In 2021, Payscale and Payfactors merged into one company, bringing together two leaders in salary data and compensation management software. Now, a year later, Payscale is providing customers with a rebranded compensation technology platform — Payfactors — combining the best of both companies’ capabilities.
With Payfactors, users can access three dynamic compensation data sources to respond faster to the rapidly changing talent market as well as the technology to create more equitable, fair, and transparent pay practices.
Solved: The need for diverse and dynamic compensation data
The trends of the last few years have certainly kept HR leaders and compensation professionals on their toes. The COVID-19 pandemic created an unprecedented situation in 2020 with layoffs in volumes not seen since the Great Depression and posed questions about whether to furlough workers, cut the pay of workers, or offer hazard pay for essential workers. Economic recovery was stifled by supply issues stemming from the pandemic as well as hiring challenges during what came to be known as the Great Resignation or Great Reevaluation. According to Payscale’s Compensation Best Practices Report, 76 percent of organizations experienced labor shortages in 2021, which drove up wages for coveted talent. In 2022, skyrocketing inflation worsened the situation for employers and workers alike.
Taken altogether, the tribulations of the last few years and the unique nature of the current talent market have challenged organizations to reconsider their pay practices. Organizations of all sizes have been scrambling to obtain market data that accurately reflects changes in the talent market today — not months or years in the past. Indeed, 44 percent of organizations believe they are losing talent due to insufficient pay increases and another 14 percent are unsure. This alone has spurred many organizations to reflect on their compensation strategy, the salary data they are using to price jobs and determine pay increases, and the resources they have invested in people, processes, and technology to manage pay.
Payscale’s newly launched Payfactors platform couldn’t come at a better time, providing users with diverse and dynamic compensation data on a single platform to help organizations understand where competitive pay trends are going with the ability to be agile about pay increases to adapt to today’s changing market.
Payscale incorporates three unique data sets into Payfactors — the number is a best practice for organizations to be confident that what they pay for a position accurately reflects the market. The three salary data sources incorporated into the Payfactors platform include:
- Employee Reported: Formerly known as Payscale Crowdsourced Data, Employee Reported data provides users with access to the world’s largest salary database validated through a proprietary four-step machine learning data model. Updated weekly and featuring over 65 million total profiles, Employee Reported quantifies the impact of compensable factors such as skills and location in a hyper granular dataset with representation in 4,045 industries, 15,432 job titles, 2,984 skills, and 4,528 certifications.
- HR Market Analysis: Formerly known as Payfactors Market Data (PFMD), HR Market Analysis is ready-to-use compensation data curated by compensation professionals and data experts, delivered through a single database. This dataset offers 1.5 billion data points for 5,500+ unique benchmark jobs that are 100 percent employer reported. In addition, HR Market Analysis uses a proprietary, proven algorithm to fill data gaps and always delivers an answer for all combinations of industry, size, and location.
- Peer: Peer is a legacy data source from Payfactors that allows users to build hyper-relevant datasets that reflect the markets you care most about, down to specific companies and zip codes. Peer allows users to respond quickly to market changes with employer reported data updated weekly as data becomes DOJ compliant. Peer is trusted by 15 percent of the fortune 100 with over 7 million incumbents, 2,220 participating companies, and 150 countries represented.
These three sources provide diverse and dynamic compensation data all in one place to help organizations large and small make more holistic decisions about pay using a variety of different perspectives.
Solved: Pay equity, fairness, and transparency
In addition to changing market rates, new legislation around pay equity and pay transparency is forcing organizations to be more conscientious and consistent about fair pay practices. Organizations in locations like Colorado (and soon New York City) must now disclose pay ranges with their job ads. However, organizations who lack a clear compensation strategy and consistent structures for how pay is determined can expect to experience backlash from current employees who might perceive that they are underpaid compared to new talent in the same role.
These challenges are not limited to large organizations with expansive resources and deep pockets. New York City’s legislation affects companies with as few as four employees. According to Payscale’s Compensation Best Practices Report, 68 percent of organizations share pay ranges with employees at some point in the hiring or onboarding process, but only 22 percent do so at the time of the job advertisement. This implies that a lot of organizations have a lot of work to do to become compliant with these new laws.
However, there are reasons to focus on fair pay that extends beyond legal compliance. Fair pay is a growing aspect of ESG (environmental, social, and governance), which both investors and prospective employees use to evaluate businesses. Pay transparency has been shown to close the gender pay gap, as being transparent about pay forces organizations to first establish and maintain pay equity. It also makes smart fiscal sense to do so. World at Work compiled research on the real-world impact of the gender pay gap and reported that $439,000 is the average cost that organizations who wait to close pay gaps can expect to pay every year they delay.
As organizations are leaning towards increasing transparency in their pay practices, there is a need to create more standardization to those pay practices. Without standardization, transparency could be mean losing out on top talent or causing trouble with internal employees who may not be paid in line with posted job range.
The new Payfactors platform from Payscale is a scalable compensation technology solution that provides tools to create standardized pay structures and practices as well as visibility into common compensation issues that impact pay equity, such as ways to identify employees who fall outside the published pay range and tools to analyze the impact of pay compression — all the while driving process efficiency and weaving equity into the fabric of all pay decisions.
Features launching with the new Payfactors platform include:
- Grade Based Pay Structures: Improved grade-based pay structures allow organizations to view and assess how jobs currently align to the market, spot pay compression indicators, prepare for budget conversations, and ensure a strong foundation of pay transparency and fairness.
- Employee and Job Insights: Users have the ability to access key data in real time, such as employee range penetration or job descriptions to help users understand the impacts that potential pricing or range decisions could have on the employees currently in a role.
Learn more about the Payfactors platform and ask for a demo to see it in action.
Solved: The expanding role of compensation
With all that has happened since 2020, organizations have realized the real value that compensation management brings to both talent strategy and financial strategy. However, as organizations strengthen their compensation practices, they come to realize just how much there is to do in order to get pay right.
As such, organizations are diving deeper into the different areas of compensation best practices, such as ensuring accurate job descriptions and architectures, building more structured pay grades and ranges, incorporating variable pay to reward performance, and standardizing compensation planning processes around annual pay increases.
According to Payscale’s Compensation Best Practices Report, 86 percent of organizations have a compensation strategy or are working on one, which is a 10 percent increase from last year and a 16 percent increase since 2020. In addition, 75 percent of organizations surveyed said they expect compensation to be more challenging in 2022.
Unsurprisingly, 70 percent are investing more in compensation management as a result. However, organizations either thinking about building a scalable compensation strategy for the first time or rethinking the compensation strategy they have been using for years can easily be overwhelmed without more resources to shoulder the burden of more responsibility.
Payfactors helps organizations tackle compensation management challenges in a variety of ways. The new platform comes with standard implementation, tech support, and a customer success manager to help organizations get up and running on the new technology.
In addition, can be contracted to support specific needs, whether its an extra set of hands or deep knowledge about compensation know-how to support your organization throughout the compensation journey, including compensation strategy development, job pricing, pay structure creation, policy creation and support, or manager training on pay communications.
Lastly, Payscale also offers . For many organizations, expanding the role of compensation means needing to share data with business partners outside of human resources, including executive leadership. Payscale’s analytics experts can be contracted to help customers define their reporting needs and create customized reports and visualizations that deliver important stories to your most valuable stakeholders.
Learn more about Payscale services.
Want to learn more?
The new Payfactors platform from Payscale is available to all customers and prospects starting June 15, 2022. Companies of all sizes now have the tools to quickly adapt and increase their competitive edge in a hot talent market. In a world where employees are increasingly in the driver’s seat, Payfactors from Payscale can help organizations large and small make fair and transparent pay a reality. Learn more about the new Payfactors from Payscale.