Hiring Without Headcount - Rebadging, Payrolling, and Badge Flipping in Pharmaceutical Clinical Research

Introduction

The pharmaceutical clinical research industry has undergone significant changes in recent years, with headcount constraints and layoffs becoming common due to economic pressures and restructuring. As companies rebound, they seek flexible resourcing models to maintain operations and sustain clinical trials without increasing permanent headcount. Three key approaches used in this context are rebadging, payrolling, and badge flipping. This whitepaper will explore these strategies, their benefits, and challenges, and how they help pharmaceutical companies adapt during volatile times.

1. Rebadging

Rebadging involves transitioning employees from a company’s payroll to a third-party vendor, such as a functional service provider (FSP) or a staffing partner, while they remain in the same roles. The employees are “rebadged” under the vendor’s employment but continue working on the same projects as they were before.

During mergers, acquisitions, or layoffs, rebadging helps pharmaceutical companies retain experienced employees while reducing their direct headcount. This approach ensures continuity, especially in clinical trial operations, by keeping valuable talent while cutting costs.

Benefits:

• Job Security: Employees retain their roles with little to no downtime, benefiting from continuous employment without disruptions.
• Cost Reduction: Companies save on HR, benefits, and overhead costs by shifting employees to a third-party payroll. This also helps in reducing fixed costs and converting them into variable costs.
• Operational Continuity: Projects, especially clinical trials, experience minimal disruption, as rebadged employees continue working on ongoing initiatives with the same expertise.

Challenges:

• Employee Engagement: Employees may feel disengaged or demotivated when transitioning to third-party employment, especially if there are changes in benefits or job security. Ideally, the Sponsor and vendor should work out a deal where the resource is kept whole during the transition.
• Legal and Regulatory Considerations: In some regions, rebadging requires careful navigation of employment laws, such as the EU's Acquired Rights Directive (ARD), which protects employee rights during transfers

2. Payrolling

Payrolling refers to hiring workers through a third-party staffing agency, where the agency manages payroll and benefits, while the resource is managed day to day by the Sponsor. This method is commonly used for contractors or temporary employees.

Payrolling is typically used when companies need to fill short-term roles for specific clinical trial phases or project work without committing to permanent hires. It is especially useful for managing fluctuating workforce needs during trial phases.

Benefits:

• Flexibility: Companies can scale their workforce up or down based on project needs, allowing them to meet short-term demands without the commitment of permanent employment.
• Reduced Administrative Burden: Payroll and benefits administration are handled by the staffing firm, freeing up internal resources.
• Lower Costs: Payrolling avoids the high costs of hiring full-time employees, including benefits, taxes, and HR costs

Challenges:

• Limited Engagement: Contractors hired through payrolling may lack long-term commitment to the company, which can impact team cohesion.
• Conversion Fees: If a company wants to transition a payrolled worker into a full-time employee, there may be additional costs for the conversion process

3. Badge Flipping

Badge flipping involves hiring contractors through a third-party staffing firm with the intent of transitioning them to full-time employees at a later time. This model allows companies to trial workers in temporary roles before offering permanent positions.

Pharmaceutical companies often use badge flipping to bring in highly skilled workers for clinical trials, particularly when permanent headcount is limited. Once headcount restrictions are lifted, these contractors can be smoothly transitioned into full-time roles.

Benefits:

• Talent Evaluation: Companies can assess a worker’s performance, cultural fit, and skills before committing to a permanent offer.
• Project Continuity: Contractors provide immediate support for ongoing projects, ensuring trials progress without delays, while also creating a pipeline for future hires.
• Flexibility: This approach offers flexibility during uncertain periods, allowing companies to adjust staffing levels as needed

Challenges:

• Risk of Losing Talent: Contractors may seek permanent roles elsewhere if headcount restrictions persist for too long, leading to potential talent loss.
• Conversion Costs: Transitioning contractors to full-time roles may involve fees from the staffing firm, which can add to the overall cost

4. Confused about Rebadging vs Payrolling?

The difference between rebadging and payrolling can be a little confusing, so let’s break it down:

The key difference between rebadging and payrolling lies in the scope and nature of the employee's transition and relationship to the company and third-party vendor.

Rebadging

• Definition: Rebadging occurs when a company transfers its existing employees to the payroll of a third-party service provider. The employees continue working in the same roles for the original company but are now employed by the third party.
• Scope: This approach is often used during organizational restructuring, mergers, or cost-cutting efforts. It is designed to reduce direct headcount while keeping critical projects and skilled employees in place. The third-party vendor now handles HR, benefits, and payroll, but employees continue performing their same tasks under the same management structure.
• Purpose: It’s a long-term solution for companies aiming to reduce fixed costs while retaining institutional knowledge and expertise. The employees’ employment relationship fundamentally changes, but their daily work largely remains the same.

Payrolling

• Definition: Payrolling is when a company hires workers through a third-party staffing agency, where the agency manages payroll and benefits, while the employee performs their job for the Sponsor. This method is typically used for short-term or contract-based roles, rather than for long-term transitions of existing employees.
• Scope: Unlike rebadging, payrolling is commonly used for external hires, such as temporary workers or contractors brought in for specific projects. These workers are paid by the staffing agency, not directly by the company.
• Purpose: Payrolling is a flexible, short-term solution that allows companies to bring in additional workforce quickly without adding permanent headcount. It helps companies manage temporary staffing needs, particularly for projects or trial phases, while minimizing the administrative burden.

5. Comparison of Strategies

Conclusion

Rebadging, payrolling, and badge flipping each offer unique advantages for pharmaceutical companies managing workforce constraints, especially during times of economic uncertainty. As companies rebound, these staffing strategies provide the flexibility needed to maintain operations and clinical trial progress without adding full-time headcount. By choosing the appropriate approach based on immediate and long-term needs, pharmaceutical companies can optimize their workforce and continue advancing critical projects.

For more information on how OnPoint Clinical can support your resourcing needs through these flexible models, please visit www.onpointclinical.com or contact Alex Benjamin: abenjamin@opsvs.com.