How One Firm Could Save Over $1.4M by Leveraging the Right Salary Answers
The recent economic upheaval caused by the coronavirus pandemic has forced many organizations to find ways to make up lost revenue by cutting spending, without causing long-term damage. Besides reevaluating how services and products are offered, business leaders are also considering how to reduce staffing costs. Recent headlines have highlighted how many companies, such as Facebook and Twitter, are looking into transitioning most of their professional and business services staff to permanent virtual offices, while others may be thinking of hiring remote staff from more affordable locations.
Big-name tech and social media companies are not the only ones looking to reduce staffing costs through remote work. Many small and medium-sized companies are also considering how to best retain their most valuable employees, while reducing unnecessary expenses as organizations, of all sizes, try to best prepare their teams for when business demand returns.
With this in mind, here is a scenario for how to simplify determining the right salary answers and accurately analyze the economic health of metros and industries for very targeted business-growth planning.
How Data Analysis Helps Get the Right Salary Answers
Challenge: Fischer Mercantile is an organization located in the San Francisco-Oakland-Hayward metro. Led by CEO, Chris Moore, the leadership would like to reduce unnecessary expenses while investing in a growth strategy through customer acquisition and retention. Before the COVID-19 pandemic, Fischer Mercantile had considered various measures to efficiently expand the organization, including relocation of some of its staff or company headquarters. With the economic impact from the pandemic, cost reduction and operational efficiency are more urgent than ever. Chris, the CEO, assigns a team to find a solution. Along with himself, the team also includes COO, Shannon Lopez, and VP of Human Resources, Marlee Horowitz.
Considerations: Due to social distancing measures, all Fischer Mercantile employees able to work from home have transitioned to remote work. With most employees not in the office, the company has been able to reduce overhead expenditures. However, Chris, Shannon and Marlee want to consider long-term solutions that will make overall overhead expenses more manageable.
The team members decide to focus their initial efforts on reducing costs for the customer service department, as that department will be integral to the company’s success in reaching its growth goals. Presently, the company has 100 Customer Service Representatives (CSRs) with an average annual salary of $60,000 or a total of $6,000,000 annually. The current recommended salary, based on supply and demand and other performance variables, for a CSR with 2-4 years of experience and a bachelor’s degree in the San Francisco Bay area is $67,591 per year. Chris, Shannon and Marlee have considered relocating the customer service department to a more affordable metro over the next two years.
Solution: The first step is to conduct a salary comparison for CSRs with the same experience and skill requirements for San Francisco and other metros being considered for relocation. Marlee, the VP of HR, suggests using LaborIQ® by ThinkWhy®, an easy-to-use software tool that provides salary answers and metro and industry performance data.
Using the software tool, Marlee was able to produce the above table, allowing her to compare the recommended salaries for a CSR in each metro. When she did that, she found a remote CSR workforce in either Austin, Texas or Raleigh, North Carolina offered savings of 23.4% to 25.0%, respectively, below their current payroll average of $60,000. If they hired 100 remote CSRs in Austin or Raleigh, the company would save between $1,403,500 to $1,497,200 per year.
Marlee reviews this information with Chris and Shannon. Realizing that the organization would be able to substantially reduce salary costs with a remote working CSR group in Austin or Raleigh, the three-member team decides to do a comparison of what the salary costs would be for other positions at Fischer Mercantile. Based on the results below from LaborIQ by ThinkWhy, they can see the organization would be able to reduce its overall salary costs without sacrificing the quality of its talent supply or company growth. The salary savings for all positions was the highest in Raleigh, Austin and Dallas, in that order, with the savings per job title and metro ranging from 13.4% to 34.0%.
By comparing salaries across different locations against specific job requirements, the salary answers provided by LaborIQ enabled Fischer Mercantile’s leaders to not only reduce talent costs, but also improve operational efficiencies with a more affordable headcount.
Outcome: Chris, Shannon and Marlee determined they would save an average of 24% or $1,425,000 on CSR salary costs by hiring remote workers in either Austin or Raleigh – taking only minutes to produce the analysis. LaborIQ is a tool that the firm will continue to leverage for monitoring where they can find talent supply to move partial operations to more affordable areas of the country, while still meeting education and skill requirements.