Your HR managers complete a myriad of tasks on a daily and weekly basis exclusively to keep your business running smoothly. One important HR task that can easily be forgotten during the shuffle is compensation management. Far more than simply ensuring your employees receive proper pay, understanding compensation management and implementing it into your workflow helps to ensure that you find and retain top employees as well as keep business costs low.
In practice, managing compensation is a big job that involves a variety of tasks. This can be especially daunting for small businesses that rely on a small team of HR professionals to keep the company running smoothly. Fortunately, there are plenty of products in the HR market that can help. One such option is compensation management software, which can help to automate workflows, help ensure that your employees are fairly compensated and keep your business operating at the highest level it can.
Attract top talent
A key goal of compensation management is to recruit qualified and experienced talent. However, simply finding those qualified candidates is not enough to get them on board to join your team. One of the best ways to attract those experienced candidates is by offering a combination of potential opportunities in their new position as well as total compensation — something that goes beyond a simple salary.
Total compensation is made up of a variety of benefits in addition to a monthly paycheck. It includes standard benefits packages that provide your team with things like insurance and retirement plans. However, there are other benefits you can offer outside of the standard package. Many companies offer things like vacation time or even perks such as the ability to work remotely. Compensation is clearly a lot to handle, but fortunately, a compensation management product is able to help organize all of these things and ensure that you’re offering applicants the best package you can.
Manage pay and retain employees
There are a variety of reasons why your employees might choose to leave their position with your business for another opportunity. However, compensation should never be one of them. Ensuring that your employees are paid a fair market value based on their qualifications and experience will help them to feel valued — and it decreases the chance they’ll leave because of an offer from one of your competitors.
The benefits you provide to your employees, such as paid time off or retirement plans, are more than just a part of the standard compensation package. They also serve as an additional way to motivate your employees and keep them happy. Compensation management software can also help you to reward your employees for their hard work. Offering your employees additional remuneration with things like bonuses is one way that you can recognize and reward your top performers, ensuring that they know their hard work does not go unnoticed.
A compensation management solution can help to manage all of these types of programs. Some systems are even able to track and assess current market wages to ensure that you’re always offering your employees a competitive rate. Implementing a software system will help your HR department to automate these workflows, freeing them up to focus on other tasks.
Boost employee engagement and satisfaction
Paychecks are the driving force behind why employees do work; that’s why paying competitive wages will help to foster employee productivity and engagement. While salary is important, there are other factors that can influence employee satisfaction as well. In fact, a recent study by Glassdoor found that more than half of employees value company culture more than salary as it relates to job satisfaction.
In addition to affecting job satisfaction, compensation can also serve as a motivator for your employees. Offering your employees incentives such as bonuses can help to increase productivity by rewarding top performers and encouraging other employees to think in innovative ways about daily tasks. By providing additional compensation to employees for a job well done, you can reward your team, showing them that you recognize their value as individual employees.
Compensation management tools assist with this by managing all the different forms of compensation that you offer your employees. From benefits packages and healthcare plans to bonuses and extra perks like telecommuting, an advanced solution can help you to stay on top of all that you have to offer your employees. Some specific forms of compensation that you might want help managing include:
- Base Salary
- Hourly Pay
- Travel Reimbursement
- Health Insurance
- Sick Time and PTO
By assessing budgets and compensation costs, a compensation management system can create a compensation plan that will help you stay within your budget. This can include plans to help with everything from determining whether or not expand your team as well as what kind of wages to offer potential new team members.
While you’ll want to ensure that you’re offering candidates fair and competitive wages, you’ll need to be sure that you aren’t overpaying for any position. Because many compensation management software solutions can help you to assess what a competitive market rate is, you can ensure that you’re making the best offer that you can.
Ensure fair compensation and compliance
When it comes to paying your employees, ensuring that you’re providing competitive pay is only one of the many factors you need to be aware of. There are also additional regulations you’ll need to remain compliant with, such as the Fair Labor Standards Act. Non-compliance leaves you at risk of non-compliance fees and litigation, both of which can easily be avoided with careful compensation management.
Fortunately, in addition to monitoring wages for any given market, many systems are designed with safeguards in place that can help to ensure compliance with these regulations. These kinds of protections will help guarantee that your employees are properly compensated as well as ensure that you are always compliant with the most current legislation. A few of the features that can help with this include:
- Planning of Compensation and Salary
- Employee Self-Service
- Reporting and Budgeting
- Support for Compliance Adherence
- Incentive Program Administration
Analyze data and workforce trends
An additional function of compensation management is that it can help to identify trends within the workplace by tracking and analyzing data. Many solutions do this by segmenting data. Segmented data can then be used to generate a variety of reports, including those that assess data by department or even based on single employees.
In addition to generating quarterly and annual reports, many solutions can also generate on-demand reports as well as compensation statements for individual employees. These statements can be either general summary statements or more comprehensive statements detailing perks, bonuses, and incentives. These documents can help to provide valuable insights into your business, which can help you to determine any parts of your workflow that you can improve.
How Do I Select Compensation Management Software?
When it comes time to find the right solution for your business, there are a variety of factors to consider. You’ll need to be sure that whichever system you choose is capable of managing compensation for all of your employees. You’ll also want to be aware of what your price range is when you begin talking to vendors and requesting price quotes.
Once you’re ready, make sure to ask prospective vendors for a demo or trial of their solution so that you have a clear idea of how the system will perform for your specific business. If you aren’t quite ready to begin shortlisting vendors, you might want to check out some of the resources we’ve compiled for you. We’re happy to help with things like our breakdown of compensation planning and analysis tools.