MERCER | COMPTRYX...– Majority of EEs in Silicon Valley – Large Salesforce – Small but...
Transcript of MERCER | COMPTRYX...– Majority of EEs in Silicon Valley – Large Salesforce – Small but...
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H E A L T H W E A L T H C A R E E R
M E R C E R | C O M P T R Y X
U N D E R S T A N D I N G P E O P L EC O S T S : Y O U R K E Y T OU N L O C K I N G T H E W O R K F O R C EA N A L Y T I C S C O N V E R S A T I O N
Patrick GutmannFrankfurt
SEPTEMBER 2016
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W E L C O M ET O D AY ’ S P R E S E N T E R
Patrick Gutmann
Sector Leader [email protected]
QuestionsTo submit a question, use the floating panel on thetop of your screen and click the Q&A button:
CLICK HERE TO ASK AQUESTION TO “ALLPANELISTS.”
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M E R C E R | C O M P T R Y XA G L O B A L P R O D U C T I N 3 P A R T S :
GlobalSalarySurvey
LaborCost
Modelling
The size and shape of your workforce can costmore than your competition
WorkforceMetrics
Global pay data with a database of more than3.4 million records
Model the cost of departments between differentlocations
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U N D E R S T A N D I N G P E O P L E C O S T S
C A S ES T U D Y
W H YP E O P L EC O S T S
M A T T E R
W R A P U P
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FACTH R i s r e s p o n s i b l e f o r e m p l o y e e s b u t r a r e l ym e a s u r e s p e o p l e c o s t s , t h e l a r g e s t e x p e n s ei t e m i n m o s t f i r m s .
P e o p l e c o s t s a r e i n f l u e n c e d b a s e d o n h o w E E s a r e :
A L L O C A T E DB YF U N C T I O N
D I S T R I B U T E DB Y L E V E L
D E P L O Y E D B YL O C AT I O N
I n d u s t r y b e n c h m a r k i n g w i t h W o r k f o r c e A n a l y t i c sc a n h e l p H R p r o v i d e e x e c u t i v e m a n a g e m e n t w i t hc r i t i c a l i n f o r m a t i o n .
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S o h o w t o g e t t h e r e ?
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M E R C E R | C O M P T R Y XW O R K F O R C E M E T R I C S
IF WORKFORCE METRICS CAN HELP IDENTIFY JUST $12MIN SAVINGS, SHARE PRICE COULD RISE 5%
Company A Improvement to Net Income:$12M
Revenue 1,800,000,000 Revenue 1,800,000,000
Net Income 250,000,000 Adj. Net Income 262,000,000
Shares Outstanding 300,000,000 Shares Outstanding 300,000,000
EPS $0.83 EPS $0.87
Multiple* 26.6 Multiple 26.6
Current Share Price $22.17 Current Share Price $23.23*Multiple: factor used by investors to express how companies are valued
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Q U E S T I O N : C O N S I D E R T W O C O M P A N I E S …
• SAME BUSINESS, SAME HEADCOUNT, SAME REVENUES– BOTH USE SAME SALARY SURVEY W HICH SAYS BOTH
PAY ON MARKET– PEOPLE ARE THEIR SINGLE BIGGEST EXPENSE
DO THEY HAVE SIMILAR PEOPLE COSTS?
COMPANY A COMPANY B
– Majority of EEs in Silicon Valley
– Large Salesforce
– Small but well-experienced R&Dstaff
– Big executive team, low SOC*
– Majority of EEs in India
– Relatively small Sales team
– Use lots of less experiencedEngineers
– Small executive team, high SOC*
*SOC: Span of control
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C A S E S T U D Y
N O T E :• M A R K E T D A T A I S A L W A Y S S H O W N I N D A R K B L U E• M A R K E T I S N ’ T “ R I G H T ”
SOFTWARE COMPANY $2B REVENUE
5,000 EMPLOYEES PARTICIPATE INMERCER | COMPTRYX
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C A S E S T U D Y : B A S E P AY A N A L Y S I S
ANALYSIS CONFIRMS:COMPANY A PAYS ON MARKET FOR BASE AND TOTALTARGET CASH
0
40000
80000
120000
160000
Job 1 Job 2 Job 3 Job 4 Job 5 Job 6 Job 7 Job 8 Job 9 Job 10 Job 11 Job 12 Job 13 Job 14 Job 15 Job 16
Company A Market
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C A S E S T U D Y : P AY A N A L Y S I S
TRADITIONAL SURVEY ANALYSIS RESULTS INA MERIT BUDGET DECISION REPRESENTING
$19M IN COST
CO A.TARGET CASH
PAYROLLMERIT BUDGET PAYROLL RISE
$625,000,000 3% $18,750,000
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Revenue per FTE(in USD)
C A S E S T U D Y : F I N A N C I A L A N A L Y S I S
WHAT YOU PAY AND HOW MANY EEs YOU HAVE = PAYROLL COST4% DIFFERENCE REPRESENTS $25M HIGHER PAYROLL COST
125,000
110,000
0
20000
40000
60000
80000
100000
120000
140000
Company A Market
EE Weighted Average(in USD)
400,000425,000
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
Company A Market
31.3%
27.5%
0%
5%
10%
15%
20%
25%
30%
35%
Company A Market
Payroll as a % of Revenue
4%
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C A S E S T U D Y : L E V E L A N A L Y S I S
LOWER SPAN OF CONTROL REPRESENTS $20M INHIGHER PAYROLL COSTS!
Level Analysis: % of Headcount Span of Control
5.0%
74.4%
18.0%
2.6%4.7%
79.2%
14.6%
1.5%0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
Support Professionals Management Executives
Company A
Market
3.9
5
0
1
2
3
4
5
6Company A
Market
$625M $605M Δ $20M
BUT, SPAN OF CONTROL CAN VARY BY FUNCTION!
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C A S E S T U D Y : S O C B Y F U N C T I O N
Level Analysis: Management Span by Function
2.3
3.84.1
7.9
10.7
8.2
3.53.2
4.13.5
8.5
10.9
6.9
7.8
2.4
3.7
0
2
4
6
8
10
12
Finance HR IT Ops Services R&D Mkt Sales
Company A
Market
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C A S E S T U D Y : L E V E L A N A L Y S I S -P R O F E S S I O N A L S
BUT REMEMBER, THE MARKET ISN’T RIGHT!
Level Analysis: % of Headcount
4.0%
12.0%
35.0%
32.0%
15.0%
2.0%
5.4%
18.2%
29.8% 30.5%
13.0%
3.0%
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
P1 P2 P3 P4 P5 P6
Company A
Market
2,4M 16,4M -18,3M -6,5M -11,9M 7,1MΔ $10,5M=
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C A S E S T U D Y : F U N C T I O N A N A L Y S I S - H E A D C O U N T
Level Analysis: % of Headcount
6.0%
2.0%
8.0%
2.0%
15.0%
38.0%
7.0%
22.0%
4.2%1.4%
5.6%4.0%
21.6%
42.0%
5.5%
15.7%
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
Finance HR IT Ops Servcies R&D Mkt Sales
Company AMarket
Level Analysis: % of Payroll
4.0%1.0%
5.0%1.0%
8.0%
48.0%
8.0%
25.0%
3.0% 1.3%5.0% 4.0%
17.0%
38.0%
7.0%
24.7%
0
0.1
0.2
0.3
0.4
0.5
0.6
Finance HR IT Ops Servcies R&D Mkt Sales
Company AMarket
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C A S E S T U D Y : L O C A T I O N A N A L Y S I S - H E A D C O U N T
1.1% 0.5%
67.7%
5.4%
0.7%
6.8%
13.7%
3.0%2.9%0.5%
60.0%
3.7% 3.5%5.5%
19.9%
2.4%
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Canada Mexico United States China India S&E Asia Europe Africa
Company A
Market
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C A S E S T U D Y R E S U L T S
H R i d e n t i f i e sa b u s i n e s s
p r o b l em f o re x e c s
H R t a k e so w n e r s h i p o f
w o r k f o r c eo p t i m i z a t i o n
H R c o n t r ib u t e sb u s i n e s ss o l u t i o n s
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M E R C E R | C O M P T R Y XW O R K F O R C E M E T R I C S
Payroll as a % of Revenue (Last FY):by Sector and
by Company Size
26.0%
37.8%
24.4%
37.1%
27.1%
35.8%
41.7%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Systems
Software
Semiconductor
Professional Services
Large Companies (>50k ee's)
Medium Companies (5k-50k ee's)
Small companies (<5k ee's)
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M E R C E R | C O M P T R Y XW O R K F O R C E M E T R I C S
F U L L AN A LY T I C A L C APAB I L I T YY O U V S . YO U R M A R K E T
LOCATIONLEVEL FUNCTION DEMOGRAPHICSFINANCIAL
P R O F I L E Y O U R O R G AN I Z AT I O NAG AI N S T T H E C O M P E T I T I O N
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Q U E S T I O N S ?
Patrick GutmannSector LeaderEurope
QUESTIONSPlease type your questions in the Q&A section of thetoolbar and we will do our best to answer as manyquestions as we have time for.
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CLICK HERE TO ASK AQUESTION TO “ALL PANELISTS”
FEEDBACKPlease take the time to fill out thefeedback form at the end of thiswebcast so we can continue toimprove. The feedback form will pop-up in a new window when the sessionends.
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