1. Scattered data sources

Which compensation professional has not seen those funny memes with multiple versions of Excel files that pop up on social media towards the end of the year?

Well, the sad truth is that they are actually real, and hundreds of thousands of compensation analysts work until the late night hours during every annual merit review to collect, sort out, and analyze data in those MeritReviewFINALuseTHISone.xls files.

And what about separating the spreadsheets so that you can send them to each manager whose recommendation you need for the merit cycle?

It’s enough pressure to make sure you’re sending the correct file to the right person. But then you need to collect that data back, and hopefully, no one added an extra column because otherwise, you won’t be able to merge it. I’m not even going to mention the question of whether the managers put in the correct increases. Who has not even once experienced populating incorrect percentages in the spreadsheet fields?

Fortunately, nowadays, we have better options.

And no, it’s not WorkDay. The basic holistic HR systems are not advanced or configurable enough to properly take care of the compensation. You’ll still store relevant data in multiple programs and need all sorts of plugs and spreadsheets for the advanced features such a basic HR platform doesn’t support.

But with platforms like Payscale’s Compensation Planner or beqom, these issues cease to exist.

Those modern systems store all the data applicable to the review and employees in a single source and can be fully adjusted to the rules and steps of the salary review process.

Both beqom and the Payscale Compensation Planner offer a single platform where you can easily manage the hierarchy under each manager. As the review starts, each manager in the hierarchy logs in to their screen and makes salary recommendations. As they submit, the review automatically rolls up to the next person in order for their approval. The process repeats until it reaches the top, usually the HR director who finalizes the compensation review.

And that’s it. You don’t need to touch a spreadsheet. Each manager can fill in only the editable field. Nobody is able to add an extra column. And you have the history of who made what change and when at your fingers tips.

Forget about separating and merging files. You’ll never need to do it again.

2. No time for strategic thinking

When you shed the weight of manually processing all the workflows associated with the merit cycle, such as:

• separating, sending, and merging spreadsheets
• waiting for the spreadsheets to load and not crush
• scrolling through tons of email threads to see who has submitted the review
• preparing the Total Rewards Statements
• managing those who had not followed the internal guidelines
• recalculating the budgets
• calculating the bonuses with absences and leaves, salaries for expats, etc.
• switching between various currencies

for a system that will automatize those for you, you gain much more time for creative and strategic initiatives. You’ll finally have time to research the markets, get to know your employees and understand their needs, design the compensation philosophy, and plan accordingly.

3. Understaffing

Separating, merging, and conducting advanced calculations in spreadsheets, trying to fit your processes to the clunky basic HR software, or producing letters cause lots of stress to your HR team.

Many of the tasks are repetitive, boring, and time-consuming. Some, like the advanced use of Excel, require a steep learning curve resulting in your HR professionals being exhausted and working excessively long hours during the comp round.

Additionally, many of the first-time hires simply leave during or right after the salary review, causing more workload to fall onto the smaller teams. We are already experiencing acute shortages in the compensation departments. The lack of proper tools for work only exacerbates that problem.

The professional compensation software cuts out the most laborious and burdensome of these tasks and lets you run your processes smoothly despite having a smaller team. And such systems will also help you attract and retain any newcomers, as they are intuitive, easy to operate, and quick to pick up.

4. Lack of control

Compensation software gives you total control of the entire salary review process. As the person overseeing the merit cycle, you have access to the administrator screen where you get all the relevant data updated in near real-time.

You can:

• view the status of each manager’s submissions. See who has submitted, who’s waiting on their subordinates to submit their recommendations first, and who has not started their compensation review yet.
• impersonate an unavailable manager. For example, the Comp Planner lets you make recommendations for a manager who cannot complete and submit the review. That impersonation is also tracked in the history logs.
• roll up the compensation review to the next person in the hierarchy. If you know a manager can’t submit, you move the review to the next person in line with a single click.
• view and approve or decline any alerts, including recommendations outside of guidelines, pay gap risks, benchmarking issues, etc.
• change budgets with just a couple of clicks.
• move employees within the hierarchy tree with or without their budgets - all budgets affected by that change are automatically recalculated for you.
• analyze past and current data as well as forecast the future using advanced tools.
• track the history of changes.

5. Lack of process optimization

If you are now spending tons of time juggling spreadsheets, separating and merging files, or tracking email threads regarding who did what - stop. Systems such as the Compensation Planner or Beqom free you from these tasks entirely.

You build the hierarchies for the reviews and then just check the status of each manager’s submissions. As they provide their recommendations for the merit increases and submit them, the reviews just roll up the hierarchy for the next person to approve. Each branch of the hierarchy tree can progress independently of others, and you are sure that each person is accessing the right data.

The admins responsible for the salary review can monitor the entire merit cycle and its progress from their own screen. The systems let you send out the chaser emails for those falling behind, or you can even impersonate those managers that are currently unable to submit their recommendations. The process is entirely streamlined.

Switching the budgets, getting extra money, or moving the employee from one manager to another? These are also processes that can be done with a matter of a few clicks. All the budgets are recalculated automatically as a result. No need to go back and make those changes manually.

Thanks to the single platform with all the data, analytical tools, and dashboards for review, all your processes are streamlined and optimized.

6. Unsatisfactory employee experience

How often has your team dealt with employees who don’t understand how their increases/bonuses/awards were calculated? Our mailboxes get spammed with emails asking for clarifications or challenging the amounts, and oftentimes you also need to have a direct conversation with that disgruntled person. All this decreases employee satisfaction and causes the HR team to waste time repeatedly explaining or recalculating the awards.

Beqom offers personalized reporting to your employees, where each can easily access their current earnings, familiarize themselves with the compensation rules and performance requirements, and check the calculations. The Comp Planner helps you run everything smoothly and error-free, so when your employees get their statements, everything is correct and spelled out for them. Thanks to that, you increase the employee experience for the whole company and keep your HR professionals happy as they won’t have to deal with complaints nearly as frequently.

7. Letters and Total Rewards Statements

If you are currently producing all the Total Rewards Statements and other types of letters to employees manually or through mail merge, consider investing in the dedicated compensation software.

Modern systems such as the Compensation Planner will generate those statements and letters for you.

The benefit is you can easily align them with your brand by picking the templates, colors, adding logos and text.

The process is simple and worry-free.

If you’re using the mail merge, you risk populating the wrong information in your fields. And there’s nothing worse than sending an employee the wrong information regarding their salary increase. That problem virtually disappears if you use compensation software. The system will automatically update the letters with any changes you make during the review, so you don’t need to remember to go back and manually alter the information.

Think about how many conversations with disgruntled employees you can save the HR department just with that!

Each manager can also write their own message to the employee for an added personal touch. Next, the managers send out the letters directly to the employee mailbox (the Comp Planner) or the employees view their statements in the mobile app (beqom).

With such systems, you’ll lift a great weight off your HR analysts’ shoulders - not only do you take off their plates hours of tedious manual work but save them from those awkward conversations. By reducing the error rate, you’ll also increase general employee satisfaction. And the whole process will be streamlined and will take much less time to complete.

8. Pay transparency

Pay Transparency is a hot topic now. Currently, 17 of the US states have laws concerning pay transparency. That number is only increasing, with New York City requiring employees to post their ranges starting April 2023.

In the EU, the Pay Transparency Directive is scheduled to come into force in 2024. And it’s not only about posting pay ranges, but the current employees having a right to request the analysis of their pay level with respect to sex and the average pay level for the given job grade.

This means that all the employers with at least 50 employees (that’s the threshold for the disclosure requirements) will need to run the data and have their jobs categorized with pay ranges assigned and figured out.

Similar actions are taking place in the UK, when on March 8th, 2022, the government announced a voluntary scheme encouraging companies to sign up and post the ranges in all of their job ads.

But it’s not just about the law requirements. It’s really the right thing to do. As we are trying to close the pay gap and offer fair compensation to women and minorities, pay transparency is a good practice even for those employers untouched by the new laws. In fact, 2 in 3 employees claim to be willing to switch jobs for a company with greater transparency. And it’s a long-known fact that if you post your ranges on the ads, you’ll get many more applicants.

So what needs to be done?

• evaluate current employees’ salaries against the market
• design and implement job architecture with scalable grades and paths assigned to pay ranges
• have a solid transparency strategy - use professional tools that offer pay equity analysis, job architecture management, compensation planning, and communication resources

You can’t manage that in spreadsheets. Nor in the simpler HR programs.

But beqom, Payfactors, MarketPay, Payscale Pay Equity, or even the Compensation Planner offer all sorts of analytical tools to help you with transparency. You feed the market data (or they are already included, depending on the platform), select the groups, populations, and grades, and the system automatically runs the analysis.

Moreover, during each merit review, you can access specialty dashboards that show you the current benchmarking data and diversity.

Additionally, the systems offer checks and balances for every step of the process, with alerts and warnings popping up during the review if the recommendations are against the guidelines or if a female employee is paid below market. If any manager grants salary increases against the guidelines they’ll need to justify it or may not even be able to do so (the setup is up to you). Your managers will even need to sign a disclaimer that they discussed the salary review with the individual employee before they are able to send out the letters!

9. Pay (in)equity

Pay equity has been the core of a number of legislative changes that we are currently experiencing.

Starting in 2024, all the EU employers with at least 100 employees will need to report on the gender pay gap. In the UK, firms of 250 people or more have been doing that since 2017. Also, since 2017, in Sweden, gender pay gaps need to be reviewed annually. And Denmark’s Statistical Department requires employers of 35 or more to submit all the information concerning the remuneration of both genders for analysis.

Similar reporting laws have been enacted in Australia, Canada, and Iceland.

Yet the progress in reducing the gender pay gap has been slow. With the increasing public pressure, governments began to act. Hence we can only expect the regulations to become more comprehensive and stringent in the future.

But how do you do that? How, as an HR professional, should you prepare for these laws?

Yet again, the answer is technology.

Beqom and Payspale’s systems, such as Pay Equity, Payfactors, MarketPay, and the Compensation Planner offer all sorts of analytical tools to run the past and current pay gap or forecast any risk of such a gap occurring in the future. You can also configure the systems to display warnings notifying you of each employee at risk of pay inequity during the review.

Closing pay gaps is usually not straightforward. It takes a long time and is a continuous process rather than a one-time solution. The organizations need to consider not only the protected characteristics but also many other factors, such as grade, type of position, performance results, location etc. In addition, companies should also identify reasons, such as opportunity or representation gaps in business practices, that cause the pay gap in the first place. Ensuring proper process monitoring and reporting is almost impossible without professional solutions due to the complexity of the analysis and its repetitive character.

10. Guidelines and further optymalization - concurrent processes

Are your managers making recommendations totally out of line with the internal guidelines that you worked so hard to set up? And you can’t even catch those naughty perpetrators?

Professional compensation software lets you set up the guidelines within the system that are readily visible to the managers on the same screen on which they need to make a salary increase or bonus recommendation. They don’t need to open a separate file or switch between the screens. It’s literally on the same row - tough to miss.

And the best of all is that even if the manager chooses to give an increase outside of those guidelines (and there are situations when it’s the right thing to do, of course), that row is highlighted with an alert in real-time. That alert, even when accepted, will be visible to everyone involved in the review of that employee, including the administrators and the HR department.

This means that as the supervisor, you’ll easily filter the database for all the employees with an alert to see what sort of guideline and to what extent has been trespassed.

And you can configure the guidelines to make them as stringent or flexible as you want.

Additionally, platforms such as the Compensation Planner or beqom let you manage all the side processes frequently occurring during the compensation review. You can configure these systems so that the managers can promote employees, manage the variable pay, evaluate performance, and handle all sorts of discretionary bonuses or stock awards on and off cycle.

It’s a clear win-win for you and the managers!

11. Security concerns

Last but not least.

If you rely on spreadsheets or the basic HR systems to conduct the annual merit cycle, you have to export and send sensitive data over email to multiple people. That carries a serious risk of compromise and unauthorized data viewing. Software dedicated to compensation management virtually eradicates the risk of exposure.

Managers see only data pertaining to their direct reports and employees of the managers in the hierarchy below. There is no way to view the information not relevant to the viewer.

On the other hand, you can set up permissions for HRBPs, compensation analysts, and any other people responsible for the compensation review so that they can see the given region or the entire population in the merit cycle. Additionally, the administrators can also expand the managers’ access permissions if needed.

Similarly, with the track changes. How many times have we got an altered spreadsheet? And as the inconsistencies pop up, you don’t know who made those changes.

The history of logs in the compensation systems informs you of any actions undertaken during the review. You clearly see who did what and when.

Virtually every step of the way, you have full control of the process - through access permissions, budgeting, real-time reporting through communication with the employees.

As data security is becoming increasingly complex, it’s better to get systems that offer the highest standards sooner rather than later.

Is the compensation software worth the hassle?

If you are experiencing any of the above-mentioned issues during the salary review, it’s definitely worth considering switching to dedicated compensation software.

Many of us worry that these platforms are pricey and the implementation time is long. But, the market for compensation software has developed tremendously in recent years.

We finally have viable options in various price ranges and implementation for some takes as few as six weeks.

How to choose the right software?

Your company size and the complexity of compensation processes are crucial to choosing the right software.

Enterprise-size companies with intricate executive compensation packages may benefit most from the comprehensive and ultra-customizable systems such as beqom that come with a heavier price-tag but will easily scale and streamline your processes for years to come.

Mid-size companies, software houses, or smaller companies with complex compensation plans in industries such as pharmaceuticals, energy, finance, etc., may find that products such as Payscale’s Compensation Planner, less pricey but still impressively flexible, are the perfect fit.

And for those who are currently too small to make an investment in such a system worthwhile can turn to robotic process automation (RPA) to automate some of the processes.

If you are unsure whether implementing dedicated compensation software at your company makes sense or would like to learn more about different platforms, send us a message.