CompLogix Insights

Should Your Organization Implement a Salary Planning Tool

The salary planning process can be a hectic and time-consuming one. Depending on certain factors, it may be too complex and take far too much time than it needs to. A salary planning tool may be a valuable investment, though it’s not a one-size fits all solution for every organization. Before deciding whether or not a salary planning tool will be an ideal fit for your organization, there are a number of questions you need to ask.

For starters, how many employees do you need to plan salaries for? As this number rises, so too does the time and effort needed to complete the salary-planning process. Depending on their size, it may not be in an organization’s best interests to invest in a planning tool. The number of employees at which an organization will receive the most benefit from a salary planning tool starts at around 300-500 on up, though this may vary due to other factors.

Another important question is how many managers your organization has who will need to provide information on their direct reports. The more managers providing salary information to HR, the more separate files will need to be organized into a spreadsheet program. Also, how decentralized is the management structure of your organization? Do you have managers working within multiple regions? And do these managers have direct reports who themselves are working in multiple regions?

How is your organization’s compensation strategy structured? If you have different groups of employees being compensated under different pay programs, this can make salary planning more difficult to manage with just a spreadsheet program. Also, what kinds of merit or bonus plans are you using to reward your employees? The more pay programs you’re using, the more time it’s going to take to put together individual manager spreadsheets. Also, depending on how many regions your organization operates in, is currency conversion a factor that needs to be taken into account?

Going along with these points are incentives and benefits. Do you have a Total Rewards program that you need to keep track of? What kinds of long and short-term incentives are offered to certain employees, and which groups are eligible for which incentives? Each of these factors can exponentially increase the amount of time needed to plan and manage salary data. Is equity or stock options part of your organization’s compensation or rewards structure? These considerations may further mire the planning process.

Last (but certainly not least), how much time is the salary planning process taking your organization to complete? Ideally the process would be one in which you can get in, complete it in a sensible amount of time, and get back to the tasks at hand. If you find that you’re spending 2 months on the salary planning process instead of two weeks, it may be advisable to look into salary planning tools in order to shorten and simplify the process.

Salary planning tools can be helpful, but they aren’t for everyone. Smaller organizations with a couple hundred employees may be able to manage their planning information in a spreadsheet program with little hassle, and thus wouldn’t receive the most benefit from implementing a planning tool. Organizations with large amounts of employees, widespread or decentralized leadership, and complicated pay structures are the ones which would receive the most return on their investment by implementing a salary planning tool.

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