In supporting 1,500+ biotech companies, we’ve seen it all.
And we understand that in the early stages, it’s common to approach a biotech compensation strategy informally. Leaders are often quick to rely on peer anecdotes, venture capitalist guidance, or one-off negotiations.
However, we’ve also seen that as biotech startups grow, this lack of compensation strategy structure soon becomes a problem, leading to overspending, internal misalignment, and worst of all, losing top talent.
A thoughtful biotech compensation strategy from Day 1 sets your team up for success, bringing clarity and fairness to your pay practices while aligning with your mission, culture, and financial realities.
Building a Biotech Compensation Strategy Step 1: Define Your Compensation Philosophy
Your compensation philosophy is your north star, a formal document that outlines your company’s stance on:
- Base pay
- Bonuses
- Cash vs. equity mix
- Promotions and raises
- Non-monetary perks
- Remote or flexible work policy
For example, your philosophy may define that your company targets the 50th percentile for both cash and equity compensation within your industry. It should reflect your values and financial strategy, as well as any legal requirements, and typically requires input from your CEO, CPO, and CFO, with final approval from the board.
Building a Biotech Compensation Strategy Step 2: Create a Compensation Matrix
A compensation matrix operationalizes your philosophy. It includes:
- Job descriptions & postings
- Job families, levels, and career ladders
- Benchmark salary data
- Clear pay bands
- Promotion pathways
This framework moves you away from ad hoc decision-making and toward standardized, scalable compensation practices.
Pro Tip: Use reputable benchmarking data to establish realistic, competitive salary bands.
Building a Biotech Compensation Strategy Step 3: Plan Your Team and Address Outliers
Once your matrix is in place, analyze where your current employees fall within it. Compare salaries against experience, skills, title, and performance. You may uncover:
- Overpaid outliers with little rationale
- Underpaid high performers who risk attrition
Address these gaps with a gradual, transparent adjustment plan.
Building a Biotech Compensation Strategy Step 4: Tailor Your Benefits
Compensation isn’t just about salary. Non-monetary benefits play a big role in employee satisfaction. Start by reviewing:
- Demographics: Are employees early-career PhDs with student debt? Consider a qualified loan forgiveness program or a formal professional development budget.
- Industry trends: In 2025, mental health support is increasingly expected.
- Direct feedback: Surveys and focus groups can reveal what truly matters to your team.
Building a Biotech Compensation Strategy Step 5: Communicate with Clarity
Even the best compensation strategy fails if it isn’t clearly communicated. Ensure every employee understands:
- Your compensation philosophy
- How salaries and raises are determined
- What they can do to grow their earnings
Use simple language, multiple channels, and involve managers and leadership in training. Transparency builds trust and reduces confusion or dissatisfaction.
Set the Foundation Now for Long-Term Success
Creating a compensation strategy for your biotech company might feel daunting, but it pays off in retention, performance, and compliance with evolving pay transparency laws.
A strong compensation philosophy, combined with a practical matrix and clear communication, gives your biotech company the structure it needs to grow with confidence and attract the talent that will power your mission.
Need help developing your compensation strategy?
Danforth Advisors offers strategic HR guidance for biotech companies throughout all stages of their journey. Reach out to our expert team today.