The practice of Compensation planning and the ensuing yearly process seem to be continual, with barely a beginning and end before the next cycle is initiated. There are many moving parts to both planning and execution, with people coming in and out of the administrative and managerial aspects of completing, communicating and complying within each of the process’s steps. The best way to navigate this complex process is with the right technology partner.
Where are you now, and is it time to take a deeper look into an all-inclusive compensation solution? These are the three keys to a comprehensive compensation application that you need in order to forge ahead.
1. The Importance of Compensation Management
It is widely acknowledged that an organization’s people are its most valuable –and most expensive –asset.
Attracting, retaining, and motivating a vibrant workforce is a primary concern of any well-functioning company, and total compensation is a major factor in doing all three of these things effectively. Despite this, the majority of organizations approach compensation in a haphazard and unsophisticated way. Ventana Research found that more than half of all organizations use spreadsheets to design, track and report on compensation. This manual approach can result in critical errors, such as overpaying or underpaying individuals, and many times the final resulting document isn’t something that can be shared in a meaningful way with an employee.
Even for those organizations that have moved beyond the spreadsheet, the next logical step leads them to “freeware” solutions that have come bundled with their Enterprise Resource Planning (ERP) or Human Resource Information System (HRIS), which provide inadequate functionality to meet their needs. Today’s modern compensation management software provides visibility and transparency to managers and employees alike. For managers, the benefits of a comprehensive compensation management solution include the ability to dramatically reduce the time and effort required to manage salary planning, incentive planning, stock rewards, compensation plan configuration, and rewards communications. Employees should have full visibility into how and why they are compensated. The right solution allows managers more time to think strategically about people, performance, and pay, fostering a dialogue between the employee and employer that will help motivate and retain top performers.
2. Key features are required
So what, specifically, should your organization look for in a compensation management system to give you a comprehensive view into your compensation practices? They should include the following:
Flexible Salary Planning - Smart software should reflect the planning preferences of the organization without expensive customization, giving managers the ability to reward good performance without going outside the bounds of budgets and other salary plan guidelines.
Pay for Performance - The solution should provide visibility to managers by conducting pay-for-performance and salary grade analyses.
Clear-Cut Rewards - A strong compensation management solution should support manager-discretionary or automatic incentive and bonus reward plans. Employees who understand how their bonus is calculated appreciate the motivating value of the reward.
Built-In Decision Support - Alerts, coaching, and information must be included to justify a reward and ensure managers are working within compensation plans.
Real-Time Budget Impact - As managers make decisions, they should be able to understand, in real-time, the budget impact of proposed people investments relative to guidelines.
Meaningful Analytics - The data an organization is capturing through the compensation process can be extremely valuable if it can be collected and analyzed effectively. Reporting insights and analytics provide a comprehensive snapshot into an organization’s entire talent pool, whether hourly, salaried, contracted or contingent, and can help managers make informed pay decisions, reward high performers, and motivate employees to achieve key business goals.
Global Capabilities - If your organization is global, you need a solution that will work with you around the world, with local translations and converted currencies to meet local business needs.
Audit Planning - In case any questions arise along the way, an audit history should be stored in the system to record the context of a compensation planning change, along with the date and time it occurred, and the name of the person who made the change.
Intuitive and Innovative - An easy to use, intuitive user interface will drive user acceptance, increase participation, and provide the desired system implementation outcomes. And when nearly every employee has a smartphone in his or her pocket, adding mobile and social capabilities makes it easier for managers and employees to access the information they need in real-time.
Integrated and Collaborative - A compensation management solution works best when it is part of a comprehensive total talent management suite. When compensation management is fully integrated with other aspects of talent management, such as performance, learning, and succession planning, the visibility into the overall process increases and adds exponential value.
Year Round Planning Cycle - Just as we shouldn’t only recognize employee performance once a year, compensation planning and reviews should occur throughout the year and your compensation system needs to accommodate this.
3. Compliance Standards
Any mature compensation system must meet both your organization as well as federal compliance standards to ensure fairness across your talent. If your organization is still using spreadsheets to manage the complex process of compensation, the time to re-evaluate is now. In addition to the loss of money from manual errors, the greater costs are in the potential loss of some of your top performers because they aren’t being compensated the way they should or because they don’t understand the compensation process. That kind of loss can be felt at an organization for years to come. A modern compensation management solution offers talent insights that result in happier and more focused employees who feel valued as well as satisfied managers who are confident they are getting the very best out of their teams. Together, your informed managers and engaged employees will put you in a position to achieve greater business outcomes.
It’s time to take action
Compensation administrators, Finance and Department managers want a comprehensive compensation solution that will provide not only the correct and compliant calculations, but allow everyone to manage the process, visualize the data that is most useful to them and be able to communicate effectively throughout the year. Everyone plays a part in the overall compensation cycle and real-time access to information is key to making informed decisions to retain great talent.
The PeopleFluent Compensation Solution provides a comprehensive 360° view into your compensation practices and provides exponential value when part of the total Talent Management Suite. The PeopleFluent Research Institute will further help to ensure your compensation practices are compliant with local and federal regulations with services such as Pay Equity Analysis.
Interested in seeing PeopleFluent’s award-winning compensation management solution in action? Join us on Thursday, May 12 for a demo of our solution. Register here.