By: Perry Doody, Chief Product Officer at CompTrak
Like a smoothly revolving wheel, any company’s bonus cycle should operate with fluid regularity. But sometimes, you can encounter obstacles in the road.
Managing bonus cycles can be complicated by the increase in remote working, missing or outdated data and by shifting market conditions. Any one of those factors can easily confuse calculations.
With data strung across a swarm of spreadsheets, that wheel may be destined to buckle, veering that much-coveted compensation off course.
Here we offer four key bonus cycle strategies to help you streamline the process and keep your teams’ compensation packages on track.
Centralize for Simplicity
Compensation can come in many forms. Many companies treat annual bonuses, equity rewards and annual salary increases separately, with their respective data being stored in different places.
All of those should be kept under the same bracket, with the data organized and stored in the same location.
To further complicate matters, the value of compensation may depend on the targets or evaluations of different decision-makers within the company. Collating that data can become a labour-intensive and convoluted process, as documents circle around managerial levels.
Companies are increasingly recognizing the benefit of compensation software; the market size is expected to grow at a CAGR of 9% between 2019-2026. Those that haven’t embraced a holistic approach risk damaging employee morale and frittering away time and capital, which are always in too short supply.
Once data is centralized and logically presented, the bonus cycle will take a more coherent shape. But unless that data is the most recent available, then errors in calculations are a certainty. The data must be updated in real-time to ensure cohesion and fluidity.
By using a cloud-based system, you can ensure that everyone with access sees the same information at the same time, and is automatically updated with any changes which could impact compensation, such as market swings, share price fluctuations and company revenue.
With real-time insights, there’s no need to wait for a specific date to access reports and calculate compensation. With data flowing in, you can model certain financial scenarios and make informed predictions and plans ahead of time.
Embrace Digital Statements
The days of employees receiving an envelope on their desk with a bonus letter are coming to an end. COVID-19 has catalyzed a shift towards remote working, and an interlinked move towards digitization.
Even before the pandemic, that trend towards digitization and paperless offices was well underway.
Embracing digital can provide a firmer grip on the entire bonus management process. Both decision-makers and employees can have access to compensation data at any time and any place. And importantly, the process scales, facilitating bonus payments en masse.
Take a Panoramic View
Step back, take a deep breath, and survey the terrain.
Ask yourself: Are your bonus packages achieving what you would hope them to? Is the company encouraging and rewarding the right attitudes and behaviours?
Old metrics might have justified a certain way of doing things, but are you still driving at precisely the same results today?
If your introspection provides food for thought, a compensation management system could help give an in-depth look at compensation program metrics, offering a clear insight into whether your bonus plan is successfully achieving your aims.
Maybe it’s time to switch up the way you’re doing things. This could mean swapping out annual cash bonuses for company equity rewards or prioritizing salary increases over one-time bonuses.
The key is to be open to new avenues and not to lose sight of your initial objectives, and how they have gradually evolved.
Managing bonus cycles can be a pleasant task or heavy labour. The importance of accurate compensation to employees is plain for all to see. Effective management of the process which offers concision, transparency and seamless communication will keep employees happy, and systems rolling evenly, without hindrance.