Most organizations will have changes to their compensation plans on a yearly basis. Depending on the size of the organization, automating the process to make these constant changes can be very difficult and time consuming. Smaller organizations can typically get away with managing the compensation process via spreadsheet or manually. For mid to large sized organizations, sending around spreadsheets to hundreds of managers becomes too time consuming and can be riddled with errors.
Compensation Management Software is an automated way for managers to allocate funds for their direct reports. Typically when a manager logs in to the online system, they will see all the different pay programs (merit, bonus, incentive, stock, equity, etc) that may be associated with the individuals they manage. The manager can then quickly allocate funds to their direct reports, and the changes are saved for HR to review.
There are many benefits to an online system versus using spreadsheets. A few of the key benefits include:
Benefit # 1: A Clear Picture of the Workforce
By using compensation management tools, companies get a clear picture of their workforce and have all the necessary information about employee performance to make appropriate pay recommendations.
Benefit # 2: Fewer Errors
Updating a master spreadsheet with information from hundreds of different managers increases the likelihood of errors.
Benefit # 3: Increased Employee Retention
A focused and concise compensation and rewards system will help identify high performance and help your organization reward and retain those individuals accordingly.
Benefit # 4: Reduced Labor Costs
Research from a 2011 study on the Society of Human Resource Management highlights many case studies in which labor costs were reduced by using compensation management tools. One organization from that study reported a 65% decrease in time spent on salary planning processes. Not only did this reduced time result in cost savings, but it also made sure employees were paid on time. All of these factors lead to increased employee retention.
Depending on the size and complexity of your organization, compensation management software can be a huge benefit, not only for HR, but for the entire organization as well.
Contact us today for more information on Harvest HCM and our talent management solutions.