compACT Compensation ROI (Return on Investment) Analysis and Salary Increase Administration

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The need for formalized base and variable pay management is imperative to a company’s operational efficiency, driving the measurements of Compensation ROI.

  • Automated Salary Increase administration provides a clear structure to compensation initiatives, ensuring validity and consistency in salary decisions.
  • Although there are many significant benefits to implementing software, we have outlined some cost saving areas to help facilitate your decision.

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Time Savings – Compensation Group

A compensation professional wears many hats: designing compensation programs, communicating philosophies, compliance, analysis, ongoing industry education, market research, just to name a few.  Administrative tasks are a necessary and critical part of the job but imagine what you could accomplish if you were required to spend less time on administration and more time utilizing your education, experience and creativity.

How much time does your compensation group spend on the administration of your annual salary review process? How long do you spend auditing data, creating spreadsheets, counseling Managers, analyzing results, training, generating reports and processing increases?  What if we could help you decrease that time by 75%?

Position Avg Salary* FTE Days Cost
Compensation Director/Manager $136,000 1 20 $10,563.11
Senior Compensation Analyst $84,000 1 30 $9,786.41
Compensation Analyst $57,000 1.5 30 $9,961.17
Trainer $75,000 2 5 $2,912.62
Total 85 $33,223.30
Time/Cost Savings using CompACT 63.75 $24,917.48
*National average from Salary.com, rounded

Manager Productivity

For Managers, the salary review process is often considered burdensome.  The time it takes managers to analyze data and enter recommendations for their team can be considerably shortened with the application.   You can communicate your compensation program structure and give your managers immediate access to budgets, guidelines and any historical employee data to facilitate analysis and recommendations.   Would your managers appreciate getting their recommendations done in half the time?

Not knowing the specific details for each organization, this calculation utilizes several assumptions for determining the cost, including:

  • Managers currently spend 6 hours on planning compensation rewards for their entire direct report population as well as reviewing subordinate manager recommendations
  • Average base salary per manager is $90,000
Manager Count Avg Salary* Hours spent per manager Cost
100 $90,000 6 $25,962
Time/Cost Savings using CompACT 3 $12,981

Retaining your Best Employees

Not maintaining competitive pay rates (internally and industry) are a costly liability for any organization.  The US Department of Labor’s Bureau of Labor Statistics estimates average costs to replace a worker in private industry at $13,996. How many employees left your company in the past year to pursue opportunities elsewhere and was their decision motivated by salary? How long did it take to replace and train the new hires? If you could decrease turnover conservatively by 2%, simply by ensuring equitable pay among your employees, it could total a significant cost savings.

# Employees Cost to replace employee Total Cost of Turnover
100 $13,996.00 $1,399,600
Cost Savings by reducing turnover 2% $27,992

 

Benefit Summary

The benefits include but are not limited to:

  • Time Saving on Administration
  • Facilitate Salary Administration for Managers
  • Accuracy/Equity in pay decisions to promote employee retention
  • Detailed Analysis and reporting capabilities
  • Software that can grow with your company

 

*Although this document was intended to provide you with a general idea of the potential cost savings associated with an implementation, we would be happy to work with you to create a more detailed ROI using your specific company information.  .