Compensation decisions are among the most critical decisions a company can make on behalf of its current employees and weigh heavily in the decision for new talent to join an organization. Getting them wrong may lead to the loss of top performers, reduced morale, or even discrimination.
One way to address compensation fairness directly is to implement a systematic and technology-focused approach to compensation management. Managers need easily accessible, accurate and understandable data to make fair and equitable decisions about their employees’ pay.
Compensation management solutions that eliminate manual error and subjectivity can go a long way toward not only administering pay fairly, but also in instilling confidence among team members that their compensation is handled fairly and with care.
Total Compensation Must be Understood and Clearly Communicated
It goes without saying that before your organization can build a useful compensation strategy, HR professionals must understand existing pay and benefit offerings and be able to communicate them clearly. It is easier for employees to perceive pay and benefits inequities if they don’t understand how they are determined or if they don’t feel pay equity is a part of their current employers’ compensation strategy.
A May 2022 Gartner survey of more than 3,200 employees revealed fewer than one-third are aware that their organization is prioritizing pay equity or has strategies in place to address it. In addition, only 38% said they understand how their pay is determined.
The importance of communicating compensation strategies is underscored by the findings that nearly 43% of employees talk about their pay with others in the same work role, and 45% look at third-party pay sites at least once a year to see if their pay is aligned with others.
Putting a process in place to outline career progression steps, how to attain incentives or raises, or even making it easier for managers and team members to talk about compensation matters can ultimately lead to a better workplace culture
In addition to competitive and fair pay, benefits, perks and pay scales that are transparent and clearly communicated encourage loyalty, trust and morale among employees. It also increases the likelihood that these employees will stay long-term.
Beyond Spreadsheets – Turn to Technology Solutions for Compensation Management
To create and build an informed compensation strategy, companies must look beyond time-consuming spreadsheets and turn to technology solutions that enable the kind of compensation management that employees expect and deserve.
Automating compensation matters and metrics saves HR professionals valuable time that can be spent addressing other issues. Perhaps even more important, a robust compensation management solution builds in an unbiased process for tracking and maintaining essential information such as employees’ eligibility for raises or promotions, salary ranges for given roles, and promotion/pay history.
Having a technology solution in place for compensation management can also provide the kind of data that uncovers pay inequities or other trends that can lead to an unhealthy workplace culture. For example, is there a particular person or team that receives promotions more often than others? Are there two workers in the same role earning significantly different wages? Do certain gender or ethnic groups receive pay or promotions that are not on par with their work peers?
This type of insight is very difficult to attain using manual compensation management methods like spreadsheets. Data trends that can be uncovered by compensation management software helps organizations to see both the big picture and individual employee metrics, which in turn leads to a healthier workplace culture. Technology solutions can also provide performance and market data to enable unbiased benchmarking and current market trends that help to ensure employees are receiving competitive compensation.
Building an Informed, Responsible Compensation Strategy
Every organization, but especially those that have outgrown a spreadsheet-style of compensation management, can benefit from a technology-based compensation management solution. This kind of technology centralizes the management of compensation data and enables the kind of metrics that allow for meaningful analysis.
Are you ready to hear more about Compensation Management solutions? Contact CompLogix today for a complimentary demo.