

and Level• In the Executive Survey, enabled Quick Report and pre-defined query analysis

capabilities in PayMonitor

2012 Enhancements

2012 Enhancements

SIRS® Benchmark Survey database shows continued growth and expansion• 512 participating organizations (94% retention rate; 2% participation increase)• 1.6M incumbents (4% increase)• 1,052 reportable benchmarks• The Life Sciences industry participation grew by 5% in both the number of

participating organizations and the total number of incumbents

SIRS® Benchmark Survey database shows continued growth and expansion• 512 participating organizations (94% retention rate; 2% participation increase)• 1.6M incumbents (4% increase)• 1,052 reportable benchmarks• The Life Sciences industry participation grew by 5% in both the number of

participating organizations and the total number of incumbents

Benchmark Survey

Benchmark Survey

MERCER 4September 17, 2012 4September 17, 2012

Mercer SIRS® Survey Process What is the Data Exchange Agreement (DEA)?

Tool used for sharing company profile information, selecting peer groups and executing Data Exchange Agreements (DEAs) with other participants

Requires annual update of company profile

Requires participants to select a peer group and send data exchange agreement requests annually

Enables others to view participating company’s demographics and company descriptions

Provides companies opportunity to share line detail informationby requesting to have a DEA

Companies can deny or accept such invitationsData Exchange Agreement is a reciprocal agreementConfidentiality is maintainedSafe Harbour Guidelines are strictly abided byExchange Agreements must be established every yearSufficient amount of DEAs are required

Companies can deny or accept such invitationsData Exchange Agreement is a reciprocal agreementConfidentiality is maintainedSafe Harbour Guidelines are strictly abided byExchange Agreements must be established every yearSufficient amount of DEAs are required

MERCER 55

Mercer SIRS® Survey ProcessWhat is the Data Exchange Agreement (DEA)?

Open from April to June

Companies who do not submit a peer group in the data exchange will not receive …

Planned changes and improvements for 2013

Enhanced “User Guide” will be easy to locate and detailed instructions will be communicated at the beginning of the processSystem modifications, such as allowing participants to select multiple peer groups at same time

Enhanced “User Guide” will be easy to locate and detailed instructions will be communicated at the beginning of the processSystem modifications, such as allowing participants to select multiple peer groups at same time

Once closed, no new exchange agreements can be executed for current survey cycle

Peer group pre-loaded in PayMonitorPeer Group Report (including line detail)Levels Analysis Report

Peer group pre-loaded in PayMonitorPeer Group Report (including line detail)Levels Analysis Report

DEA reopens as a read-only directory of company information and contactsDEA reopens as a read-only directory of company information and contacts

MERCER 66

Mercer SIRS® Survey ProcessWhat is PayMonitor?

Web-based analytical tool to quickly access market data using template reports or custom reports you create specific to your needs

Secure and confidentialunique ID and password for system to recognize you and your organization

Results are online as soon as report results are availableaccess 24/7

Three ways to access data

Published survey reportCustomized market comparisonsReport Wizard to customize report templates and output

Published survey reportCustomized market comparisonsReport Wizard to customize report templates and output

MERCER 77

Mercer SIRS® Survey ProcessWhat is PayMonitor?

Customize reports in three easy steps

Step 2: Select market using predefined Industry, peer group, or geographic areasselect specific revenue data cut, create analysis based on industry, geography, and other factors*

Step 3: Run reportrequest the system to age survey results or compare your data to the market dataprint or export results to PDF or Excel; including Report Appendix that summarizes selections

Training

Online user guideKnowledge base of articles and detailed instructions for accomplishing specific tasksClient Contact Center

Online user guideKnowledge base of articles and detailed instructions for accomplishing specific tasksClient Contact Center

Step 1: Select benchmarks you want to analyzeview benchmark descriptions, highlight submitted benchmarks or create “blended/hybrid” jobs

*Some market selections require Premium PayMonitor access

MERCER 88

PremiumStandard

Mercer SIRS® Survey ProcessPayMonitor Options

• Access for 2 users

• One peer group

• One industry cut

• One Peer Group Report

• One Levels Analysis Report

• Standard geographic cuts

• Some interactive analytical capability:– Compare My Data– Aging– Exporting

Everything in Standard, PLUS …

• Unlimited peer groups– Each peer group request must be approved and

meet Mercer standards:- at least 10 organizations- at least 8 distinct organizations- at least 4 different organizations compared to

any other peer group

• Access to 19 industry and sub-industry cuts

• All geographic locations including city and state

• Additional market selections including revenue, headcount, organization ownership and more

• Full analytical flexibility to combine/create statistics based on any queries and filters

MERCER 9

The Mercer Workforce Intelligence Network:

• An easy-to-use interactive search and analysis tool

• Access your survey results across industry and across borders

• Unlimited, free peer cut reports, on the fly, for participants

• Ability to compare your submission to the market instantly

• Produces charts, graphs and reports at the click of a button

• Refine the results exactly the way you want

• And more

The Mercer Workforce Intelligence Network:

• An easy-to-use interactive search and analysis tool

• Access your survey results across industry and across borders

• Unlimited, free peer cut reports, on the fly, for participants

• Ability to compare your submission to the market instantly

• Produces charts, graphs and reports at the click of a button

• Refine the results exactly the way you want

• And more

99

Mercer SIRS® Survey ProcessMercer WIN®

SIRS® is currently exploring the feasibility of transitioning from PayMonitor to WIN in 2013You may already have access to other US or global Mercer surveys in WIN

MERCER 10

• MLS Provides clients with consistent regional methodologyreport delivery through Mercer WIN®

deep industry databasesbroad market and job coverage

• MLS will have enhanced data levels and more reportable benchmarks compared to current SIRS®

International reports.

• MLS Provides clients with consistent regional methodologyreport delivery through Mercer WIN®

deep industry databasesbroad market and job coverage

• MLS will have enhanced data levels and more reportable benchmarks compared to current SIRS®

International reports.

• SIRS® International for Europe and Canada will be transitioned to the Mercer Life Science (MLS) Survey for the 2013 survey cycle.

• SIRS® International in Latin America, including Puerto Rico, is still under discussion.• Mercer is comparing the SIRS benchmarks to MLS to ensure consistency and will provide a

translation table for SIRS benchmarks and levels to MLS.• The fee structure will change to a per-country cost.

• SIRS® International for Europe and Canada will be transitioned to the Mercer Life Science (MLS) Survey for the 2013 survey cycle.

• SIRS® International in Latin America, including Puerto Rico, is still under discussion.• Mercer is comparing the SIRS benchmarks to MLS to ensure consistency and will provide a

translation table for SIRS benchmarks and levels to MLS.• The fee structure will change to a per-country cost.

• MLS brings all of Mercer’s industry-specific and general industry data together under a single harmonized methodology.

• MLS covers 32 markets.• The MLS survey benchmarks are coded using Mercer Universal Position Coding System (MUPCS),

and International Position Evaluation (IPE) output is produced in all EMEA countries.• Compensation data consists of base salary, variable pay, and any other guaranteed cash payments.

• MLS brings all of Mercer’s industry-specific and general industry data together under a single harmonized methodology.

• MLS covers 32 markets.• The MLS survey benchmarks are coded using Mercer Universal Position Coding System (MUPCS),

and International Position Evaluation (IPE) output is produced in all EMEA countries.• Compensation data consists of base salary, variable pay, and any other guaranteed cash payments.

10

Mercer SIRS® Survey ProcessSIRS® International & Mercer Life Sciences Survey

Why change?

Why change?

What’s changing?

What’s changing?

What is the MLS Survey?

What is the MLS Survey?

MERCER 1111

Mercer Life Science Survey

Separate Mercer industry offering

No industry offering

Mature Markets

Belgium

Canada

Denmark

France

Germany

Ireland

Italy

Netherlands *

Portugal

Spain

Sweden

Switzerland *

United Kingdom

Emerging Markets

Algeria

Bulgaria

Czech Rep.

Egypt

Gulf Region

Hungary

Levant Region

Morocco

Poland *

Romania

Russia

Saudi Arabia

Serbia

Slovakia

Tunisia

Turkey

Ukraine

(*) available combined with comprehensive benefits survey

Mercer SIRS® Survey ProcessSIRS® International & Mercer Life Sciences Survey (MLS)

MERCER 1212

Mercer SIRS® Survey ProcessQuestions and Comments

Thank you for your continued support and participation

Please continue to provide us with

feedback

LIFE SCIENCES RESULTS MEETINGINDUSTRY TRENDS

MERCER 14

Industry Trends Life Sciences Perspective

Life Sciences IndustryLife Sciences Industry

• Agricultural Science• Animal Health• Biotechnology• Contract Healthcare

Services• Medical Devices• Pharmaceutical

• Agricultural Science• Animal Health• Biotechnology• Contract Healthcare

Services• Medical Devices• Pharmaceutical

Overall Industry Perspective

Consolidation will continue to take place as established companies strive to

improve product pipelines and portfolios.

FDA authority expanding; regulating approximately a quarter of the US

economy.

Growing patient awareness, copayment models, and subsequent increases in

patient influence/voice regarding treatment decisions.

Social media bound to play more prominent role; FDA is taking social

media seriously and has embraced its use with eight Twitter feeds.

MERCER 15

Industry Trends Biotechnology Perspective

BiotechnologyBiotechnology

• Personalized medicine• Nearly 31% of the

molecules in R&D are cancer and auto-immune

• Venture funding in the domestic biotech sector topped $4.7B in 2011, 22% more than 2010

• Personalized medicine• Nearly 31% of the

molecules in R&D are cancer and auto-immune

• Venture funding in the domestic biotech sector topped $4.7B in 2011, 22% more than 2010

Industry Trends

After seeing tightening of R&D budgets with a greater focus on revenue in the past few years, 2011 saw an increase

of 6% in R&D spending and jobs.

Several biotech companies are also moving into biosimilars (large molecule drugs) as follow-on manufacturers do

not have access to the molecular clone, cell bank or fermentation and

purification process.

MERCER 16September 17, 2012

Industry Trends Medical Devices Perspective

Medical Devices Medical Devices

• Diagnostic companies will increase in importance as gene chips are used to “personalize”drug therapy

• Increased medical device and pharmaceutical partnerships/alliances as devices are used as drug delivery methods

• FDA Safety and Innovation Act doubles the charge medical device companies will pay the FDA in exchange for the promise of a faster approval process

• Diagnostic companies will increase in importance as gene chips are used to “personalize”drug therapy

• Increased medical device and pharmaceutical partnerships/alliances as devices are used as drug delivery methods

• FDA Safety and Innovation Act doubles the charge medical device companies will pay the FDA in exchange for the promise of a faster approval process

Industry Trends

Patient Protection and Affordable Care Act (PPACA) Health Care Law is threatening to decrease

Medical Device Companies’ US manufacturing presence through

taxing revenues, prompting companies to cut jobs and move

factories to other countries.

MERCER 17

Industry Trends Pharmaceutical Perspective

PharmaceuticalPharmaceutical

• Global sales expected to expand 6–9% in 2012, to over $960B

• US sales account for 33%, Europe 15%, Japan 11%, emerging markets 15% and all others 19%

• Industry-expanding shift for clinical trial studies toward low-cost countries

• Global sales expected to expand 6–9% in 2012, to over $960B

• US sales account for 33%, Europe 15%, Japan 11%, emerging markets 15% and all others 19%

• Industry-expanding shift for clinical trial studies toward low-cost countries

Industry Trends

Patent cliff expected to hit the big pharmaceutical companies

through 2014 is causing reshaping and restructuring.

Increasing M&A activity between Pharmaceutical and Biotechnology

companies, blurring the line of distinction between the two sub-

industries.

Patient Protection and Affordable Care Act will be generating 30M

new customers.

LIFE SCIENCES RESULTS MEETINGECONOMIC CONTEXT

MERCER 19

Economic Context Key Indicators for the United States Economy

Indicator 2008 2009 2010 20112012

Projected

Real GDP Worldwide 2.9 3.7 3.5 4.0 3.1Real GDP US -0.4 -3.5 3.0 1.8 2.1Inflation (CPI) 3.8 -0.4 1.6 3.2 2.1Unemployment Rate 5.8 9.3 9.6 8.9 8.2

Source: www.bls.gov

MERCER 2020

Economic ContextAverage Base Salary Percent Increase

On average, base salary increases for SIRS® Life Sciences organizations are leading CPI.

2012 SIRS® Life Science Average Salary

Increase = 2.4%*2012 Inflation

Increase = 2.1%

* Salary Increase Source: Mercer SIRS® 2011 and 2012 Benchmark Surveys effective April 1 of calendar year (excluding Sales and U coded benchmarks)

MERCER 2121

Economic ContextInflation and Base Salary Increases

Continued alignment of general industry and life sciences base salary increase budgets, both forecast to stay above CPI in 2013.

Inflation Source: Current Consumer Price Index published monthly by the Bureau of Labor Statistics (BLS)

Salary Increase Source: Mercer US Compensation Planning Survey

LIFE SCIENCES RESULTS MEETING2012 SURVEY RESULTS AND TRENDS

MERCER 23

2012 Survey Results and Trends Key Findings• The industry has prioritized product and compliance training as well as process

improvement in the quality and manufacturing areas resulting in large population growth in Engineering and Sciences Support, Manufacturing and Quality job families.

• Companies are in the process of implementing shared services models and investing in outsourcing services; the survey will continue to show a reduction in reported employees in Communications and IT job families.

• There is a close alignment in the median base pay levels for the Technical and Administrative categories. As companies face cost constraints and potential changes in compensation philosophy and peer group comparisons, the survey expects to show a wider gap in the pay lines for the Administrative positions compared to Technical category.

• As companies deal with limited budgets, reward and recognition have become even more essential to compensation leading to increased use of dual career ladders across most job families. The survey shows one degree of separation between SIRS® levels for management and individual contributor roles based on average base salary.

MERCER 2424

2012 Survey Results and Trends Sub-Industry Participation Distribution

Number of Incumbents: 541,864

Sub-Industry Organizations Participating

Number of Incumbents

Agricultural Sciences 9 17,047

Animal Health 12 9,482

Biotechnology 28 27,619

Contract Healthcare 27 75,195

Medical Device 73 162,648

Pharmaceutical 84 249,873

Total 233 541,864

MERCER 2525

2012 Survey Results and Trends Job Category and Family Incumbent Distribution – Life Sciences

Number of Incumbents: 541,864

Job FamilyNumber of

Incumbents% change from 2011

Sales 116,728 6.2%Engineering and Sciences 82,802 2.5%Manufacturing 73,000 8.8%Information Technology 36,218 -5.6%Quality 34,356 11.8%Material and Distribution 30,347 4.9%Engineering and Sciences Support 26,235 29.2%Marketing 23,321 0.2%Fiscal 22,649 3.3%Administrative Services 21,391 -4.5%Legal and Regulatory 18,381 5.8%Facilities 11,158 8.2%Technical Product Support 10,544 -7.0%Strategy and Planning 9,736 0.4%Human Resources 9,216 4.7%Procurement 5,118 -0.7%Contracts 4,006 3.9%Communications 2,926 -30.8%Environmental, Health and Safety 2,433 10.1%Security 788 -5.1%

Engineering & Sciences Support, Manufacturing and Quality showed the largest growth in incumbents, while Communications and IT saw a reduction in reported employees.

MERCER 2626

Support Administrative Technical Management

Medical Devices lags both Biotechnology and Pharmaceutical pay levels on average across all categories.

75th %ile

25th %ile

MedianAverage

2012 Survey Results and TrendsSub-Industry Analysis

MERCER 2727

2012 Survey Results and Trends All Life Sciences: Administrative

75th %ile

25th %ile

MedianAverage

The Administrative category shows an average mid-point base salary progression of 30% between each level step, consistent with 2011.

MERCER 2828

2012 Survey Results and Trends All Life Sciences: Technical

75th %ile

25th %ile

MedianAverage

The Technical category is closely aligned with the Administrative median base salary and ranges by level.

MERCER 2929

2012 Survey Results and Trends All Life Sciences: Management

75th %ile

25th %ile

MedianAverage

In creating a dual career ladder for a job family, the data shows a single SIRS® level separation between management and individual contributor roles when looking at average base salary.

MERCER 3030

2012 Survey Results and Trends All Life Sciences

Interquartile Range (25th to 75th percentile)

All Functions Median = $79.7

Legal & Regulatory and Marketing show highest median base salary overall across categories.

MERCER 3131

2012 Survey Results and Trends Pharmaceutical



Pharmaceutical pays higher than overall Life Sciences for most job families except Manufacturing.

MERCER 3232

2012 Survey Results and Trends Biotechnology



Compared to other job families within biotechnology, marketing jobs are paid the highest.

MERCER 3333

2012 Survey Results and Trends Medical Device



The spread of pay within a job family is generally smaller within Medical Devices than other sub-industries.

MERCER 3434

2012 Survey Results and Trends: Geographic Base Salary Differences Life Science Industry Non-Support* Benchmarks

6%

-8% -9% -5%

-13%-8%

7%9%

-15%

Compared to all SIRS® Life Sciences, average base pay is lowest in the South and highest in the Northeast.

* Includes Administrative, Technical, and Management benchmarks

MERCER 3535

2012 Survey Results and Trends: Geographic Base Salary Differences Life Sciences Industry Support* Benchmarks

4%

-8% -5% 1%

-13%-7%

11%12%

-16%

Geographic base pay differences for Support roles are similar, however show more variance.

* Includes Office/Clerical, Production/Maintenance, and Technician benchmarks

LIFE SCIENCES RESULTS MEETINGYEAR-OVER-YEAR TRENDS

MERCER 37

Year-over-Year TrendsMethodology

• Constant 2011–2012 population– By Company, Benchmark Code and Level

• Incorporates Job Family Changes– Public Relations to Communications

• Incorporates Benchmark Code Changes– T116 Healthcare Economics Analyst moved to T188 Health Economics– T003/S078 Sales-Diagnostic moved to T004/S080 Sales-Medical

Devices

• Excludes Subfamily 04.04– Sales Positions

• Excludes Licensed Professionals– U-Coded Benchmarks

Changes in base salary and total cash may reflect a combination of factors (staffing changes, promotions, individual increases)

Changes in base salary and total cash may reflect a combination of factors (staffing changes, promotions, individual increases)

MERCER 3838

With the increased focus of organizational resources on quality, this key area shows the largest growth in incumbent population.

* Top Job Growth job families analysis include only those benchmarks with sufficient amount of incumbents matched. Data includes common organizations, common benchmarks across both years.

Year-over-Year TrendsIncumbent Population Growth By Job Family – All Life Sciences

MERCER 3939

The largest growth for management roles was within the Contracts and Marketing job families.


Year-over-Year TrendsIncumbent Population Growth By Job Family – Management

MERCER 4040

The Administrative category shows strong growth for individual contributor roles within Quality.


Year-over-Year TrendsIncumbent Population Growth By Job Family – Administrative

MERCER 4141

Organizations are increasing their HR technical-based individual contributor populations.


Year-over-Year TrendsIncumbent Population Growth By Job Family – Technical

MERCER 4242

The overall IT incumbent population drop is driven largely by Support category benchmarks.


Year-over-Year TrendsIncumbent Population Growth By Job Family – Support

MERCER 4343

2.1% base salary increase across all categories –Largest increases in Contracts and Human Resources job families.


Year-over-Year TrendsBase Salary Increases By Job Family – All Life Sciences

MERCER 4444

2.5% total cash compensation increase across all categories –Largest increases in Contracts and Communications job families.


Year-over-Year Total Cash Compensation Increases By Job Family – All Life Sciences

LIFE SCIENCES RESULTS MEETINGINCENTIVES ANALYSIS

MERCER 46

Incentives AnalysisKey Findings

• The shift away from stock options and towards performance awards that are earned based on achieving performance goals continued in 2012.

• As the industry looks to re-build sustainable pipelines with high value products, R&D organizations are focusing on actively balancing resources across the pipeline. The data indicates a change in eligibility that is more centered on longer term performance and commitment from the scientific/engineering staff. In 2012 Technical category showed a decrease in STI eligibility of 15% and 11% for levels 3 and 4, compared to an increase in LTI eligibility of 10% and 14% respectively.

• LTI eligibility is not as common at lower levels of management as STI. One contributing factor is the 2008 SEC ruling that requires companies disclose their performance measures and goals as well as resulting payout levels.

• As expected, short and long term variable pay make up more of the total package for administrative, technical and management categories as roles become more senior.– Management category benchmarks show increases from 15% of total direct

compensation at SIRS® level 3, up to 43% by SIRS® level 7.

MERCER 4747

Incentive Analysis: Target and Actual Short-Term Incentives Plan Payout Analysis

On average, there was no significant change to target bonus award levels, however more incumbents were paid out at less than target in 2012 than the prior year.

*Data reflects incumbents who were eligible for short-term incentives and provided target information in the 2011 and 2012 SIRS Benchmark Survey

Incentive Plan Payout -Percent of Incumbents No Payout

Less than Target At Target

More than Target

2011 Survey* 10% 23% 34% 33%

2012 Survey* 10% 29% 29% 32%

MERCER 4848

Incentives Analysis: Long-Term IncentiveEligibility by Plan Type

The prevalence of Performance Shares/Share Units rose while the prevalence of Stock/Share Options and Restricted Shares/Share Units decreased

mercer sirs 2012 survey results … ls...mercer sirs® 2012 survey results connecting the dots...

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