Many hiring managers already know this sobering truth: in 2024, companies spent more than $350 billion globally on employee training and development. Furthermore, a senior-level employee being onboarded in biotech or healthcare may complete 200 to 400 hours of training in the first year. With these costs, and this kind of time investment, companies need to find the right match.
The cost of the right (or wrong) hire
One of the challenges in making this crucial decision is the paradox of choice—an overwhelming number of options that can lead to indecision or dissatisfaction with the decision-making process. The research on this paradox, explored in a previous BioHire article, reveals that too many options can leave companies struggling to select the best candidate, often leading to missed opportunities or a lengthy hiring process.
Hiring is already expensive. The Society for Human Resource Management (SHRM) notes that the average, all-in cost per hire for senior-level positions in competitive fields can be three to four times the position’s salary. A role commanding a $150,000 base salary, for example, could mean a potential cost per hire of $450,000 to $600,000. That includes staff time spent, opportunity cost while the position is open, onboarding and training, relocation and signing bonuses, and advertising or outside recruiter fees. It most certainly will cost significantly more if the company hires a poor performer:not only will there be a need to go through the process again, but the corrective actions can result in redoing portions of the employee’s work deliverables or worse, loss of competitive advantage and reputation. Keeping the problematic employee often results in lower productivity, adverse staff morale, and higher employee turnover.
There is no doubt that the cost of recruitment is a high-stakes game, but getting the right executive in place could mean company success or failure.. When hiring for the biopharma industry, that often means working with an outside recruiter.
A model of how internal and external recruitment teams can partner up
A retired senior executive at Johnson & Johnson corporate in New Brunswick, New Jersey remarks that J&J used a collaborative model, with HR partnering with an outside firm. “That external recruiter has the robust connections in that field, and knows who to look for, who is up
and coming, and what is trending in terms of talent. Meanwhile, the internal HR person would have deep knowledge of the group this candidate would be working with. They also have a great understanding of the company, the culture and what the company wants, which is why both roles are critical,” he says.
It must be stated that the incentives and KPIs for external and internal recruiters are fundamentally different. An agency recruiter is motivated by a placement fee, which is often binary—an “all or nothing” outcome. In contrast, an internal recruiter is compensated through salary and performance-based bonuses, specifically tied to the quality of their work as a company steward. Agency recruiters prioritize speed and reach, aggressively sourcing and selling the opportunity to passive candidates who often require persuasion. Internal recruiters, on the other hand, focus on fit, precision, and process, meticulously vetting candidates for competencies and cultural alignment while ensuring a seamless onboarding experience.
Furthermore, recruiters specializing in life sciences bring a solid understanding of the industry’s unique requirements and challenges, as they are well-versed in the culture and politics of the industry. An article published by Pact & Partners noted that those extensive databases, built up over the years, combined with recruiters’ wide industry knowledge “offer valuable insights into industry trends, salary benchmarks, and skill demand.”
Detractors of third-party recruitment
Peter Cappelli is a detractor of third-party recruitment. The management professor at the Wharton School at the University of Pennsylvania and the director of its Center for Human Resources noted in the Harvard Business Review, “Businesses have never done as much hiring as they do today. They’ve never spent as much money doing it. And they’ve never done a worse job of it.” According to Cappelli, many companies are outsourcing the meat and potatoes of the hiring process, which then gets outsourced again to subcontractors. This can get complicated, because, as he notes, “subcontractors scour LinkedIn and social media to find potential candidates. They sometimes contact them directly to see whether they can be persuaded to apply for a position and negotiate the salary they’re willing to accept. (The recruiters get incentive pay if they negotiate the amount down.)”
That said, external agencies almost certainly “widen” the candidate funnel by adding or discovering competitive talent—a crucial advantage for critical leadership roles. This is especially important when weighing the cost of a poor performer against a placement fee. Time is another key factor. Engaging a third-party recruiter can significantly shorten the hiring cycle, and in biopharma, the cost of delays can be substantial. Missing a key milestone or delaying a program could result in irreparable damage to a company’s progress and competitiveness.
Cappelli isn’t sold on this. “We don’t know whether they produce satisfactory hires. Only about a third of U.S. companies report that they monitor whether their hiring practices lead to good employees; few of them do so carefully, and only a minority even track cost per hire and time to hire.” Cappelli suggested that companies do more homework in this regard, such as tracking the percentage of openings filled within; require that all new searches be posted inside the company; recognize the costs of outside hirings; and reconsider the focus on passive candidates.
These systems may be helpful, but all that due diligence drains even more time away from a company’s HR department, which already may be overtaxed. Adds the former J&J executive, “The expectation is that the outside firm will do all the heavy lifting, which is why they only come back with 3 or 4 viable candidates. The hiring organization does not want to deal with (or have the time to) vet 50 or more resumes, a big part of why we hire using outside firms.”
Final thoughts
In a crowd-sourcing article posted on LinkedIn, contributors discussed comparing the costs of outside recruitment versus internal departments. Responses to the article were mixed and telling. For example, Sarah Frank, a senior recruiter and career coach uses this formula: When recruiting takes up more than 20% of your time (one day a week for full-time staff), it’s time to get internal or external recruiting help. Krista Brenner, director of talent acquisitions for Bayshore Healthcare adds, “I’ve been external and internal, and can totally see it from both sides. External partners can take a business-critical role and run with it 100% with all their resources at their disposal while internal teams still focus on the countless other roles still open.” For internal recruiters, when you factor in process requirements, compliance training, meetings, reporting and onboarding for instance, there simply isn’t enough time to do as much direct candidate sourcing
With assets and drawbacks to both, what is the best way for a healthcare or pharma company to source new talent? Most agree that creating a healthy internal talent acquisition-external vendor partnership is best, leveraging the best qualities of outside firms with in-house company and culture expertise. Neolytix, a healthcare management services organization, agrees: “A hybrid approach that combines in-house recruitment and outsourcing strategies can offer organizations the benefits of internal expertise and control alongside the external specialists’ access to broader talent pools and niche recruitment strategies. By blending these two approaches, companies can tap into the experience and knowledge of their internal talent acquisition teams while also leveraging the specialized skills and resources of external recruitment partners.”
All said, it’s hard to argue against partnering with a specialized local firm for critical hires, particularly one deeply versed in a specific discipline. While this approach may only apply to 10-15% of hires, it serves as a cost-effective safeguard—ensuring that every effort was made to secure the best available talent in the shortest time possible.
