We are in the thick of earnings season and that means heavy scrutiny of companies’ financial performance. Apple has investors in a flap as it must recover from a 13% decrease in revenue from lackluster iPhone sales, while Alphabet’s big bets may finally be paying off. Yahoo’s financial performance has also been exhaustively combed, especially now in light of a potential sale.
While stakeholders and executives concentrate on the bottom line, they aren’t necessarily able to see what factor a company’s human capital is playing into that red or black number. At a company that is slated for sale, for example, it wouldn’t be surprising if some of the most talented individuals started looking for work elsewhere in anticipation of a cultural shift.
So to get some insights Fast Company spoke to Chris Bolte, the cofounder and CEO of Paysa, a big-data platform providing market insight about compensation and retention.
The startup taps both publicly available and self-reported data on its platform. To get information on compensation, Paysa’s data sets mine 30 million salary points. But the platform is also able to crawl publicly reported information about job changes as well. As such they were able to look at 198,000 distinct companies and 7.45 million job changes by software engineers and individuals in related professions during the past 25 years. The best score is (counterintuitively) a 1 and the scores go up (or down) from there. For these purposes, the lowest grade is a 250, which a company is also assigned before it is in operation, as in the case of Snapchat which launched in 2012.
Here’s what it looks like:
In the case of Yahoo, where Bolte was formerly employed, the talent pool has clearly shifted and the data reveals a decline in the density of its most talented employees. Ditto for Zynga and HP. Other companies such as Google and Facebook have continued to hang on to their best and brightest over the years.
While Bolte makes it clear he’s not in a position to comment on why there is a brain drain or brain trust at any of the companies in the analysis, he cites changes in leadership and business headwinds as two major factors that would influence retention of core talent.
Just based on past Fast Company reporting, we can see, for instance, that Facebook has remained relatively steady in the talent rankings, which makes sense as the company invests in new channels such as Oculus Rift which is a draw for qualified tech talent looking for a new challenge.
On the flip side, we see the talent at Zynga take a sharp dive beginning in January of 2013 and falling precipitously again after the departure of founder Mark Pincus in 2014.
Bolte explained that behind these comparison data sets is Paysa’s "CompanyRank." That’s a proprietary algorithm that quantifies the quality of technical talent that a company has at a particular time. He likens it to Google’s algorithm, which pulls a variety of data points that assign different web pages rankings, which then show up when you search. Quality results always come up at the top.
Paysa looks at tech talent by the inbound and outbound flow of talent at various companies. As Bolte puts it, "Over time, that flux lets past quality propagate into new companies, e.g., a lot of employees from Facebook and Google joined Uber, which helped increase Uber’s score—and Uber hasn't lost many engineers yet, so their quality is high." If more qualified staff leave and a company hires lesser-quality talent, their rank will reflect that.
"What we are is a data company," Bolte underscores, "We spend a lot of time focused on accuracy." He explains that crawling public records doesn’t always yield the truest information, so data is cross-checked with other reliable sources. If something is outside the bounds of a trend, for instance, if an engineer is reporting a starting salary of $2 million, that data point is put aside, much the way some results are controlled in scientific experiments.
Anomalies aside, Bolte says, "Success in our space is predicated on the talent and type of people you have on board." For those looking to make an acquisition, it would only make sense that due diligence includes careful consideration of its human capital.