Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Survey Ro Ir2


Published on

LiNGO Survey Return on Investment. You can't afford not to participate in the LiNGO Survey

  • Be the first to comment

  • Be the first to like this

Survey Ro Ir2

  1. 1. Survey ROI or Why You Can’t Afford NOT to Pay Attention to the Market Warren Heaps,Partner Birches Group LLC John Palien ORC Worldwide
  2. 2. The Challenge – How do organizations justify paying for annual survey participation? Is it really necessary? The Solution – HR must demonstrate the value from survey participation in clear financial terms – Survey ROI Let’s take a look at some ways to show how surveys help organizations manage their business more efficiently
  3. 3. Fundamentals <ul><li>Remember Economics 101 – the law of supply and demand </li></ul><ul><li>Employers set their salaries according to the cost of labor, not the cost of living </li></ul><ul><li>The “market” (however defined) is dynamic, and responds to many external conditions and events </li></ul><ul><li>Developing country markets are volatile and subject to even more change </li></ul>
  4. 4. What is ROI? <ul><li>ROI = Return on Investment </li></ul><ul><ul><li>A financial measure which illustrates the benefits of making an investment </li></ul></ul><ul><li>Example </li></ul><ul><ul><li>A company purchases a new machine which increases the output on the manufacturing line from 1,000 pieces per hour to 2,000, with no additional staff required </li></ul></ul><ul><ul><li>The cost of the machine is recaptured through additional profits and steady labor costs over 7 months </li></ul></ul><ul><li>Can this be applied to salary costs? </li></ul>
  5. 5. Compensation Factors to Consider <ul><li>Staff compensation is one of the largest administrative items in most NGO budgets </li></ul><ul><li>What is the cost of paying your staff </li></ul><ul><ul><li>Too much? </li></ul></ul><ul><ul><li>Too little? </li></ul></ul>
  6. 6. Measuring the Financial Impact <ul><li>Suppose your overall compensation scheme is set just 0.5% to 1% higher than the market </li></ul><ul><li>Potential Savings: </li></ul>Salary Budget 0.5% Savings 1% Savings $250K $500K $1.0MM $2.5MM $10.0MM $1,250 $2,500 $5,000 $12,500 $50,000 $2,500 $5,000 $10,000 $25,000 $100,000
  7. 7. Measuring the Financial Impact <ul><li>So, you would only have to realize a 0.5% savings on a payroll of $180K to break even! </li></ul><ul><li>Now lets consider the savings if you are 10 to 15% off your target market position which is not atypical: </li></ul>Salary Budget 10% Savings 15% Savings $250K $500K $1.0MM $2.5MM $10.0MM $25,000 $50,000 $100,000 $250,000 $1,000,000 $37,500 $75,000 $150,000 $375,000 $1,500,000
  8. 8. Defining Survey ROI <ul><li>Survey costs are minimal compared to any world-class survey while LiNGO provides more detailed information than any other survey on the market. </li></ul><ul><ul><li>LiNGO is just $900 </li></ul></ul><ul><li>Add the cost of staff time to submit data, analyze the results, and determine the organization’s market position </li></ul><ul><li>Determine how you would move your salary budget for the year (COLA adjustment across the board?) if you did not have an updated survey </li></ul><ul><li>Let’s look at a simple example </li></ul>
  9. 9. Assumptions
  10. 10. ROI Calculation In this example, having access to survey data and doing a proper analysis results in a savings of over $23,000, or more than six times the survey cost!
  11. 11. ROI is easy if there is savings But what if there’s added costs?
  12. 12. Even if costs are higher, there is still positive ROI <ul><li>Suppose your organization matched the market in 2005, and then regularly adjusted the salary budget by 2% per year for COLA for 2006-2008 </li></ul><ul><li>Market movement over the same period has been averaging 6% per year </li></ul><ul><li>This has eroded your organization’s competitive position, particular for mid-level skilled professionals </li></ul>
  13. 13. Compa-Ratio Drops!
  14. 14. Savings Results from Reduced Turnover <ul><li>If staff have to be recruited to replace those who leave for higher salaries: </li></ul><ul><ul><li>There are costs associated with recruitment </li></ul></ul><ul><ul><li>There are costs associated with onboarding and training </li></ul></ul><ul><ul><li>Costs associated with the period prior to voluntary termination when workers tend to be less productive. </li></ul></ul><ul><ul><li>In some cases costs associated with the communication of proprietary procedures and skills to competitive organizations. </li></ul></ul><ul><ul><li>It’s likely that new hires will be successfully recruited only at rates closer to the actual market, causing internal equity and compression issues </li></ul></ul>
  15. 15. Savings Results from Reduced Turnover <ul><li>Typical turnover costs are estimated at between 25% and 200% of annual salary. </li></ul><ul><li>Using a conservative estimate of turnover costs, the cost of the LiNGO survey is equal to avoiding the turnover of one employee earning $3,600 per year. </li></ul>
  16. 16. Regular Survey Participation Reduces Overall Costs <ul><li>An annual process which includes </li></ul><ul><ul><li>Regular market surveys </li></ul></ul><ul><ul><li>Analysis of market position </li></ul></ul><ul><ul><li>Adjustment of salary scales to match market movement as well as internal issues </li></ul></ul><ul><li>Results in higher morale, less turnover and real savings </li></ul>
  17. 17. Regular Survey Participation Reduces Overall Costs <ul><li>“ But my project budgets are on a two-year cycle so I only need data every other year.” </li></ul><ul><ul><li>You still bear the financial risk of being under or over market in the interim years. </li></ul></ul><ul><ul><li>Not all organizations are on the same cycle. Thinking this way makes it difficult for the sector to build stable and consistent market references if participants swing from year to year. </li></ul></ul><ul><ul><li>Annual LiNGO survey provides better information at lower cost than a custom survey of similar quality every two or three years. </li></ul></ul>
  18. 18. Other Benefits of Survey Participation <ul><li>Organizations have or are developing global employment brands </li></ul><ul><li>Part of the global brand is consistency of practice with respect to remuneration </li></ul><ul><ul><li>Consistent position against the market across countries </li></ul></ul><ul><ul><li>Consistent policies with respect to compensation elements provided </li></ul></ul><ul><li>Global employment brand brings equitable approach and reinforces team cohesion across organization. </li></ul><ul><li>You need market intelligence to deliver this consistency </li></ul>
  19. 19. Why LiNGO? <ul><li>Tailored solution to your markets </li></ul><ul><ul><li>Country coverage </li></ul></ul><ul><ul><li>NGO-specific jobs included in the survey </li></ul></ul><ul><li>Consistent methodology across all countries </li></ul><ul><li>Right balance of cost and utility </li></ul><ul><li>An effort by your community to serve your community </li></ul>
  20. 20. <ul><li>Talk to your CFO </li></ul><ul><li>Talk to your CEO </li></ul><ul><li>Talk to your Programme Leads and Country Directors </li></ul><ul><li>Show them the numbers </li></ul><ul><li>Demonstrate the ROI </li></ul><ul><li>Act strategically as a business partner </li></ul>Take the Lead!