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Pricing the Same Job in Different Cities
 

Pricing the Same Job in Different Cities

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Do you employ software developers in Austin and New York? How different is their pay by location? In this Advanced HR Series webinar, we’ll teach you how to pay people performing the same job in ...

Do you employ software developers in Austin and New York? How different is their pay by location? In this Advanced HR Series webinar, we’ll teach you how to pay people performing the same job in different cities a market-appropriate wage.

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    Pricing the Same Job in Different Cities Pricing the Same Job in Different Cities Presentation Transcript

    • Comp Challenge: Pricing the Same Job in Different CitiesStacey Carroll, SPHR, CCPDirector of Professional Services & EducationPayScale, Inc.
    • PayScale is a market leader in global online compensation data. With the worlds largest database of individual employee compensation profiles, PayScale provides an immediate and precise snapshot of the job market.7,000 Positions. Our patent-pending, real-time profiling system indexes custom employee attributes (such as industry-specific certifications) and50 Major Industries. specific job titles for every industry.11 Countries. Our secure, on-demand business solutions, PayScale MarketRate and PayScale Insight, provide employers with accurate, reliable compensation detail never before available.
    • Agenda Why this challenge exists What the data suggests What to do with this challenge Communicating differences to employees Q&A
    • Why the challenge exists People (employees and managers) confuse cost of living with local wages Different locations = Different managers Factors other than geography may be at play Lack of data, philosophy or structure Data doesn’t always account for the “commuter”
    • What the data suggests1. All positions are not created equal2. Differences are most dramatic in the middle3. The $75k rule4. The supply and demand of qualified workers is more important than geography5. Some differences can’t be explained objectively
    • Not all positions are created the same Annu. Base Annu. Base Annu. Base Annu. Base Annu. Base Position Title Organization Mkt - 10th Mkt - 25th Mkt - 50th Mkt - 75th Mkt - 90th Delta Account Executive Seattle $31,816 $38,344 $46,309 $55,401 $64,911 Account Executive Washington DC $33,714 $40,713 $49,406 $59,503 $70,259 107% Account Executive San Francisco $36,255 $43,888 $53,289 $64,115 $75,535 115% Account Executive New York $33,446 $40,848 $50,106 $60,999 $72,830 108% Account Executive Houston $31,177 $38,031 $46,586 $56,605 $67,394 101% Account Executive Honolulu $30,587 $37,295 $45,658 $55,410 $65,826 99% Accountant Seattle $44,035 $49,551 $55,552 $62,554 $71,317 Accountant Washington DC $46,886 $52,743 $59,638 $68,019 $78,551 107% Accountant San Francisco $52,633 $59,665 $67,628 $76,969 $88,353 122% Accountant New York $46,228 $52,899 $60,316 $68,835 $78,990 109% Accountant Houston $39,293 $44,607 $50,476 $57,556 $66,818 91% Accountant Honolulu $36,928 $42,187 $48,599 $57,168 $69,381 87% Customer Service Representative Seattle $24,096 $27,382 $31,660 $36,904 $42,964 Customer Service Representative Washington DC $21,862 $25,180 $29,627 $35,267 $42,047 94% Customer Service Representative San Francisco $25,140 $28,940 $33,965 $40,215 $47,514 107% Customer Service Representative New York $23,198 $26,934 $31,962 $38,406 $46,296 101% Customer Service Representative Houston $20,717 $23,924 $28,217 $33,681 $40,315 89% Customer Service Representative Honolulu $21,227 $24,563 $29,038 $34,699 $41,455 92% RN Seattle $52,931 $59,573 $66,288 $74,513 $86,021 RN Washington DC $49,182 $55,097 $61,941 $70,955 $83,741 93% RN San Francisco $59,643 $67,422 $76,143 $87,134 $102,243 115% RN New York $52,916 $60,980 $69,579 $80,013 $94,215 105% RN Houston $50,048 $57,186 $64,398 $73,308 $86,004 97% RN Honolulu $48,540 $55,157 $62,722 $72,541 $86,425 95% Software Engineer Seattle $66,406 $77,627 $89,142 $100,733 $112,178 Software Engineer Washington DC $62,197 $72,305 $83,502 $95,539 $107,949 94% Software Engineer San Francisco $72,465 $84,924 $98,395 $112,559 $126,893 110% Software Engineer New York $65,672 $77,951 $91,290 $105,337 $119,527 102% Software Engineer Houston $52,779 $62,152 $72,205 $82,822 $93,816 81% Software Engineer Honolulu $55,852 $66,799 $78,788 $91,724 $105,420 88%
    • Geographic Offset Does Not Equal Market Wages Median Pay for a Software Engineer Cost of Living IndexMetropolitan Areas with 0-5 Years of Experience (National = 100)Louisville, Kentucky / Indiana Metropolitan Area $51,900 87.6Houston-Baytown-Sugar Land, Texas Metropolitan Area $60,300 91.9Detroit-Livonia-Dearborn, Michigan Metropolitan Area $54,900 98.2Phoenix-Mesa-Scottsdale, Arizona Metropolitan Area $58,500 99.6Salt Lake City, Utah Metropolitan Area $63,500 100.6Seattle-Bellevue-Everett, Washington Metropolitan Area $73,800 120.2San Jose-Sunnyvale-Santa Clara, California Metropolitan Area $85,800 143.5New York-Wayne-White Plains, New York / New Jersey Metropolitan Area $75,300 177.7 Notes: 1. The Median Pay reported is the Median Total Cash Compensation for Software Engineers with 5 or less years of experience (median of 2.5). 2. The metropolitan areas are defined by the Office of Management and Budget 3. The Cost of Living (COL) Index is provided by The Council for Community and Economic Research. It is important to note the index reflects cost differentials for professionals and executive households in the top income quintile. 4. The higher paying metros are typically the ones with the higher cost of living. 5. Two Cities stand out as having pay higher than their relative COL: (a) Houstons predominant industry being Oil & Gas Exploration, which is a high paying industry. (b) San Jose is the key city in Silicon Valley, which is a top site for large, high paying tech companies (e.g. Google, Facebook, Cisco, Intel, etc.)
    • What to do with the challenge Make sure jobs are well defined and scoped  Important scoping factors include: Budget managed, Branch/location size, number and level of employees managed, strategic skills and “reports to”. Make sure you have reliable geographic data Develop a strategy relative to market based wages  Blog Post: How to pay virtual workers  Whitepaper: How to manage pay for virtual workers Build guidelines and or train managers how to use salary ranges. Teach managers how to negotiate with prospective employees  Webinar: Salary Showdown – Tuesday, October 18, 2011
    • Communicating Differences with Employees Educate employees about your salary program Share important information with employees about the market Empower employees who are ready to make changes
    • PayScale Delivers Where Other Compensation Providers Fall ShortPayScale operates the largest online salary database in the world. We allow organizations to price their jobs according totheir industry, location, and the employee skill sets which make their workforce unique. PayScale goes beyond supplyingthe accurate data you need - we also give you the tools to efficiently manage your compensation projects, and theknowledge to stay up-to-date.Visit our blog: http://blogs.payscale.com/compensation/Join our Group on LinkedIN: Compensation Today: HR Best PracticesStacey Carroll, M.B.A, SPHR, CCPDirector of Professional Services & EducationPayScale, Inc.Connect with me on LinkedIN: http://www.linkedin.com/in/hrstacey