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The compensation management is a necessary undertaking for the functioning of any business – from a two person start up to a multinational organization employing thousands upon thousands of people. But it also has a nasty way of getting unnecessarily complicated when it’s not kept on top of. A breakdown in your compensation management process can make this necessary proceeding take weeks longer than it should, costing your organization time and money, as well as precious manpower. So how can you streamline the process and ensure it doesn’t become a chore?
To put is as simplistically as possible: you need to get everybody on the same page. Everyone involved in the compensation management process throughout the entire organization needs to have a plan in place; a protocol to follow when it comes time to put together the necessary data to complete the compensation management process. Without a plan in place, things quickly fall apart.
For example, if you have managers sending compensation and performance data on their direct reports up the chain of command – and have no kind of plan of action in place – the compensation process can turn into a waiting game. You’re waiting for them to get around to sending the necessary data, backing up the compensation process and costing precious time. And when they finally send the necessary information, what happens to it then? Without a disciplined approach in place to handle the compensation management process, a detailed plan, it languishes at each step on the approval chain until that person finds the time to send it through to the next person up the chain.
Now imagine this scenario across multiple departments, with multiple levels of employees receiving different grades and types of compensation (including performance/merit increases, stock options, and whatever else makes up your compensation mix). If your organization operates in multiple regions, multiple countries with multiple currencies and tax regulations then things get even stickier. Surely you can see the picture. The more complicated things get, the more possibility there is for time to be wasted.
The solution is to have a plan. Depending on how often your organization completes the compensation management process, set up dates letting everyone involved know exactly what is expected of them and when. Let each person on the approval chain understand their role, what’s needed of them to keep the compensation process flowing smoothly, and the time frame in which their role is expected to be carried out.
Without having a game plan in place things will all fall apart in short order. It’s imperative that, just like in a play or a sports team, everybody knows where they’re supposed to be, what they’re supposed to be doing, and when they’re supposed to be doing. Without this knowledge, this plan, everything else is chaos.
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Hiring a new employee is like making an investment in your organization’s future. No matter how smooth of a talker they may be, only a fool would hire someone sight unseen. This is why there are certain protocols in place to judge the reliability of a prospective employee, so that you mitigate the risk of getting a lousy return on your investment (or worse, make your organization vulnerable due to some unscrupulous character’s misdeeds). Things like background checks, drug tests, and following up with former employers and references are all meant to ensure that you’ve truly found the right person for the position, and not someone whose employment you’ll eventually live to regret.
A compensation management solution can be thought of similarly, as an investment. One that will not only do what your organization needs it to do, but will do so securely and reliably. In order to ensure you’ve found the right compensation management tool for the job, it’s wise to inquire about how secure and reliable it is.
For instance, many (if not most) compensation management solutions have moved to an SaaS model, forgoing in-house servers for cloud-based hosting. This brings a great many benefits in terms of convenience and compatibility, but it also needs to be tempered with responsibility. Some important questions to ask regarding SaaS compensation management solutions are:
-Where are the servers that will host our organization’s data located?
-Who operates the servers on which our organization’s data will be hosted?
-What kind of encryption will the compensation management solution feature?
-Does the developer of the compensation management solution have sufficient insurance should something unforeseen and unfortunate happen?
-How will the compensation management system be structured? That is to say, who in our organization will have access to the system, and how much access will they be granted? (for instance, it wouldn’t make much sense or be very secure for a low-level manager to have the same user privileges as an executive)
-What kind of user auditing will the compensation management system have? Will it allow us to see everyone who has accessed the system, and what changes they made?
A good developer of compensation management solutions should be able to answer all of these questions, and any others you may have, to your satisfaction. It’s always important to do your homework, whether you’re hiring a new employee or investing in a compensation management system. Both are large investments that, if made wisely, can be important factors in your organization’s success. Which is why it would be a shame to squander such an opportunity on so-so software or services. Investing in a compensation management solution, like the hiring process, requires due diligence in order to make the best possible decision for your organization. In both situations you need to ensure that the employee (or compensation management solution) are not only reliable, but will not compromise the security of your organization or its sensitive data.
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Whether you were a natural whiz in math classes or always struggled to make a passing grade, one thing is certain: your teachers always stressed the need to check your work. And what’s equally as certain is that you knew exactly why, too. When working with numbers, there are a lot of places where things can go horribly wrong for the seemingly smallest of reasons. One misplaced decimal point, one errant digit and the entire solution came crashing down around you. Without checking your work, however, you wouldn’t figure it out until you saw the mark of your teacher’s red pen pointing out your error.
The same is true for compensation management, although on a much larger (and potentially calamitous) scale. Depending on how large or complex your organization is, there are thousands and thousands of places where the same small mistakes can cause weeks of headaches and heartaches. Because if making the mistake wasn’t enough, you (or your compensation team) now have to pore over all of the compensation data to find out where the mistake was made.
And when dealing with lots of different people – managers reporting on their direct hires, different levels and groups within the organization, and so on – the possibility for errors becomes exponentially greater. Automating the entry of your organization’s compensation data into a spreadsheet program can make finding errors even more difficult if you’re not vigilant in seeking out and correcting errors before they cause major problems.
One facet of compensation management solutions that can be helpful is automatic updating. Say for example you have your compensation budget, including merit and bonus pools, readily available on the screen whenever data is being entered or changed. And every time something is entered and changed, those totals update in real time to reflect said changes – allowing you to see if anything looks off at a glance.
Or, say the system is organized in such a way that tracing anomalies back to the errors that caused them is less a feat of being led down the garden path and more about simply retracing your steps and finding what went wrong and where. These are things you could emulate somewhat if you (or someone in your organization) is a whiz in Excel, but let’s face it – you’re already spending enough time as it is with the compensation process, can you spare the amount it would take to create such spreadsheet wizardry? And is it feasible to do so in an organization as large and complex as yours?
A compensation management solution can make finding and fixing errors less troublesome, but the same basic principle your high school math teachers kept trying to drive home applies here. You need to check your work, check your data, before it has the potential to cause problems and before you lose track of where it was things went awry. That is the single best way to avoid having to fix troublesome issues all the time. But still, mistakes can always happen – if your compensation process seems to be more prone to them, it might be time to look for a solution.
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For those beleaguered by the compensation management process, investing in a robust compensation management solution for their organization seems like it would be the obvious end goal. You pay your dues, get the tool, and then it’s all smooth sailing throughout the rest of the compensation process, right?
But let’s run with this maritme metaphor a little longer. Suppose you’re behind the ship’s wheel of your shiny new compensation management solution. The skies may seem clear at the start, but whether you’re talking about business or boating, things have a way of getting complicated when you least expect it – and when is least convenient. Dark clouds and choppy seas, treacherous shallows and deadly shoals all have the potential to pop up out of seemingly nowhere, dashing your dreams of a manageable compensation process upon the cruel rocks of fate.
That is, unless you have the right tools at your disposal, and the right support.
Think about it this way – if you’re out at sea and something starts to go horribly wrong, you radio for help. Whether it’s the coast guard or some other vessel out there, the most surefire way out of a sticky situation is calling for support. If you’ve got someone to help you out of a jam, it can turn a potential catastrophe into something much more navigable.
The point here is that when you invest in a compensation management solution, you need to be sure that you’re not just getting the solution itself. You need to make sure that whomever you’re getting it from has the ability and willingness to provide your organization with the necessary support to operate said solution so to maximize its usefulness.
This support starts at the beginning, by tailoring the compensation management solution to fit whatever unique structure and needs your organization has. But business is never static, and to survive organizations will often need to change in order to adapt to the ever-shifting world of business. So if your business needs to change with the times, your compensation management solution should as well. And the developers should be willing to facilitate said changes.
Then you have the more obvious types of support, such as the proper training. Because the fanciest ship in the world is worth nothing if the captain doesn’t know how to make it go. This also includes technical support, to make sure things keep running smoothly for as long as you’re using the compensation solution.
The bottom line is that when looking for the ideal compensation management solution, you’re not just looking for the software or solution itself – you’re looking for a developer who is willing and able to go the extra mile for you, their clients. Because without the success of your business, theirs wouldn’t succeed either. Find the right crew, and your voyages into the sometimes savage seas of compensation management can end up being much more manageable.
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Compensation management can be a tricky business, one that requires vigilance and a great deal of effort to stay ahead of the game. We all wish that cooking up the right compensation strategy would work something like a slow cooker – you throw all of your ingredients into the pot, season it to taste, turn it on, and let it run while you get on with the rest of your day. Then when you get home, you have a delicious stew or chili and can enjoy the fruits of your (admittedly minimal) labor.
That would be nice, though a bit boring, wouldn’t it? The reality of the situation lies on the opposite end of the spectrum though. In order to truly get the most out of your compensation mix, you’ve got to keep an eye on each aspect of it to make sure something doesn’t curdle or boil over. You need to be able to identify what’s working, what isn’t, and even predict what will be the best fit going forward.
The fact of the matter is that nothing in life stays the same. Time moves onward, rivers erode rocks into canyons, glaciers carve their way through mountains, and fortunes come and go like the tides. And as you’re no doubt aware, the world of business especially doesn’t stay the same. What works for your organization today may not be what works tomorrow. And that doesn’t just mean compensation strategy – organization, structure, goals, all are subject to change in order to adapt to the constantly evolving world of business.
So how do you manage to stay ahead of the curve? How can you keep your compensation strategy fresh? It may seem impossible, but luckily you’ve got one of the most powerful tools at your disposal – all you need to do is learn how to use it, and use it well.
That tool is data.
When it comes to compensation management, it’s imperative that you have the right data to help you strategize. Data can show you what is working, what isn’t working, what has worked in the past, and can even allow you to make informed predictions rather than just taking a shot in the dark and hoping you hit the bulls-eye.
And while the analysis of data can be difficult, the last thing you need is to make the collection and organization of said data more difficult than it needs to be. Keep it organized and usable, and you’ll be able to utilize it more efficiently than trying to piece together a coherent picture from disparate spreadsheet files and reports.
Getting the most out of compensation management requires vigilance. It requires knowing your numbers and being able to work with them. But if you don’t have them organized, and if they’re not put together in a format that’s understandable, you’re making things far harder than they need to be.
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If you’re looking into a compensation management solution to simplify your organization’s compensation process, there are a number of things you need to keep in mind. The compensation solution needs to be robust enough to easily handle whatever data you need to throw at it. It needs to be secure, keeping sensitive information safe and out of reach of prying eyes. But perhaps most importantly, it needs to be simple.
This may seem somewhat contradictory. How can something be simple, yet powerful enough to accommodate your organization’s unique needs and structure? The compensation management solution itself should be powerful, yes, but its simplicity should be in the end users’ experience. Ideally, it should allow users to log in, complete the necessary tasks to facilitate the compensation process, and get back to their jobs.
Think of it this way: if you’re looking to invest in a compensation management solution, your organization’s compensation process has become unwieldy enough that it’s already a pain to complete. The last thing you want to do is add more headaches into the process by introducing confusing, unintuitive software to your employees who are already stretched to the limit trying to complete the compensation process.
Furthermore, one of the main goals of a compensation management solution is to save time. A compensation management system can help you do that, but not if it requires intensive training in order to get your employees up to speed on how to use it. The compensation management process is already taking weeks of your organization’s time – time you don’t have to spend on weeks of training to teach your employees how to use a cumbersome and confusing system.
SaaS compensation systems can be both powerful and simple. A good compensation solution can be accessed securely through a web browser (allowing users to access it through the device of their choosing) and intuitive enough to allow users to know what they need to do once they’re inside. And training your employees on how to use the compensation management system doesn’t need to take weeks, or even days. Often they can be trained on its use in a matter of a couple days, if not hours. That way, users can get into the system and start using it effectively in a very short period of time. And your organization can start reaping the benefits of a compensation management solution immediately.
Simplicity and power are not mutually exclusive, as it turns out. You can have a system sophisticated enough to support your organization’s compensation data and structure, while still being user-friendly enough to make the entire process of setting up and using the system quick and easy. The compensation process is already complicated enough, which is why you call on the compensation management system to do all the heavy lifting for you. That way, you no longer need to stress about the compensation process and can keep focused on day to day operations, keeping your organization running smoothly.
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Does compensation management seem more like a chore than it should? Here’s ten quick tips to help keep the compensation management process as simple and effective as possible.
- Automate as much as possible. The less reliance on manual input and calculations done by users, the less chance you have of introducing time-consuming errors.
- Use the right tools for the job. Spreadsheets are fine if your organization’s size and structure aren’t too big or too complicated, but if the process is taking too long it might be better to move on to something more advanced.
- Keep sensitive information secure. Avoid sending compensation data through unsecured emails.
- Avoid kinks in the approval chain. Automating the process will notify each person up the chain automatically, meaning you won’t have to keep hounding them to approve any changes made.
- Allow users only as much access as they need. Users should only have access to the data and sections of your compensation management system that allow them to complete their part of the compensation management process. Giving them access to the entire system is both confusing and a potential for security risks.
- Keep all necessary data at hand. Information like compensation budgets, performance metrics, eligibility for promotion/raises/merit bonuses should be consolidated to avoid having to cross reference multiple different systems or programs at once.
- Keep all necessary systems accessible. Allow users to have the necessary access to wherever your compensation data is being hosted. If you’re using a compensation management system hosted locally, this may lengthen the compensation process as users will have to use whichever specific machines house the system.
- Utilize the cloud. A secure cloud-based SaaS compensation management solution allows users to access the compensation management system whenever (and wherever) they need to, while keeping compensation data secured through encryption and user auditing.
- Reward your employees. Recognizing and rewarding hardworking and valuable members of your organization helps employee retention. Make sure their hard work is reflected in how they’re being compensated.
- Work smarter, not harder. Consider investing in a compensation management solution if your organization’s compensation process is too unwieldy, lengthy, or just plain difficult.
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As we’ve discussed here before, compensation management can be a powerful tool for businesses who employ it thoughtfully and strategically. One of the biggest mistakes one could make regarding compensation would be to allow themselves to get lulled into complacency due to the comfort of routine. Another mistake would be getting too focused on (or bogged down in, as the case may be) the process of compensation management itself rather than the potential outcomes. Here are five simple (yet important) points everyone in compensation should be considering:
- Perception of fairness: How do the employees in your organization view their compensation, or compensation as a whole within your organization? It stands to reason that not everyone will receive the same compensation, as much of what they earn is dictated by their position in the organization and the kind of work they do. It is important, however, that employees perceive compensation within your organization as being fairly administered. Employees who feel like they aren’t being compensated what they’re worth with regards to how hard they work are likely to become frustrated and look for other opportunities.
- Perception of opportunity: Similarly, do employees in your organization feel as though they have enough opportunity for growth? It’s important to keep an eye on employee performance in order to reward those who go above and beyond in your organization, as well as to promote promising talent as an investment for your organization’s future. Hardworking, valuable employees who feel they have no room to grow within an organization will likely try to find somewhere they believe holds more opportunity for them.
- Giving a fuller picture with Total Rewards: Total rewards statements are a good way to illustrate to employees the full breadth of their compensation beyond just their paychecks. Laying out benefits, perks, and other parts of their compensation package that goes beyond their pay stubs gives employees a fuller picture of how much they receive from your organization.
- Tying employee performance to company growth: This one may be easier for certain types of organizations than for others, but how can you link the success of the company to the success of individual employees? Generally this is thought to mean something like stock options, though this may not be possible for all organizations. If you can’t make it literal, you can try to be more creative and build the perception that your employees’ success is indivisible from the organization’s success.
- Empowerment through knowledge: How can all of the data necessary to strategically deploy compensation management be organized so that it’s as useful as it can be? Compensation management tools can be particularly useful here, especially for larger or more decentralized organizations. Having budget information, performance metrics, eligibility for promotion or raises, and any other necessary information all in the same place can drastically cut down on the time it takes to strategize and complete the compensation management process, removing a lot of headache in the process.
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So you think your compensation software has what it takes to handle your organization’s compensation data? It may seem robust enough to take what you throw at it, but there may be certain areas where it’s lacking. Certain areas where it’s not performing as well as it could – resulting in a loss of productivity, time, and ultimately money. If you really want to make sure your compensation management software is up to snuff, make sure it has these things:
AUTOMATION:
How much manual work do you have to put in to your compensation management software to get to the desired end result? Can compensation and merit pools be updated in real-time? Can your compensation software convert currency and taxes based on which parts of the globe your organization operates in? Do you have to wait on emails from managers on direct reports, and then input that data manually into your compensation system? And what about your approval chain – do you need to wait for emails to be sent to each person along the chain and wait for them to okay changes or adjustments to your employees’ compensation? A good compensation management solution should be able to automate all of these tasks, and more. Can you say the same for yours?
COMPATIBILITY:
How easy is it for your employees to access your compensation management software? Is everything hosted in-house, requiring them to log in to a specific company machine that lets them input compensation data? Does your compensation software require a large amount of processing power, meaning costly equipment upgrades and server fees? With the introduction of SaaS compensation solutions, in-house hosting has largely become a relic of the past. These days, any compensation management solution worth its salt will be cloud-based. It will be accessible by any device provided the user has access to a web browser and the proper login credentials. Which brings us to…
SECURITY:
Just how secure is your compensation management software? Does it have user auditing capabilities? In order to ensure complete security, your compensation software should allow you to see every time the system is accessed. Not only that, but it should show you who accessed it, when they accessed it, and every exact change they made while they were accessing it. How does your compensation software handle encryption? Are the servers hosting your solution US-based? And how much sensitive information are you still sending over unsecured email, rather than directly into your compensation system?
These are just a few questions to ask yourself to make sure your compensation management software is performing up to par. If you can’t find satisfactory answers to these questions, it might be time to invest in a better compensation management solution.
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Proper compensation management is key to any successful business. For some organizations, the compensation management process can become a chore. Anything worth doing takes some effort, but is your compensation team being put through undue stress when trying to administer compensation? Here are 10 signs that you might want to invest in a compensation management solution:
- Your organization is large or structurally decentralized enough to where your current method of compensation management has become unwieldy.
- You’re still using Excel spreadsheets and email to gather and centralize your compensation data, leaving valuable information vulnerable as well as scattered.
- You find the waiting periods between requesting compensation data from managers and receiving said data agonizingly long.
- The approval process is broken, meaning that compensation management has to wait until someone somewhere along the approval chain finally gets back to you to accept any changes you may have made.
- You spend a lot of time fixing errors in your compensation management system. Whether they’re simple user input errors, miscalculations regarding taxes or currency conversion, or other assorted miscalculations that require you to pore over your compensation data until you find the exact spot where things went south.
- Your compensation team spends more time manually entering data into your compensation management system and performing basic calculations than they do planning your compensation strategy to reward and retain valuable, hardworking employees.
- Your organization’s computer equipment is unable to keep up with advances in compensation management software, requiring costly upgrades as advances in technology are made.
- The compensation management process takes your organization more than two weeks, wasting valuable time and resources that could be more productively applied elsewhere.
- Your employees have to keep track of merit pools, bonus pools, compensation budgets and performance data in seperate places, then try to incorporate each into a single system by hand – leaving the compensation management process open to not only errors, but lengthy waiting on approval by higher-ups in your organization.
- Your compensation team views the compensation management process as something to dread rather than just another aspect of their jobs.
These are just a few reasons of many why your organization might want to consider investing in compensation management solutions. The most important thing to keep in mind is that compensation management should be something that works for you – not something you have to work unnecessarily hard to make sense of.
