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Making the decision to invest in a compensation management solution is only the first step of the process. After this, your organization needs to consider which compensation solution is the right choice based on your specific needs and goals. While there’s no one-size-fits-all solution, there are a few key things to keep an eye out for when searching for the right compensation solution.
- Accessibility: If you’re going to invest in a compensation management solution it’s a good idea to make sure it’s easily accessible by everybody in your organization who will need to be using it. SaaS solutions accessible through web browsers are a good idea, because it doesn’t require any sort of specific hardware to be usable. That means you don’t have to make sure your computers have the right specs to run the solution, nor do you have to worry about server hosting or maintenance. All that’s needed is a web browser and the user’s credentials, making it easy for managers and executives alike to access the system quickly and easily when the need arises.
- Automation: One of the main reasons to invest in compensation management solutions is how much easier they make the compensation process, and automation is a huge part of that. The less that the user has to calculate and manage, the better it will be for everybody. Everything from the approval chain to updated totals in merit and compensation pools should be automated so that users don’t need to make calculations or hassle other employees for necessary data. In essence, the compensation solution should take all of the busywork out of the equation for the end-user. Not only does this save time by cutting down on the need to perform menial tasks, but also because it greatly lessens the chance that an error will be made somewhere along the way. And if an error is made, it’ll be easier to see where it is so that it can quickly be fixed.
- Security: Compensation data is sensitive, and should be protected as such. It’s probably a good idea to ask the developers where the servers are hosted, what manner of security they use to protect their clients’ data, and so on. User auditing is also an important feature, because it allows you to see which user accessed which part of the system and when they did it. This makes it easier to find mistakes (as mentioned above) but also lets you keep tabs on who is getting into your system and what they’re doing when they’re in it.
Finding the right compensation management solution may seem daunting, but if you keep these three key features in mind when searching for the right fit for your organization then you’re off to a good start. Remember that you want something robust yet simple to use, as the reason you’re searching for a compensation solution in the first place is to add some much-needed simplicity to the compensation process.
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Growing a business isn’t a simple step-by-step process. It involves adaptability, intuition, and the ability to analyze patterns and trends in order to make informed predictions which will (ideally) lead to success. The factors leading to success can be grouped into two major categories: internal and external.
A compensation plan can’t really affect external factors like market trends, supply and demand, or other things which need to be in play for a business to be successful. However, as mentioned in an earlier blog post about how compensation management software fits in to the ideas of people, process, and product, internal factors are another story altogether.
People are necessary to carry out the process used by your business. And compensating them fairly can reduce their levels of stress, improving their performance. If your compensation plan allows your employees to stay worry-free concerning factors outside of the workplace (mortgages, health insurance, retirement, and so on) then they can spend more time focused on their jobs. Good employees are necessary for successfully growing a business.
Keeping with that theme, let’s talk about employee growth. One of the key factors to employee engagement is keeping them from feeling that their career is growing stagnant. People want to feel as though they’re making progress – if they feel as though they’ve reached the limit of what they can achieve at your organization, chances are they’ll be looking for the door pretty quickly.
It’s important for management to be able to recognize which employees are (or have the potential to be) key players within the organization, and to foster their talents in kind. Rewarding top performers, whether that be through promotions, merit increases, or so on, is one of the most significant ways a compensation plan can help grow your business from within. Money is a powerful motivator, but it goes deeper than just that. Rewarding your employees for their hard work and providing them recognition allows them to feel as though they’re making an impact within your organization. It also makes them feel like their contributions are valued, as are they.
One of the most powerful ways to get your employees invested in the growth of your business is –literally—investment. Offering employees company stock, whether as part of their salary or as a performance incentive, can be a powerful motivator. If the business is successful, then they’ll be able to reap the benefits, giving them further motivation to give their all for the company and help it grow as much as possible.
Compensation management can be a difficult thing to get exactly right, but with the right planning it can be a powerful tool to help grow your business from the inside. The right mix can go a long way in keeping your employees engaged, excited, and invested in the future of your business (which they can see is directly tied to their own futures). Without that engagement, it’s easy for your business to sink into stagnation – or worse. Effective compensation management is vital to growing and nurturing your business.
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If you’re working in an HR or Comp department, administering compensation to employees can sometimes seem like a necessary evil rather than a normal and vital part of your business. Tracking down employee data from managers, glancing back and forth at spreadsheet programs while painstakingly entering endless amounts of data by hand, and having to go back and find out where the inevitable mistake was made – the very thought of all of this is enough to raise one’s blood pressure. But compensation management doesn’t have to be such a hair-pulling experience. Compensation management software can make the compensation process (and your life) easier. How, you ask?
- Compensation Management Software Saves Time: With a compensation management solution, you no longer need to pester managers to cough up the data on their direct reports and wait for them to find the time out of their busy schedules to do so. All they have to do is access the system through a web browser, enter the necessary information, and that’s it – it’s in the system, ready to be used. Which means no going through by hand and manually entering the data into a master spreadsheet file. And with an automated approval system, each person up the approval chain is notified whenever their input is needed.
- Compensation Management Software Reduces Errors: The problem with maintaining and updating a master compensation spreadsheet by hand is that at some point an error’s going to occur. Even something as miniscule as misplacing a single digit can require poring over reams of data in order to find the offending variable, gumming up the works and bringing the entire process to a screeching halt. Also, budgets and amounts are updated in real-time, so you’ll be able to more quickly and easily see if something has gone amiss and fix it before it gets buried under all of the other data in the system.
- Compensation Management Software Saves Money: Yeah, it may be cliché to say that time is money, but when you’re dealing with business this is often quite literally the case. Not only does a prolonged and problematic compensation period take away time from other aspects of running the business, it also necessitates overtime pay in some cases, which can really make the compensation management process more expensive than it needs to be. Compensation management software saves you time so you can get back to your day to day operations and don’t need to put undue pressure on employees. Which leads me to my final point…
- Compensation Management Software Reduces Stress: By taking all of the hard, menial, tedious work out of administering compensation, compensation management software can turn what was once an arduous and dreaded task and make it fast, easy, and painless.
If your organization looks on compensation season like a dog looks on going to the vet, it may be time to start thinking about a compensation management solution to ease the pressure and make your life a little bit easier.
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The three Ps of a successful business are People, Product, and Process. Meaning, in basic terms, that you need to have a product which will sell and bring in revenue. You need to have a process which will allow you to produce that product efficiently so that you can conserve as much time and money as possible during its production. And finally, you need to have the right people who will enact that process.
So where within these three Ps does compensation management fit? It surely wouldn’t fit under Product, unless your organization’s product is compensation management software. And it wouldn’t be people, for obvious reasons. That leaves process – compensation management is part of the process of running your business, obviously – but it can affect the other two areas fairly dramatically.
Think about people, for a second. It’s important that your employees are engaged and productive, and that they enjoy their work. One of the main ways to see to this is through compensation, and proper compensation management. Employees want to feel that they’re being compensated fairly for the hard work they put in to your business, and also want to be recognized for their achievements. Proper compensation management not only ensures that they’re paid fairly and on time, but that they’re recognized for any hard work they put in above and beyond the status quo and are rewarded accordingly.
Compensation management can also affect product. The first (and most obvious) way is through people – by keeping your people happy and productive you can keep them more easily focused on the process, which will produce the product. Compensation management is also important here because it helps keep your operating budgets in check. By having clearly defined pools for compensation and merit increases, you can help ensure that you don’t start allotting money for compensation that might be needed somewhere else within your organization.
To summarize, compensation management affects all of the three Ps, though in different ways and to different extents. First and foremost is process, which compensation management is a part of. Second is people, because compensation management directly impacts them, and thus affects their work, motivation, and engagement. And the last is product, because making sure that you have the people and the process working in lockstep is paramount to producing your product in a timely and cost-effective manner. Understanding how compensation management interplays with these three Ps is important because understanding how the three Ps interact with each other is vital to running a profitable and successful business.
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Retaining key employees should be one of the main focuses of a successful business. When you look at the three main factors which determine successful operation of a business – people, product, and process – you notice that employees make up a third of that equation. Without the right people, you can’t enact the process which then produces the product. Simple enough, but what factors determine employee retention, ensuring that you hold on to some of your organization’s most valuable assets? There are multiple factors, though compensation is definitely one of the largest.
You want your employees to be engaged, to enjoy coming in to work every day and to get fulfillment out of what they do. Nobody wants to think that their employees are only in it for the money, but let’s face it – compensation provides security. Workers can truly enjoy what they do for a living, but that enjoyment alone can’t sustain them at the end of the day. Basic needs need to be fulfilled – food, shelter, clothing, et cetera – and families need to be provided for. More than just basic needs, though, workers need to have a general sense of security and comfort. It’s not enough to give the bare minimum, as any unforeseen catastrophe could decimate them financially. This general anxiety would sit over them like a dark cloud, providing a great deal of stress and thus affecting their performance. Furthermore, with that stress weighing down on them, you can bet that they’d be looking for a way out towards something better.
So compensation is a key factor in employee retention – in terms of both monetary compensation and benefits – but it’s far from the only factor. Employee engagement is definitely another important thing to consider. You can play your employees well but if their work is tedious, monotonous, and leaves them feeling stagnant, then compensation alone may not be enough. Furthermore, if they feel trapped in their current position with no opportunities for progression, or feel as though they are underappreciated or mistreated by managers, there’s a good chance that they’ll also be looking towards greener pastures.
And even if they’re adequately compensated and engaged, there are still factors which can affect employee retention. If their field or position is one that involves a great deal of stress, long working hours, or lots of travelling and time spent away from family, these things can also wear away at them. These types of positions require workers who are able to withstand the stressors the job entails, and will eventually cause even the most dedicated workers to burn out if they’re not given enough time to recover every now and then.
Compensation and compensation management is one of the most important factors affecting employee retention, though it’s far from the only one. Ensuring retention of your most valuable employees is a balancing act that requires spinning multiple plates, something that can be difficult to accomplish depending on the situation. There is no correct formula for every position or situation, but being well-armed with knowledgeable HR professionals and the proper tools can make this task much easier.
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If your organization is at the point where the compensation process seems unmanageable, it’s time to try something new. Deciding on the correct course of action can be difficult, though, and requires a close look at the factors which brought you to this decision in the first place. As far as handling compensation goes, there are two major directions you could choose, each with their own merits and disadvantages. Choosing the right one for your organization requires looking at a few different aspects.
The first is cost. What is the most cost-effective way of solving your organization’s compensation woes? Hiring a compensation professional can be a very expensive endeavor, with payscale.com reporting that entry-level salaries for compensation analysts starts around $50,000. This is, of course, not factoring in total rewards or other benefits you may offer to employees. Compensation software prices can vary greatly depending on your business’s specific needs but its probably safe to say that the cost of compensation software is typically well below that of hiring a full-time employee.
Sometimes, however, that price may be well worth it. In order to figure out whether you should hire a compensation professional or spring for compensation software, you need to think about what issues your organization is facing regarding compensation. Are your problems more in the realm of planning or execution?
Let’s say your main problem is collecting and compiling performance and compensation data for thousands of employees across multiple departments. All that hiring a comp professional would do is offload that burden onto them from whoever else was tasked with it to start. Not only are you setting them up for a stressful work experience, but you really only need them each time the compensation cycle rolls around. In this case, compensation software would serve your purposes much better.
What about planning, then? Compensation software can help with the planning process. It can update budgeted amounts in real time. It can also show performance data and alert users to when an employee is up for a bonus or promotion. Tools like these can help users make smarter, more informed decisions when planning compensation. The main reason you’d need to consider hiring a compensation professional in this case is if you’ve completely lost the plot, or never found it in the first place. If you don’t even know where to start regarding compensation, or what you’re trying is clearly not working, then maybe hiring somebody who’s more informed would be a good idea.
In the end, the answer varies depending on what your organization needs. Hiring somebody to administer compensation can be costly, and won’t do much good if the tools they’re working with can’t handle the volume or complexity of the task at hand. There are no easy answers to this question, and often the answer will lie somewhere in the middle. A good compensation solution would fulfill most needs, and hiring a professional is a radical step that should only be taken if you really need to do some serious analysis on your compensation management processes.
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As your company grows, whether in complexity or number of employees, things can start to get complicated. This is especially true when it comes to compensation. Investing in a compensation software solution may be just what your organization needs to tackle this hurdle. The important question, though, is whether or not such a solution is right for your company.
Generally speaking, companies with a small numbers of employees can get by with spreadsheet programs. Once you start approaching 1,000 employees or more, things can get overwhelming for your HR or Comp department. Dealing with such a large number of people, especially if you add things like performance ratings into the mix, can be a nightmare to amass and organize into a single document.
Not to mention the fact that you need to wait for managers to send over the necessary information about their direct hires. Contacting and waiting can take a lot of time, and can potentially expose vulnerable data if sent unencrypted over email. And then once all of the relevant information has been collected, it has to be added to the rest of the necessary data collected from other managers and departments and then wrangled into something that makes some kind of sense.
Then, of course, there’s the potential for errors. As humans, mistakes are inevitable. And when dealing with a wall of information in a spreadsheet being complied by hand, they’re even more so. The more data that needs to be entered and calculated, the more variables you work with, the higher the chance that something along the way is going to go wrong. And when that happens, it means having to pick through all of that data to find whichever small mistake set everything off kilter. This is a very tedious task and, needless to say, can cause a lot unnecessary stress and wasted time.
What it all basically boils down to is this: how do you view the compensation planning season? Does the mere thought of it fill you with dread? Does thinking about it cause you anxiety or stress? And how much time does the process take? Weeks? Months, even? If any of these scenarios sound familiar, it might be in your best interest to invest in a compensation software solution. Something that can expedite the process, automating communications and the approval chain and minimizing errors. What that means is less time wasted fussing over minute details and more time focusing on making your business as successful as it can be.
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Of all the resources an organization has available to it, the most important are its employees – the people who ensure the business keeps running smoothly. This may seem obvious at first, but it may not be so from their perspective. You may know very well how valuable your employees are to your organization, but the question remains: do they? Often people will get so focused on their pay stubs as a measure of value that they may forget all of the other ways in which your organization expresses their value. Unfortunately, this can lead to dissatisfaction, which can in turn make it difficult to retain valuable employees.
The fact is that you express value to your employees in much more ways than simply what ends up on their paychecks at the end of each month. There are many benefits which can not only improve an employee’s job satisfaction and work-life balance, but can also communicate just how valuable said employee is to the organization. Things like paid healthcare, vacation, retirement accounts, education reimbursement and so much more are all as much a part of an employee’s compensation as their salary. Often, though, it’s easy for employees to overlook this fact.
Issuing a Total Rewards statement is a fantastic way to show your employees the full extent of their compensation. By illustrating the actual value of all of their benefits they get a better idea of just how valuable they are to their organization. Creating and issuing Total Rewards statements can seem like a lot of extra work, however, since it requires the collection and organization of all the various benefits and other perks offered to each employee.
Providing Total Rewards statements doesn’t need to be so difficult, however. Indeed, it’s even possible for a compensation management program to automatically generate Total Rewards statements, making the endeavor much easier. The compensation management systems custom-designed at Harvest for our clients are capable of generating Total Rewards statements, among many other features.
If you’re looking for the right tool to take your organization’s compensation planning to the next level, contact us today to learn more about our customized compensation management systems or to schedule a demo.
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As any strategist worth their salt will tell you, the secret to success is being prepared. And the secret to being prepared is being informed. You see, compensation planning isn’t so dissimilar from being a tactician as one may think. At the end of the day it all boils down to the same key principle: effectively managing available resources.
Depending on your organization’s structure and pay practices you’ll have a number of employees to account for and a specified budget with which to compensate them. Each of these employees, depending on their position, performance, or whatever other variables your organization uses, will need to be paid from that budget. Unfortunately compensation isn’t something with a neat solution, like a jigsaw puzzle, so there’s no exact rules as to how to go about it. With the right tools, though, you can make the endeavor a lot easier.
Take organization, for instance. A lot of compensation planning is done in spreadsheet programs like Excel, which serves its purpose well in a number of cases. But the more employees you have to account for, and the more complex or decentralized the organization is, the more tricky things become. And the more people you factor into the approval chain, the more gummed up things can get – which costs organizations both time and money.
If you’re at this point, administering compensation is like using an abacus to solve a problem which requires a graphing calculator. The tools you’re using are no longer useful in allowing you to see the whole picture, and thus effectively strategize. If any of this sounds familiar, it may be time to upgrade the tools you’re using in order to match the problems you need to solve. But then again, depending on your organization, there might not be a ready-made tool out there that can meet the needs of your organization.
So if there are no tools already out there to do what you need them to do, it might be time to get one custom-made. A compensation management solution which can incorporate your organization’s hierarchy no matter how decentralized it may be. A tool which can instantaneously alert each person in the approval chain so the compensation process doesn’t get mired down somewhere along the way. A tool that can update compensation and merit budgets in real time so you always know where you stand, and can more effectively consider various hypotheticals.
This kind of tool isn’t something that comes out of the box by some software giant. It comes from a team who can find out exactly what your organization’s needs are and create a system which can meet them. Like a strategist has a team of advisors helping them consider all sides of an issue. When issues become complicated you need all the information you can get in order to effectively plan your next move. And if you’re having trouble planning, your next move should be to invest in a compensation management system which can keep you – and your organization – up to date. If you would like more information on how Harvest HCM’s compensation strategies and tools work, sign up for some free in formation on our Contact Us page.
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Rewarding hard-working employees for going above and beyond what’s expected of them is a familiar component of many organizations’ pay mixes. The idea is to further motivate them, and the way in which this works is twofold: You want to let them know that their hard work has not gone unnoticed, and you want to further motivate them with an incentive. All of this is done in an effort to encourage good performance and retain valuable employees.
If you’re having issues with employee retention, or just think that your organization’s merit increase strategy is less effective than you’d like it to be, there are a couple of ways you can examine it in order to try and bring it back under control and make it as useful as it can be for your organization.
One way to help optimize your merit pay strategy is to go over the metrics used to judge employee performance. Many organizations use a system in which an employee’s performance is reported by a manager or supervisor. This, however, leaves the evaluation of the employee’s “performance” entirely up to the reporter – that is to say, subjective, to an extent.
So in order to truly make sure that your merit increase strategy is as useful as it can be, re-assess what specific behaviors and indicators are going in to your employees’ performance reviews and are being used as a basis for a potential merit increase. It’s impossible to come through every position in order to corroborate each employee’s performance and how it was measured, though you can try to match up merit increases based on certain KPIs of a department or grouping of employees.
Another way to take a look at the consistency with which merit increases are given out, as well as the consistency of their performance reports as they relate to a potential merit increase. With what frequency are employees considered for merit increases? Are relevant performance measurements received in a timely enough manner to be used when determining an employee’s eligibility? If an employee is being passed over for merit increases they otherwise would have been eligible for because of a tardy performance report, it could severely harm retention of valuable employees.
One of the most important factors regarding employees is their perceived value. By offering merit increases you’re not only reinforcing and reaffirming their performance within the organization. You’re also sending them the message that they’re valued, that they’re seen as a useful and significant part of whichever part of your organization they inhabit. Which is why merit increases seem like such a good idea – a fair idea, even. But if you go into a merit increase strategy with no rhyme or reason (or perhaps lose those somewhere along the way), it won’t do your organization much good. The key is to determine which behaviors you wish to reinforce, identify the employees fulfilling those behaviors, and reward them. Though the how and the what may differ from organization to organization, the why remains the same.
