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.