Utilizing a decentralized organizational structure has its benefits. It allows those at the top to focus only on the most impactful decisions, allowing those under them a degree of autonomy to make their own choices. Because of this, they feel as though they make an impact within the organization. But like any other kind of business structure, it also comes with its own set of downsides. One of these downsides is the way in which decentralization tends to complicate the compensation process. Trying to manage compensation data in a spreadsheet can quickly become an exercise in frustration, and the differences between locations only serve to further muddle things. With the right compensation management tool, however, you can alleviate most of this stress by greatly simplifying the process.
Trying to wrangle compensation spreadsheets out of various managers in a decentralized organization can seem like trying to teach cats synchronized swimming. You have documents with sensitive data being emailed back and forth — that is, if you can get the managers to send you the data in a timely manner. Then, once you finally have the data you have a ton of separate variables to deal with. Because each location is allowed a certain degree of autonomy in how they operate, their pay systems and structure may be different from another. Not only that, but operating in multiple locations means there are multiple sets of regulations and laws which have to be factored into the compensation process. Even if your organization isn’t international (which brings even more issues), even operating in different states (if you’re located in the United States) means different regulations you have to deal with. Bringing all of this together as a whole can seem impossible, and actually finishing the compensation process can take weeks (if not months).
With the right compensation management tool, however, many of these issues are solved. Different locations and groups of employees can be ordered and organized, existing as a single unit within the software with its own sets of pay programs, incentives, and regulations in place. All of these separate units can then feed into the data for the organization as a whole, with the decisions made within one of the units updating compensation and merit pools for the entire organization. You don’t need to wait on different managers to send data to be fed into various spreadsheets, either. As the organizational structure allows employee autonomy, so too does a good compensation management tool. What this means is that managers are able to log in to the system and mete out employee compensation as they see fit (with the ability to add an approval process if your organization so desires).
A decentralized organization allows its employees to focus on decisions which are directly impactful to them, meaning less time spent on extraneous and unnecessary busywork. The compensation process for these organizations should facilitate this, not bring things to a screeching halt. Investing in the right compensation management tool allows you to get in, do what needs to be done, and get out, without having to juggle multiple spreadsheets with their own variables and needs to take into account.