Webinar-The Total Economic Impact of PayScale

The Total Economic Impact of PayScale

Guest speaker: Sean OwensPrincipal Consultant, Forrester

Tim LowSr. Vice President, PayScale

Tim Low, Sr. Vice President, PayScale

Tim joined PayScale in 2011 to bring his experience in demand generation, product marketing, branding and go-to-market to the company’s business products. Tim’s resume includes deep expertise in both enterprise software and cloud-based applications. He has held executive positions at Daptiv and at Niku (where he was part of the team that led the IPO), and product management roles at both Microsoft and Oracle. Tim was a founder of social analytics platform NorthbyNine and is a graduate of Marquette University.

We help employers

and employees

understand the right

pay for every position

and effectively

communicate about

compensation.

5© 2017 FORRESTER. REPRODUCTION PROHIBITED.

Sean Owens

Sean and the Forrester TEI team have

worked on projects with a variety of clients:

• PayScale

• eBay

• BAE

• Microsoft

• IBM

• Dell

• Oracle

• And many others

Sean has spent the last fifteen years helping technology

vendors measure and communicate the business impact of

its solution to their customers. IT strategy and planning

executives, sales representatives, and product marketing

professionals can use these materials to help understand the

solution more completely, and better estimate the costs and

business impact for their organization. Sean has been with

the Forrester TEI team for more than four years.

Previous Work Experience

Before joining Forrester, Sean spent more than a decade as

a partner, consultant and business development lead for

business value consulting practices at several firms.

Education

Sean has a bachelor’s degree in English from Seattle Pacific

University, and an MBA from the University of Washington.

Principal Consultant, Total Economic Impact Practice

We work with business and

technology leaders to develop

customer-obsessed strategies

that drive growth.


© 2017 FORRESTER. REPRODUCTION PROHIBITED.

The TEI of the PayScale Compensation Intelligence Platform

Sean Owens, Principal Consultant

September 1, 2017


Compensation

impacts

recruiting and

maintaining

employees

Unfair compensation

(whether perceived or real)

has led to some employees

deciding to leave the

company

Too many employees are

not paid at compensation

goals (many organizations

have a 50th percentile goal)

Source: The Total Economic Impact™ Of PayScale: Cost Savings And Business Benefits Enabled By The PayScale Compensation Intel ligence Platform. June 2017

The answer to resolving

these issues is not just

paying people more!


Engaged Employees May Not Be Valued

› Engaged Employees:

• Enthusiastic about work

• See meaning in work,

personally and

organizationally

• Willing to devote extra

time to help customers.

Engaged Employees Stay Longer And Become

Advocates of the Company And Its Products

Engaged employee definition source: David Ning’s The Employee Engagement Network (http://employeeengagement.ning.com/)

Chart and quote source: 7,228 global information workers. Claire Schooley, “Use Digital Technologies To Improve Employee Engagement,” April 19, 2016

(https://www.forrester.com/report/Use+Digital+Technologies+To+Improve+Employee+Engagement/-/E-RES82061)

“Employee engagement is a measurable workforce characteristic that

remains at low levels globally. Increasing the level of employee engagement

drives higher levels of customer satisfaction and reduces employee turnover”


Employee Comp Not Tied To Customer Metrics

› Many employees work

face to face with

customers

› Quality work related to

service - and engagement!

› But not usually part of

compensation package

Most Employees And Managers Don’t Have

Any Part Of Their Compensation Tied to

Customer Metrics

Source: 212 US CX Professionals. Rick Parrish “Talent Management For The Customer-Obsessed Organization,” July 20, 2016

(https://www.forrester.com/report/Talent+Management+For+The+CustomerObsessed+Organization/-/E-RES130905)

“Customer-obsessed businesses have lower-than-

average turnover.”


Each

salary

review

took one

hour.

Position compensation was

not consistent – a lot of

people were being paid at less

than 25% of the market

“It was more of manager

gut feel. They would just

ask the person what

their previous salary

was and try to get them

more than that”

The organization estimated that it had to

recruit and hire (and incur costs for recruiting

and hiring) 50 people each year that wouldn’t

have left if they had fairer compensation.



Case Study: TEI of PayScale


About TEI

The TEI Framework

Total Economic Impact Approach and Methodology

Perform due

diligence

Conduct customer

interviews

Construct financial

model

Write case

study

Benefits

Costs

Flexibility

Total

Economic

ImpactTM

(TEI)

R

i

s

k

Build

composite


Overview

4,000 Employees

1,000 Job titles

Annual review cycles

10 Salary surveys managed

25% Turnover

Goal: Improve Talent

Make compensation more

standard, fair and

transparent

Bring in good talent and

keep what they have

Implementation

Using both PayScale and

MarketPay

Goal of 50th percentile

Quick implementation


The Organization


Each salary

review now

takes just 10

minutes,

instead of 1

hour.

“The biggest business operations benefit

that I’ve seen is the consistency in

benchmarking positions”

Salaries are now set to the

right amount – benchmarked

based on metrics collected

and adjusted taking into

account position, tasks,

location, and more.

The organization has

estimated that it avoids

recruiting and hiring costs

for 50 people each year.



Avoided recruiting and

hiring costs

Reduced turnover leads to

avoided costs

Other benefits

Reduced survey mgmt. time,

reduced ad-hoc reviews and

time, and avoided

compensation team hires

• $2.1Million, 3-year PV

• From 25% to 20%Reduction in turnover

• $180,200 3-year PV

• 1 FTEAvoided hiring 1 FTE for the

compensation team

because of the efficiencies

provided with PayScale and

MarketPay

Study Overview



Total Economic Impact of PayScale Results

Metric Result

ROI 249%

Benefits PV $2.3 million

NPV $1.6 million


($500,000)

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

Initial Year 1 Year 2 Year 3

Cas

h f

low

s

Financial Analysis (risk-adjusted)

Total costs Total benefits Cumulative net benefits


• Turnover reduced from 25% to 20%

• 50 total positions impacted by PayScale

• Avoided hiring and recruiting

• Additional benefits such as employee satisfaction

Reduced turnover

Input metrics w/ PayScale

Turnover 25% to 20%

Cost to recruit and hire a new employee (estimated) $20,000

Percent of employee that say pay was a reason for leaving 40%

Percent of employees that left that could be avoided 60%

Total employees 4,000



Better Transparency

and Communication

Salary standards are

clear, measurable

and easy to

communicate.

Fewer and faster ad-

hoc compensation

reviews

Managers trust the

process and data;

any questions are still

handled faster

One avoided comp

team hire

40 to 4 hours managing

salary surveys. Easier

job matching.


Other Benefits


“Whenever I’ve done

market pricing, I’ve always

felt like if I could match

about 80% of the jobs to

market data in the surveys,

I was setting up a really

good foundation. Well here,

I’ve been able to find good

solid matches for about

90% of the jobs or more.”


“We know for a fact

that the data we have

in MarketPay helped

us build and keep

current our Salary

structure. It helps our

managers and

recruiters make

better-informed pay

decisions.”


What’s Next?


Compensation can be a value-added service

1. How do you think about compensation?

• Is it simply based on past or current employee salaries?

• Is it a strategic opportunity to bring in better talent?

• Does it help or hinder employee engagement?

2. Build a business case

• Use the TEI study, and create your own assessment

3. Start now! The sooner you start the sooner you save

4. Get the full report!


More discussion and workshop at Compference!

› In person review of study

findings

› Workshop time to start your

own business case!

› October 3 right before lunch


Q&A

Webinar-The Total Economic Impact of PayScale

Recruiting & HR

Transcript of Webinar-The Total Economic Impact of PayScale