It’s no secret that financial incentives help employers attract and retain employees. But as an HR or compensation professional, you want to feel confident you’re rewarding your best people and that your pay for performance strategy aligns with business results.
Managing compensation with spreadsheets demands hours of manual input, risks personal information ending up in the wrong inbox, and results in fragmented data with minimal insights.
Using a single source of reliable data, you can align compensation with key talent and business metrics, make complex calculations to drive salary and bonus outcomes, and create multiple templates for compensation statements making sure employees understand how their pay was determined.
Which is why many leading employers decide to invest in compensation management software. But choosing a solution can be daunting so we’ve put together five key tips to help you build your business case, define your requirements, select the right vendor and deliver success.
Tip 1: Understand the benefits a leading technology solution can offer
A good place to start when considering your business case is to understand the benefits a solution will bring to your organization and how these are specifically aligned to the business needs. How will it support your compensation strategy for the short and medium term? We have summarized some key benefits here.
Drive efficiency by delivering streamlined processes for administering compensation, reducing cycle time and resources required.
Improve effectiveness by providing a clear line of sight between employee achievement and business outcomes.
Ensure equity by ensuring allocations are rewarded fairly and consistently.
Manage compliance with intuitive alert functionality ensuring you enforce your compensation principals and guidelines throughout your allocation process.
……and manage risk with complete confidence through automating complex compensation calculations and secure data management.
Additionally, the right compensation management software should provide many other additional benefits including third party data integration, data integrity, automation of complex compensation calculations, ease of use for system administrators, full audit trails, flexible automated workflows and clear communications at all appropriate levels.
Tip 2 – Decide what you need
The most common mistake when considering purchasing a compensation management software solution is not detailing your requirements at the outset. This can often lead to you choosing an inferior product and ultimately having to adjust your compensation processes in-order to ‘fit’ the way the software works. This can happen when an organization selects a broader HR product suite, rather than a specialist provider.
Whilst it might seem time consuming, allocating sufficient time to detail how you currently run processes, together with your compensation plan rules will save you time and money in the long run. But don’t just look at how you do things today, take the opportunity to review how your compensation strategy might change in the future. This can be helpful in justifying the business case, if your investment can also help support future compensation plans and policies.
Before completing your requirements don’t forget to embrace the opportunity that a technology solution can provide and be ready to adapt current processes to leverage these – too many buyers dismiss a solution because it does not “match” their current process, and in doing so lose sight of the opportunity to streamline and simplify their compensation processes. Asking potential vendors to run a workshop with you will help you to utilize their expertise in automating compensation processes, and may even help you to distinguish the real compensation experts to partner with.
Ultimately a clear set of requirements will help you to assess vendors thoroughly, as well as build your business case.
Tip 3 Engage all stakeholders
All too often selecting a compensation solution happens within the confines of the HR function. To guarantee successful adoption you need to engage all stakeholders and ask them what they want. It helps to understand the key benefits for different stakeholders which we have outlined below.
- Empowered to make informed pay decisions
- Provide decision support and actionable insight
- Automated workflow to drive the approval process
- Streamline compensation planning cycles
- Shift focus to outcomes and more value added tasks
- Realtime oversight of live process
- Ensure governance
- Gain transparency and consistency around pay determination
- Achieve clearer communication on award outcomes
- Ensure top performers are appropriately rewarded
Execs & Rem Committee
- Transparency on pay allocation relative to business goals
- Ensure strong governance, budget adherence and risk alignment
Tip 4: Consider organizational readiness
The adage “timing is everything” is never more apt than when selecting a compensation management software solution due to the cyclical nature of the processes the technology will be supporting. Always be realistic about implementation timelines and make sure you have enough time to conduct thorough user testing well in advance of your compensation cycle kick off, so there are not too many competing priorities for you to manage. It is possible to define your requirements and select a solution in the window between annual compensation processes, but always factor in time for contractual and technical assessments not under your control.
Never underestimate the impact of data for implementation success. Clearly understand if you are data ready and the impact this may have on your delivery timescale. Compensation management solutions often require data inputs from multiple sources; employee data from your HRIS, performance and financial data for incentive plan calculations and market data for benchmarking and peer comparison. Drawing up a data checklist will help you catalogue how data ready you are.
Tip 5: Undertake a thorough vendor assessment
Increasingly many companies choosing to implement compensation management software use a request for proposal (RFP) process, often supported by their in-house procurement team. This approach does ensure you address all issues in a timely and consolidated manner. Most good RFP’s cover:
- Security and technical considerations
- Detailed functional requirements
- Pricing and contractual issues
- Understanding of vendor strategy and roadmap
However bear in mind RFP’s are often ‘gamed’ by vendors with a tendency to say “yes” to every functional requirement you have specified, and those who have been honest about their product’s capabilities are penalized. That is why organising a thorough software demo as follow up is critical. Ask each vendor to show you how their solution can meet your functional requirements, and consider providing use cases for them to demonstrate.
Choosing compensation management software can be time consuming, so much so, that sticking with the current approach may feel like the safer choice. However, following these five tips will help deliver success and ensure you can reap the benefits of the right compensation management solution for your business.
Want to know more about CURO Compensation Management? Request a Demo Today.