Why you need to consider Compensation Management Software?
Compensation Management Software is a superb tool for attracting and retaining top talent by enabling compensation to be leveraged as a strategic lever in your organizations’ growth. To gain a better understanding of compensation management, we recommend referring to our previous blog.
It provides a framework and governance model for your business to develop new HR standards, as you evolve and grow as an organization. Instead of siloed systems or spreadsheets, performance reviews, bonuses, equity, and salaries can all be managed in a single cloud-based system.
Compensation Management software also allows you to protect yourself against potential legal liabilities. Rather than depending on risky spreadsheets or legacy systems, give yourself piece of mind that all your compensation data is secure and audited. Let’s look at what the risks are without a dedicated compensation management system and how a business can know when they are in the correct position to make the jump to the software.
The risks of not using Compensation Management Software
The main problem companies face when relying on legacy systems or spreadsheets is the risk of unsecured data being exposed to the wrong parties or individuals resulting in legal ramifications and a loss of trust within the organization. Even with the known risks, many companies still send confidential information on Excel spreadsheets to various members of the organization, which not only violates GDPR legislation but puts a large strain on your compensation team managing the process. Rest assured, there is a system that can take on those complex and onerous spreadsheets while maintaining the flexibility you need to handle exceptions and overrides.
When data is contained within legacy systems, it becomes very difficult to track and report on. For example, If you have dispersed systems or processes, an employee’s salary may be managed in the HRIS, a bonus calculation happens in a spreadsheet and equity is accessible by a third party platform. A cloud-based system that keeps track of all aspects of compensation in one platform, gives you enhanced reporting ability and provides the context to continue making data-driven decisions when it comes to comp.
The difficulty of implementing a traditional HRIS Compensation module
All major HRIS (Human Resource Information System) providers such as Workday, SuccessFactors, UKG or BambooHR have a straightforward compensation module that allows organizations to manage things like salary reviews and bonus calculations, but these compensation modules have their limitations.
In the more complex situations where bonuses are related to multiple individual metrics or team results, those HRIS modules often fall flat. The compensation modules are fundamentally very rigid and do not allow much flexibility in terms of changing plans, weightings or how they are administered. A flexible compensation platform allows you to manage many different plan structures within one platform and adjust them as needed.
Another restriction of HRIS compensation modules is your ability to provide insights into your compensation program. Whether it be on-the-fly analysis, customized dashboards, self-serve filtering, a dedicated compensation management system is well-suited to support not only the operationalization of your comp program but the optimization of it as well.
Factors that indicate compensation management software is suitable for you
If your business is experiencing some of the following situations and circumstances then you should make a best-in-breed compensation management software a top priority.
- Compensation is viewed as a strategic lever and cannot be compromised to fit within a platform
- Consolidation and calibration of budget take an inordinate amount of time.
- Your employee personal data is emailed unsafely in spreadsheets.
- Clerical errors are costing your company monetarily each year.
If any of these statements ring true for you, then reach out to the CompTrak team to learn how compensation management software can take your HR transformation to the next level.