Strategic approaches to rewards in established companies
Driving top-line growth is a priority for many industrial companies, a key for unlocking significant shareholder value creation. For companies entrenched in established industries (e.g. manufacturing, aerospace, agriculture), branching into the vibrant life sciences field offers substantial growth opportunities due to the sector's rapid advancements and increasing demand for innovative biotech solutions.
This expansion can be particularly beneficial for industrial companies involved in areas like materials science, engineering or precision manufacturing, where their existing expertise can be leveraged in the development of medical devices or biotechnology applications. However, this brings a unique set of challenges, including navigating complex regulatory frameworks, acquiring specialized knowledge and managing the higher costs and risks associated with research and development in life sciences.
Many companies tackle these challenges by embedding life sciences into specific divisions or expanding their existing operations to push product advancement and innovation across the enterprise. Some opt to set up standalone businesses or spin off dedicated units to sharpen their focus on cutting-edge technology and innovation.
As we move into 2026 and beyond, many long-standing, successful institutions have identified life sciences as a sector with the potential to deliver critical growth. As these companies delve into a field rife with rapid innovation and specialized knowledge, how they manage talent — especially through compensation strategies — becomes critical. But there are strategies to help mature companies grow their life sciences units to achieve industry prominence.
The life sciences industry depends heavily on specialized expertise in research, development, regulatory affairs and commercialization. For established companies diving into this sector, attracting and retaining such talent is key.
Unlike industries in which roles can be more standardized, life sciences professionals often move between niche organizations, like biopharmaceutical firms and research institutes, as well as larger commercial companies.
This nuance requires mature companies that are considering moving into the life sciences space to think differently about talent. It also requires an attractive, differentiated and clear employee value proposition that may be different from the rest of the organization. Consider the following approaches.
Collaborating with renowned academic institutions to create internships and co-op programs can establish a strong talent pipeline. Providing tailored career development paths, such as rotational programs and opportunities for research sabbaticals or conference participation, can help companies invest in their long-term success by fostering employee growth and engagement.
Benchmarking compensation against industry standards and offering performance-based incentives is crucial. In addition to traditional compensation arrangements, consider implementing benefits (e.g., research grants, the chance to present at prominent industry conferences) to make life sciences roles within your company more appealing.
Encouraging a culture that values scientific inquiry and innovation is essential. To drive innovation, promote cross-disciplinary projects in which life sciences professionals can work alongside peers from sectors such as data science or engineering. Highlight the real-world impact life sciences professionals can have within your company, whether that means contributing to groundbreaking research or developing new technologies in ways that aren’t possible in a standalone life sciences organization.
For established companies venturing into life sciences, it is important to understand that there are likely differences in both quantum and structure of compensation programs relative to your primary business. For example, average compensation for STEM occupations is significantly higher than for other occupations due to talent shortages and the strategic importance of STEM expertise.
If your primary business maintains a conservative pay structure, you may need to adjust it to match life sciences industry standards for that portion of your employee population. For example:
The life sciences sector demands a departure from traditional incentive models in favor of those that support sustained scientific progress as well as commercial success. There is a strong focus on long-term incentives (LTIs) and equity-based compensation to align employee interests with ownership.
For early-stage R&D-focused companies, both annual and LTI metrics have a strong focus on scientific and regulatory progress and achievements. Equity awards are primarily in the form of stock options to reward enterprise value growth which, for an R&D-focused company, is driven by achievement of milestone events such as clinical trial success, patent signoffs and so on.
For companies with both R&D and commercial operations, incentive compensation metrics commonly encompass both traditional financial metrics as well as goals linked to sustained scientific progress. For example, equity awards incorporate performance share units (PSUs) with goals linked to R&D pipeline progress and diversification.
Beyond annual and long-term incentives, other types of pay programs can be used to help keep employees focused on innovation and aligned with company success, such as employee patent bonuses or milestone achievement bonuses. How these programs are integrated, rationalized and communicated to the rest of the organization is a critical success factor. It requires a balancing act that leads to all parties feeling like they are rowing in the same direction, with a shared sense of success.
For companies operating in mature industries, incorporating automation and technologies like artificial intelligence and Internet of Things (IoT) can revolutionize life sciences operations. These investments not only boost efficiency but also enhance agility.
Organizations can use AI to streamline data analysis in scientific discovery. IoT devices can ensure laboratory compliance and minimize downtime. Process automation can free up human capital, allowing deployment for more complex problem-solving tasks. And an agile culture that encourages rapid adaptation to new technologies combined with continuous training programs will prepare employees for the dynamic demands of life sciences.
To maintain competitive standards and drive innovation, investing in and nurturing key talent is essential. Critical employees will play a pivotal role in successfully integrating these technological advances as well as keeping your company at the forefront of life sciences innovation. You also will be able to leverage those benefits to the rest of the organization.
To sustain growth in a life sciences unit, companies must craft bespoke career paths and compensation strategies that reflect the market value of these roles. A strong culture of safety and compliance is vital, and cross-training efforts can bridge the gap between traditional practices and the demands of life sciences.
By embracing these strategies, established companies can effectively navigate the complexities of integrating and growing a life sciences unit.
