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3 Reasons Why Excel is a Risk to Your Compensation Planning

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Erin Cushing
on September 08, 2015

Be honest. Are you using Excel to track and manage your compensation planning?

If you just sheepishly nodded, don’t feel too badly; more than half (51%) of organizations surveyed by analyst firm Ventana Research[1] use spreadsheets exclusively in their compensation planning activities. However, Excel was never built to handle the intricacies of enterprise-level operations, especially one as important as compensation. With compensation accounting for up to 70% of your company’s operating costs, you can’t afford to take the risk.

Still not convinced that Excel presents a risk to your compensation planning?  Here’s 3 quick reasons:

Errors are Rampant

This is the most obvious, and potentially the most dangerous. Every human intervention increases the potential for error. A wrong number here, an accidental deletion there…multiply that by dozens or even hundreds of managers who all must be included in the compensation planning process, and you could be tallying up big financial problems for your employees and your organization. And before you dismiss this with a “But I know what I’m doing, I’ll catch those errors!” rebuttal, consider this: a University of Hawaii study[2] found that a whopping 88% of Excel spreadsheets contained some type of error. More than likely, your spreadsheets do too.

Sharing is Difficult

Compensation planning requires input from countless individuals.  Unfortunately, a static spreadsheet can’t handle live updates from multiple contributors, which means that the master copy has to be manually shared from person to person, slowing the process down and opening planning up to errors. Having one person (you, maybe, as compensation strategist) become the chief owner of the spreadsheets is also problematic. One computer virus (or real virus) that keeps you out of the office for a few days brings the entire operation to a screeching halt. Plus, are you really volunteering to make all those manual changes to that master sheet?

Security Risks are More Common

Aside from human error, this manual method of compensation planning exposes a lot of sensitive, confidential data to exposure, opening your company up to problems galore. Additionally, ensuring compliance with industry, state, federal, and other mandates is more difficult with this type of process – you can’t control how other people interact with spreadsheets, and it can be tough to track that type of paper trail.

Still not convinced spreadsheets are ruining your compensation planning? Check out our top 5 reasons to avoid Excel in our ebook, “5 Profound Pitfalls of Spreadsheets in Compensation Planning.”

Want to see what your day could look like once you’re free of spreadsheet mania? See how effective and efficient your compensation planning process can be with our PeopleFluent Compensation Software Guided Tour!

[1] Ventana Research, Trends in Total Compensation Management, 2012

[2] MarketWatch, 88% of spreadsheets have errors, 2013

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