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In this age of technology, business is changing faster than ever. More people than ever have access to tech, software, and programs that are far more advanced than what people had at the beginning of the century. Just over 10 years ago, the first iPhone was announced, and now, there are “more than 700 million iPhones currently in use worldwide.” Additionally, those little pieces of technology that can fit into your pocket are “millions of times more powerful than all of NASA’s combined” when the first rocket landed on the moon.
It’s pretty amazing how far technology has come over just the past few decades. Yet, with the embracing of the new technology comes with moving-on from the old. Instead of shelves of records, people opt to stream their music from their smart speaker. Rather than typing documents on typewriters, most people use computers with cloud-based word processing software that is accessible from anywhere with an internet connection. The point is, that most pieces of technology that were once revolutionary are now obsolete, and the next thing to join that list is excel spreadsheets.
Now, I understand why this may seem like a shock to you. If you walk into almost any business course on a college campus, you are likely to hear a professor that raves about how it is absolutely necessary to understand how to use excel to succeed in the business world of today, but they are wrong. Instead of manually tracking every minute detail through the use of excel and similar programs, many companies are choosing new ways to manage their information. When it comes to compensation management, customized software programs are the way to go.
However, before we get there, let’s determine exactly what makes spreadsheets, problematic, confusing, and outdated.
Enormous Errors
We’ve talked about the inevitability of human error before. When people are the ones creating every formula, aligning ever box, and inputting all the data, it’s extremely likely that they will make at least one mistake in at least one of those steps. This may seem manageable… only if it’s a mistake or two from time to time. Unfortunately, 88% of spreadsheets have some kind of error, which is essentially 9 out of every 10 documents.
Of course, there are ways to combat the inevitability of an error-ridden spreadsheet, but that takes both time and money– two things no business owner likes to hear. Having another person double-check every compensation-related spreadsheet would take hours of time, and leaving the possibility of mistakes un-checked could potentially cost your company thousands of dollars. Ultimately, it isn’t worth the effort to try and combat the error-ridden nature of spreadsheet software.
Difficult to Understand
Another often overlooked aspect of using spreadsheets is the fact that they are far from easy to interpret. Part of this is the fact that when you simply input all of your data into one big spreadsheet for storage, the important parts are hidden. As this article from Forbes puts it, “it’s hard to see the forest for the trees.” Instead, you will likely have one of your employees take the time to go through all of the data, pick out the important pieces, and then turn that information into a report for the entire department to read.
This process takes a lot of time, which, in return, costs you money. The Forbes article also mentions how this data is difficult to analyze. Most people who are not fully educated in the in’s and out’s of spreadsheets have a hard time knowing what all of the information actually means. The article states that “people only familiar with spreadsheets and their associated tools tend to make charts and graphs that often distort data.” Just because the software has a one-step process to turn data into a 3D graph, it does not mean that it is the appropriate way to visualize that set of information.
Sharing Fiascos
When it’s time to collaborate on a data-set or send your newly finished input, you are going to have a way to transfer your spreadsheet to your coworkers or bosses. Again, this may sound extremely basic, but sharing documents can be far more difficult and confusing than you think.
For example, it is likely that more than one employee is going to have input on your spreadsheets, especially if you are going through the lengthy process of double-checking every piece of information. If you are using a traditional software like Excel or Numbers, you have to save, upload, and send every new version of your document with no way for two people be working at the same time. HubSpot makes the point that long, complicated file names make it challenging to even find the correct document to work on, and when using a program like Excel, waiting for each collaborator to save and upload the correct document to the master file is a tedious process that costs precious time.
If you are working with newer software like Google spreadsheets, you have the option to have more than one person edit a document at once- only with a working internet signal, of course. But when working with numbers and formulas, one little box can potentially change all the other little boxes, especially when complicated algorithms are involved. This means that when two people are remotely working on the same document, they have to be doing completely different parts of the document to avoid problems with formatting.
Ticking Time Bomb
Ultimately, Excel spreadsheets and similar pieces of software are ticking time bombs. They are programs that were once life-changing, but, now, they tend to make life more difficult. They have become error-ridden, confusing, and inefficient documents that take a lot of time and effort to customize to the needs of your business. Instead, it’s time to move on to the next piece of technology that is revolutionizing business.
Harvest HCM is a business that creates personalized compensation software management plans. Essentially, the people at Harvest HCM do everything that your spreadsheet does, except it is cheaper, faster, and easier to understand than anything that you could create using your spreadsheets. The compensation software programs at Harvest HCM are completely customized to your business to meet your exact needs. Check out this other article on our blog to check out the basics of compensation software and why it’s the right choice for you and your business.
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Employee Retention is one of the keys to running a successful business. It allows for consistency and quality in your product or service by having the same great employees continually doing their best work. It helps the office atmosphere feel more like a team, instead of a revolving door. When you team is able to build a bond in the workplace, they will be happier, more productive, and stay at the position longer themselves.
While employee retention may not seem like something that could potentially be a large problem, according to Fortune, it is one of the biggest worries that employers will encounter. The article cites a study by Future Workplace and Kronos that states that “87% of employers said that improving retention is a critical priority.” It is already something that is on the forefront of the goals of a lot of companies. On the employee side, the article states more people are “interviewing outside of work hours, asking for higher salaries and promotions, and researching pay grades in their industry.” The workplace is getting more and more competitive to find and keep the best employees, and employees are braver, bolder, and increasingly willing to find a new job.
Purely and simply, your employees are not going to stay at your company if they see a better deal for them somewhere else. Some employees may highly value loyalty to your company, or may believe in your product or so much that compensation is not their number one concern, but for the vast majority of people, a job is first and foremost a way to earn money. That is the main reason why employee retention is deeply related to employee compensation.
To break it down further, there are five crucial elements of the compensation management process that directly affect employee retention: offering competitive pay, implementing exclusive benefits, tracking goals and progress, providing learning opportunities, and promoting inside growth. Let’s look closely at each of these components of compensation are connected to employee retention.
Offering Competitive Pay
Offering competitive pay is definitely the most obvious affiliation of compensation and employee retention. When comparing future positions, a high salary is the most glaring and alluring factor of a new compensation package. This Entrepreneur article states four specific strategies that go into a fair and competitive pay: employee skill and experience, supply and demand, geographical location, and worker seniority. It is important to incorporate all four of these concepts into an employee’s salary, and to keep in mind that salaries should differ for job position, difficulty of job, and time already spent with the company. Each of these completely ensures that your workers know that their work is being valued, which, therefore, increases their likelihood of staying with your company for a longer period of time.
Implementing Exclusive Benefits
Not only is a competitive salary important to keeping employees around, but having an inclusive package of exclusive benefits is a crucial component of employee retention through compensation. Employees are likely to look for an all-encompassing compensation package, meaning they will stay with the job that has the most benefits not only the highest salary. Of course, this doesn’t mean that the salary should be low, it should still be competitive with similar positions at other companies, but it does mean that your compensation package should have a range of attractive benefits offered.
The previously mentioned Entrepreneur article names a few of these high-demand benefits: health insurance, life insurance, paid vacations and holidays, and tuition reimbursements. All of these are attractive to employees, especially the more unique options such as life insurance and tuition reimbursements. By providing these exclusive benefits, your employees will feel like they found something at your company that they can’t get anywhere else, keeping them onboard for the long haul.
Tracking Goals and Rewards
Hard work should always leave to rewards, especially in the workplace! It is one of the most sincere ways to let your employees know that you value their work, and the benefits are immense. One way to measure the hard work and eventual rewards is through implementing a goal setting program. By sitting down and establishing exactly what work needs to be done with your employees, you will be guaranteed the work you are looking for. Additionally, employees know what they need to do to make a good impression in the workplace. Goal setting creates concrete steps for both employers and employees to take to increase the quality of the work and the workplace.
The Balance Career’s final tip to retaining great employees is making staff members feel appreciated. They state that verbal affirmations are a great way to do this, but “monetary rewards, bonuses, and gifts make the thank you even more significant.” By incorporating achievement and goal-based bonuses, your employees will know exactly what to do to impress their company and how to get rewarded for it. This is one of the most clear-cut strategies to increasing employee retention through compensation.
Providing Learning Opportunities
A part of compensation you might not have thought about is providing learning opportunities for your employees. This can be done in several ways, and they all lead toward higher rates of employee retention. One way to offer learning opportunities is by incentivizing professional development opportunities. Perhaps that is through a weekend conference on a new development in your field. Another advantageous learning opportunity for employers and employees is by sponsoring postgraduate education courses or even degrees. This is a huge perk to employee because it makes them more knowledgeable in their field, which, in return, makes them better employees for your business!
The aforementioned Forbes article establishes learning opportunities as an important part of employee retention because “new technology, new selling techniques, changes in employment laws, and the huge impact of the internet are all compelling reasons to keep permanent employees in the loop.” They feel like they are learning, growing, and are valued in their position because you as the employer are making an effort to invest in them.
Promoting Inside Growth
As you may have noticed, many of these employee retention strategies also makes for better employees, and with better employees, you can promote them to higher positions. For example, you may sponsor one of your salesman’s master degree in management. Now you have a highly qualified salesperson who has ample knowledge of how to lead a team- who better to hire for your new Manager of Sales!
According to the Fortune article “When employees, especially millennials and Generation Z’s, aren’t able to advance at work, they immediately start searching for other opportunities,” and A study by Cisco and Future Workplace discovered that promoting within your company instead of outside hiring increases engagement, productivity, and teamwork. Employees will feel that they have an opportunity to grow within your company and will be far less likely to search for work elsewhere if they know that you are likely to promote them instead of hiring an outsider.
Offering competitive pay, implementing exclusive benefits, tracking goals and progress, providing learning opportunities, and promoting inside growth all lead to higher retention rates in employees, but actually creating and implementing all of these compensation planning tools can be incredibly difficult. The easiest and most cost-efficient ways to do this is by using compensation planning software, such as the service offered by Harvest HCM. Our company will create a customized compensation management plan using our software that will suit your every need, including progress tracking and total rewards statements. It will completely change the way you manage your compensation and employee retention!
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The short answer: yes.
Of course better compensation leads to better engagement! An employee that believes that they are being paid an adequate amount for the work they do and thinks their benefits truly… benefit is bound to be engaged in their work. They will be motivated to prove to their boss or bosses that they are the right person for the job. Not only that, but those who know that their supervisors will be highly involved in the compensation process will also be further engaged. As discussed in this previous post, an employer that expresses genuine interest in their employees’ compensation plan and future goals with the company is a telling indicator of engagement and retention within their company. Ultimately, your employees will inevitably produce the amount of effort that they think they will be compensated with.
However, the longer answer to my question is substantially more complicated.
As you probably know, there are so many factors that go into an employee’s compensation package other than their salary. This includes, but is not limited to: company stock options, health insurance or life insurance, pension plans, vacation and sick days, and various types of bonuses, and because their are so many components to compensation plans, they all affect employee engagement in different ways.
In order to get to understand all of this various parts of a compensation plan, let’s look at how individual parts of the compensation plan affects employee engagement.
First, let’s look at the the primary park of compensation: the salary and the many different ways that it can be configured. A study from the Harvard Business School analyzed how different compensation systems affect employee engagement, satisfaction, and trust. They interviewed over 1,000 different workplaces and 13,000 employees to get input on several different compensation plans and how they affect employee engagement. They found that performance-related pay, including incentive and merit bonuses, had a positive effect on engagement and job satisfaction, while profit-related pay, including share ownership, was less motivating and resulted in less trust in their employers.
On the other hand, there have been previous studies that have linked the numerous benefits of profit-related pay to employee engagement. So, what’s with the inconsistency? It turns out that the type of salary payment should be customized to the position of the employee. Jobs in sales departments should be structured differently than those in reception. Ultimately, salary pay should be configured on an individualized basis to best foster engagement in the workplace.
Another major factor of compensation that influences employee motivation is health benefits. This includes everything from dental insurance, gym memberships, to regular health insurance. This article from Employee Benefit News quotes a Collective Health and Harris Poll that states, “78% of adults in the U.S. say healthcare benefits strongly factor into their decision on where to accept a job.” However, they also state that employees often do not even use the full range of benefits that are offered. In fact only 25% of employees have used their entire benefit package.
So, this means that in order to increase overall engagement and happiness at your company, it might be better to choose more interactive health benefits, such as incentive programs and competitions, wellness competitions, or even sponsored health screenings. Programs that actively involve employees to practice in healthcare have an overall larger impact on workplace engagement than simply insurances plans.
Now, the fun part, vacation. It might be surprising, but offering a fair amount of vacation days and making sure your employees actually use them greatly affects their engagement in the workplace! According to this article, Americans are taking less and less vacation days than they ever have. To put it in numbers, “in 2015 Americans used an average of 16.2 vacation days per year, a full week less than the average from 1978 to 2000,” and “more than half of the workers surveyed (55 percent) left vacation days unused in 2015.” We are taking less vacation than ever before, but what kind of effects does it cause?
First, the Culture IQ article claims that less vacation means less productivity and creativity in the workplace. Without a mental and physical break, it gets harder and harder to produce quality work. Additionally, it lessens trust in employees. The article states that 30% of employees believe that there is no one to do their job if they leave, which in most cases simply isn’t true. There is always someone to cover for an employee who is taking time off. All of these negative effects of less vacation can cause unhappy employees, resulting in lower engagement or even retention rates.
Finally, let’s examine how bonuses affect employee engagement. Dr. Dow Scott from Loyola University did an extensive study on how “total reward programs” affect overall employee engagement. There are a few great breakthroughs from this study. Dr. Scott found that “rewarding engagement through incentive programs indicate that their organizations more effectively foster employee engagement and motivation then those organizations that do not,” meaning that specific incentive or merit-based bonus programs were found to be the most effective. Another interesting finding of his was that it is important for employees to “think in terms of total rewards and not just financial rewards.” This means that monetary rewards may not always be the best choice. Sometimes in-office competitions or an extra sick day may be more impactful to employee engagement than a merit-based bonus.
So, what do you do with all of this confusing compensation information?
It’s obvious that there is no one-size-fits-all compensation plan for every company, and even within companies, different compensation plans work better for different types of work. It truly is difficult to put together a comprehensive compensation plan that will result in the highest levels of engagement with your employees and without breaking the budget. Fortunately, there are many tools that can solve this problem.
A compensation management program is the best option to maximize benefits and minimize costs when trying to decide on a compensation plan for your company. Of course, it is much cheaper and less stressful to purchase a compensation software that figures out all the right balances of elements within the plan. Compensation management software will do all the hard work for you and even create individualized reports on each employee and your company as a whole, to make the process even easier for you.
So, with your compensation software in hand, you will know that you have the best compensation plan for your employee engagement.
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Compensation planning is a process that can get tricky very quickly depending on the variables at play and the methods used. Each complication is sort of like a snowflake; it seems harmless at first, but once they’ve all accumulated on your driveway and you have to shovel them it’s a different story altogether. If your compensation planning process isn’t properly optimized, it can turn into weeks of headache, heartache, and lost productivity.
If you’re having difficulty with compensation planning, your first step should be finding where the issues lie. What is tripping you up and making the compensation process so difficult? For this, start with the accumulation of data. Do you have managers giving you data on your direct reports? Often times waiting on them to get the necessary information to you can be agonizing. If this is an issue, try to set up a rigid schedule for them to adhere to, so you can get the information you need on time.
How about the complexity of the data you’re managing? Depending on how large or complex your organization is, this is one of the areas in which major issues can come up. That goes double if your compensation mix includes compa-ratios, stock incentives, prorating, merit increases, and so on. The keys to easing this aspect of compensation planning are to organize and automate.
Many compensation professionals do their compensation planning with spreadsheets. Adding data into the master compensation spreadsheet from various other sources can be incredibly time-consuming, especially if you’re constantly hunting for the right information. Store all of your information in a rigidly organized manner so that you know exactly where it is when you need it. And double (or triple) check your work! A small error somewhere in the data can lead to a massive scavenger hunt for even a misplaced number or decimal point.
An even better strategy is to get technology to work for you. Automating the compensation planning process can cut down on user errors and speed up the process immensely. This might mean making heavy use of excel macros if you’ve got the time and expertise to implement them properly. Another method is investing in a compensation planning tool which can eliminate the need for spreadsheets altogether. It all depends on what makes the most sense for your organization, and how mired the compensation process has become.
Compensation planning can be difficult, but it doesn’t necessarily need to be. By planning ahead, utilizing rigid organization and automation, you can make the process considerably easier. It all starts with looking at your existing process, finding what works and what doesn’t, and working to improve from there.
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Compensation software is like many business processes, you have to protect it. Unfortunately, in the world that we live in, it can be incredibly difficult to make sure that your information is impenetrable. So, in order to protect your information from being compromised, you have to strongly evaluate the state of your software system.
To do this, there are several questions that you should ask yourself about your current compensation software system. You need to make sure that there is no possible way that anyone can access this information if you don’t want them to.
Today, we are going to look at a few of those questions, the potential answers, and how the answers are going to affect you.
How do you access your compensation information?
When you are retrieving your compensation information from your software program, the point of entry is the most important thing that you can protect. Think of it like a medieval castle. Before someone could even think about entering, they would have to get across the moat filled with alligators, over the drawbridge, and passed the knights standing guard.
…Now even if this type of castle only exists in fairy tales, you want your compensation information to have the same levels of security. So, what is the equivalent when it comes to compensation software?
First, if your compensation process is not password protected DO NOT TRUST IT. This means that just about any person would be able to see what your employees are being paid, how much, their benefit packages, etc. This could cause so many problems for potential new employees, competing companies, and your current employees.
Email is also something to be careful of. Most people don’t know but email is by no means secure. Just one email being sent can be bounced off of many external servers and allow your messages to be compromised by outside parties. This is why companies like Dropbox and Sharefile exist. Having a compensation system with a required sign in (or Single Sign On) is incredibly more secure than passing around spreadsheets via email.
Next, where do you access this information? If your compensation management plan is only available on a company-wide server, it may not always be reliable. Additionally, there may be times when you are away from your office and need to look at your compensation plans. So, you best option is to have your information store on the cloud.
How many people have access to your compensation information?
Now that we’ve talked about how you access your compensation information, we need to look at who might be able to access that information.
While it is extremely important that you information is password protected, you do not only want to have one username and password that the whole company has access to (that protects a spreadsheet for example). Again, this mass access of knowledge can cause a lot of problems between current and future members of your company. It is just simply not appropriate that all of your employees can see the compensation plans of all the other employees.
This means that you want separate compensation management accounts with different clearance levels. Some of your higher ranked employees may need to be able to see the compensation plans of their subordinates, so it would make sense that they would be able to retrieve that material. With the modern compensation systems that are available, you can set up hierarchies with permissions to control who sees what.
On the other hand, it is also important that all of your employees can see their own compensation plans. They need to be able to feel like they have control over their information and that they are properly informed on every aspect of their compensation plan. There a many ways a compensation system can deliver statements to your employees securely.
Is your software encrypted?
Other than ease of access, data encryption is one of the most important factors to securing your information. It is also a concept that many people do not know a lot about.
Essentially, data encryption means that your information is changed so that it is not readable by anyone without specific access, i.e. it is protected against those who don’t have a “key.” If we revisit the medieval mastle analogy, data encryption would be a magic spell that transforms the area surrounding the castle and camouflages it to look like a shabby cottage.
With the increased use of the internet, just about everyone has basic computer skills, and more and more “lay people” have advanced knowledge in computer science. They even teach basic coding in public schools now! This means that if your data is not encrypted, there is a very high chance of it being stolen. Encryption makes sure that your data cannot be taken by just any internet hacker.
Where is your information stored?
Finally, there are a couple things that you need to consider when it comes to where your compensation software stores your information.
Even if your software is stored on the cloud, that information does not just magically appear out of thin air. It is actually physically stored through some kind of information server in a specific location.
The scary thing is, this location could be in a data warehouse across the ocean. If it is securely protected, that would not be a problem, but if it is in a location that does not have it’s own security, then you are in for trouble.
You want to make sure that you are working with a compensation software company, you want to ensure that they are transparent about how and where their data is stored. This means that you are also looking for a company with trustworthy and reliable customer service representatives. It is important that you have confidence in what they are telling you.
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There is really a lot of factors that go into securing your compensation plans on your software program. Just as if you were protecting your house (or your medieval castle) you want to make sure that there are several barriers that prevent anyone from accessing something that they are not supposed to see.
On the other hand, you still want to be working with a software that allows for flexibility and ease of access for qualified personnel. Your software program should be both effortless to use for those who need to use it and impossible to access for those who don’t.
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Now that your business has reached a certain level of success you are faced with a challenge. The challenges of managing employee compensation on your own or by your HR representative has become too difficult and too large of a task, and you need someone or something to do the work for you. You have two options: hire a compensation employee/manager or purchase a compensation software service. The choice can be difficult and there are a lot of factors to consider to make the right choice for you and your company. So, let’s get into the details of both options to see which makes the better choice.
First, let’s define these two entities to get a basic understanding of what each of them do and how they work. A compensation manager or compensation professional is an in-house employee that you higher to handle of your compensation needs. Their job is first to create a compensation system to pay all of your employees and, second, to track and manage all of your employees’ compensation packages, including their bonuses and benefits.
A compensation software does all of these same things, except it is not an employee that you hire it is a service that you purchase. Compensation software programs are web-based programs that manage all of your compensation needs. They have a database of all of your employee’s specific compensation plans, where you can also track an individual’s work goals and performance rates. All of this is done through it’s own cloud-based application that tracks and manages all of the data on its own.
Although both the product and the employee do the same thing, they do these in very different ways. Next, let’s analyze both a compensation manager and compensation software using four different criteria: cost efficiency, workload, accessibility, and accountability, to get a well-rounded idea of the pros and both a compensation manager and compensation software.
Cost Efficiency
Compensation managers can cost a business serious money. Their salaries can range anywhere from $66k a year up to $104k a year. Although that is quite a large range, you have to consider yearly raises, bonuses, and other benefits that can raise that baseline salary higher and higher each year. It can be incredibly expensive to have a compensation manager, or potentially an entire team if your business is big enough, to track and manage your compensation needs.
Compensation software, on the other hand, will not have the same expense. It, unlike an employee, does not have bonuses and benefits that you need to keep track of. Instead, when purchasing a software, you are doing just that: purchasing. The price for compensation software packages also ranges, but this is because these software packages are tailored to the individual companies and address their specific compensation needs. There are no other surprise costs that a compensation manager might have.
Workload
Obviously, there is going to be a large difference on the amount of workload between a compensation manager and compensation software. At the baseline, a compensation manager is going to be working 8 hours a day, 5 days a week, 52 weeks out of the year, which surmounts to a whopping 2,087 hours a year. And, according to the United States Department of Labor, “about 1 in 3 [compensation managers] worked more than 40 hours per week in 2016. They may work more hours during peak times to meet deadlines, especially during the benefits enrollment period of their organization.” In total that’s over 2,000 hours of work solely based on compensation management for a single employee.
Additionally, a compensation manager has a lot of duties based on their title, which can make the job very stressful. For example, a compensation manager is not only responsible of monitoring all compensation packages, but they also have to design the entire system that the company uses. This means that every year, or even every quarter, when it is time to give out raises and bonuses, the compensation personnel is swamped with work.
On the other hand, using a compensation software is considerably less work. First, there is no individual whose sole job is compensation management. Therefore, you can dedicate that job space to fill another position that will help your company grow. In addition to that, any extra time that would be taken up during the compensation planning season with a compensation manager would not happen with the software. If there happen to be any problems, the customer service team at your compensation software provider will handle it.
Accessibility
One of the great benefits to compensation software is that you can access it anywhere. Since the program is web-based and stored on the cloud, all you need is a web browser, and you can retrieve all of your compensation information. You do not have to worry about waiting for your employee to finish working on that one spreadsheet or figure out the new merit bonus equation; instead, you will be notified exactly when your data is ready, and it updates in real time. So you never have to wait too long to access any of your compensation data.
Contrastly, a compensation manager might not always be as accessible as your think. For example, when they are in the middle of making and working on documents, you will not have the most updated compensation data. This would not be a problem if it were a small amount of time, but when it is up to a person and not an algorithm to do some of the intricate math involved in compensation planning, which could potentially be problematic on the financial side of your business. There will be times when your compensation data is simply not accessible to you because you are waiting for your compensation personnel to finish their work.
Accountability
To put it simply, a piece of software cannot call in sick days or go on two week vacations. In comparison to an employee, a piece of software does not have the same amount of risk or unpredictability. The piece of software will always be there for your company, which, no matter how great of an employee, can never be truly possible for a human worker. There will inevitably be personal matters that come up or have days where they are not as productive as others. These are concerns that absolutely will not occur when using compensation software.
Additionally, and more importantly, it is far less likely for a software program to make any errors. When a compensation employee has to work with spreadsheets all day everyday, the will make an error or two in the process; it would simply be impossible not to. When your company does not have to rely on spreadsheets and can instead operate with a tested product that will give you accurate results every time that you use it. Compensation software will always deliver results in the time frame that you need and to the quality that you deserve.
All in all, there is a surprising amount of differences between a compensation employee and a compensation management software. When comparing cost efficiency, workload, accessibility, and accountability, compensation software is cheaper, faster, and more reliable than hiring a compensation manager. Using the software ensures that all of your compensation needs will be met exactly when you need it, and that information is easy to understand and adjust if necessary.
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For most companies there are numerous times throughout its existence that are incredibly exciting. Things are fast-paced, changing, and rapidly growing. The founders’ innovative ideas generate a buzz that enchants everyone involved, and they are all ready and motivated to do whatever it takes to make this new company strong and successful. Unfortunately, the phase enthusiasm doesn’t last forever. The company will inevitably hit a point of stagnation. The people and great ideas that got the company up and running will not be able to progress as quickly as it once did.
Eventually, you are going to have to innovate to be able to continue being successful, and one of the best ways to do that is through a compensation plan. According to a study done on business owners who were rated “fast-growth” “a strong hiring strategy of stock options and signing bonuses did not have retention value”, meaning the compensation strategies that first gained you the best employees will not work in the long-term. The companies from this study that invested in a creative and individualized compensation management plans were the ones that were able to continue at this “fast-rate” of growth.
Compensation plans need to change and grow just as the company does. Just as the study said, the strategies that worked from the beginning will not continue to work in the long run. For example, having impressive sign-on bonuses is great for acquiring new employees. It attracts people who are willing to join your company now, and it motivates those who are looking for jobs to act fast, helping your company in a quick and timely manner. Unfortunately, from the perspective of an employee, a sign-up bonus is only a one-time perk that will now continue to reward them for their work in the company. However, there are ways to use this bonus-method and turn it into something that attracts long-term employees. For example: merit-based bonuses and quarterly-bonuses are great compensation perks that both continually honor your employees for their work and propels them to do their very best work. So, in order to keep your employees at your company and motivate them to produce quality work.
The article also mentions how stock options may not always be the right option for your company; however, there are ways to use this compensation strategy that helps business growth in the long-run. For example, this Forbes article discusses several ways to use stock options or other stock packages to motivate and retain your employees to propel company growth. One of the factors the article mentions is that “options can provide a significant financial incentive to employees to reach predetermined goals and in time,” showing that personally investing in your company is motivating for an employee to make that company successful. It also makes sure that your employee will be more likely to stay with your company for a certain amount of time, if your stock packages require the employee to hold the stock for a while before selling. The article ultimately concludes that “employee stock options can foster the twin goals of increasing worker productivity by providing economic stakes in the success of the company while at the same time enabling employees to achieve a substantial reward without a cash burden to the company,” proving that including this as part of your compensation plan can be extremely beneficial for both your employees and your business.
There are two key terms that I previously mentioned: creative and individualized. The secret of compensation management is that there is no “one-size-fits-all” plan for compensation. There are many elements that go into creating the perfect plan for your business, and that takes a lot of time and energy and can cause a lot of stress. That’s why compensation management software is so effective at helping companies organizing their payroll, benefits, and rewards systems. A good compensation plan establishes two key things: happy, productive employees and happy, productive employers, and both ensure that the company is bound for long-lasting success.
In this article from Entrepreneur, the author talked to Vinaya Varma, CEO of mjunction, the largest e-commerce website in India, who credited a good compensation structure as a pivotal factor of sustainable business growth. One of the reasons for this is that it inspires employees. He stated that compensation plans “”shifts an employee’s attention towards generating more revenue for his/her organization and empowers them to overcome their departmental agendas.” Employees that know that they are going to be fairly and competitively compensated when their employer uses a set, consistent plan, and, in return, they are more likely to focus their efforts into their company. An employee that knows that they will be rewarded for their hard work will work hard.
Now this may sound simple, but there are actually so many factors that go into fair compensation for your employee. A compensation plan ensures that you are not over or under-paying any of your employees, and it keeps all employee pay consistent between similar positions. Without these consistent elements, there could be chaos. Imagine that two of your employees start comparing salaries and benefits, and one one employee finds out that their salary was less than the other’s (when they had similar credentials and accomplishments); there could be an enormous conflict. A compensation plan, specifically one done through a compensation software program, guarantees that this situation could never happen. By riding of spreadsheets that make the process far more difficult to understand (who really knows how to use excel, anyway?) there is no way that a mistake like this could be overlooked, which saves you a lot of time, money, and stress.
Another one of the specific ways that a good compensation play can do this is through compensation perks or benefits. First of all, a pay package that includes unique benefits, such as merit bonuses or stock options or units, and are far more likely to attract potential employees and retain top-performing employees. In this article aimed at people searching for jobs, the authors demonstrates that a compensation package goes far beyond the traditional base pay. He states that “base pay is important, but it might also not be that the most important thing.” He then goes on to analyze three different perspective job offers, and concludes that the one with the lowest base pay actually yields the highest rewards for the employee. As it turns out, your employees are actually looking for something that goes beyond a high monthly-salary. They want the jobs that will both pay them a fair salary and provide benefits that continually reinforce their work. This is the way to have happy, faithful, and productive employees: through a solid, consistent compensation plan.
Ultimately, there are many ways that a good compensation plan can help your business grow. First, when you have a consistent plan (one without those obnoxious and hard to understand spreadsheets) you are guaranteed to fairly pay everyone of your employees. Second, a compensation plan with a continual rewards system, such as bonuses or stock-options, your employees will be highly motivated to stay a part of your team and produce quality work. And, finally, diverse compensation plans that allow a unique range of benefits will attract high-quality employees that want to stay at your company. Together, all of these things allow you to have faith in your employees and their work and rely on them to help you continue to grow your company.
Blog, General Insights
In business, as in life, trying to rely on luck sets one up for a major loss. A person could just decide to not work and wait to win the lottery, though according to the odds they’ll be waiting forever for a ship which was never headed into harbor in the first place. And if you’re starting your own business and go to the bank for a loan to get you on your way, telling them your plan is to wait for lady luck to smile on you will likely get you laughed all the way back out the front door. In order to get off of the ground you need a plan. A concrete strategy which lays out how you’re going to make your business succeed.
Compensation planning also requires strategy. You can’t just administer compensation willy-nilly and hope you’re getting the right mix to motivate and retain employees while simultaneously growing your business. You need to look at what you’re doing, study the data, and figure out what’s working and what isn’t. And from there, you need to tweak your compensation mix based on what you’ve discovered.
In order to plan effectively, you need the right tools. A long haul trucker doesn’t steer his rig down the nearest highway, hoping that the winds of fate will somehow guide him to his destination. He has a route, maps, a timetable and a plan of how long it will take him to get to where he’s going. Compensation planning also requires the right tools. Using spreadsheet software to track data and trends may work for a while, but as your organization grows it may make spreadsheet software cumbersome and unwieldy, obscuring the end goal more than it illuminates.
A custom built compensation tool can help immensely. Intelligently designed with your organization’s structure and goals in mind, it can help you update, organize, study, and plan effectively. It can give you easier and more useful access to compensation data, which is the most powerful tool of all when it comes to compensation planning.
If you wait around hoping to get lucky with your compensation mix, odds are you’ll be waiting forever. Success requires hard work, dedication, and most importantly a solid plan. Success in compensation planning is no different. And in order to achieve success, you need to have the right tools in place. If compensation planning is getting too stressful or complicated and your organization is outgrowing the methods you have in place, it may be time to look into a robust compensation tool.
Blog, General Insights
In his legendary treatise on warfare, Sun Tzu states that “the general who wins a battle makes many calculations… ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory, and few calculations lead to defeat.”
While business and war may use vastly different means to reach their ends, the book, The Art of War, has become a favorite of businesses the world over as the lessons contained within are easily (and usefully) applicable to any kind of management. The above passage is a good example of this, as the importance of planning cannot be understated. This is especially true when it comes to compensation planning.
Compensation planning is a vital strategy in managing an organization’s workforce. The correct compensation mix applied strategically can have massive impact on many aspects of your workforce, including morale, retention, and productivity – the three of which often go hand in hand. By mastering compensation planning, your business is one huge step closer to achieving its goals, and to victory.
The inverse, however, is also true. Say you pay little attention to compensation planning, and your employees feel like they’re not being fairly rewarded for their work, or that there’s no room for them to grow within the organization. `If they’re worth their salt, someone else will notice sooner or later and offer them something that’s more to their liking. Thus, you lose valuable resources to competitors.
Moreover, if an employee doesn’t feel as though they’re valued, and aren’t receiving the opportunities they’ve earned, their morale will drop and their productivity will inevitably suffer. Make them feel valued, however, and they’ll become more invested in their work. Make them feel as though they have a stake in the company’s success and future and they’ll fight to make it succeed.
Compensation planning should be more than just a mere afterthought – it should be treated as the powerful strategic tool that it is. In the right hands, the right compensation plan can reap great rewards for an organization, just as its mismanagement can lead to stagnation. Utilize the resources available to you effectively, and your organization will reap great dividends. Compensation planning is an important key to your organization’s success, and to victory.
Blog, General Insights
Winter is here, and evidence of its arrival is everywhere. The days are shorter and the weather is colder. Many people find the winter months to be some of the most depressing times of year. Not just because of the weather and darkness, but because it’s a time for some exciting business processes like compensation planning. Dread as a part of our everyday lives definitely isn’t desirable. And for some, there’s an undertaking that fills them with such dread, such mortal fear and apprehension, that it looms over their lives like a dark cloud and keeps them awake at night with fright. This undertaking is the compensation management process.
Sound familiar? If so, don’t despair. The compensation management process may be something you look on with apprehension and dread, but it doesn’t need to be that way. There’s a way to simplify the compensation management process and turn it from something to fear into just another normal aspect of your business – the way it should be.
For many in large organizations, or those with decentralized unique structures, the compensation process can become drawn out like a suspenseful scene in an old horror film. Only instead of obeying any kind of tasteful dramatic timing, it just goes on and on. Unoptimized processes, breakdowns in communication and the approval chain, and tedious spreadsheet management are just a few of the obstacles that may be faced during a laborious compensation management process, and I’m sure you can think of at least a few more. All of these things combine to create a personalized horror story for you and your organization.
What you need in this case is a personalized solution. One built to solve whatever specific problems your organization is facing during the compensation management process and to streamline the entire endeavor. A solution that’s made to the exact specifications of your organization, allowing you to ditch the spreadsheets and the tedious organization and reorganization of data that results from it.
If the compensation management process seems like something out of a bad horror movie for you and your organization, it might be time to start looking into ways to demystify the process and alleviate the fear for you and your compensation team. Compensation management is a powerful tool for businesses in managing their most important assets – their talent. And something so important shouldn’t be something you look forward to with fear.
