CEO at Curo Comp
The majority of companies find the annual compensation review cycle to be exhausting, manual, time consuming and with a massive administrative overhead. A number of you may be immersed in the process at this time of year. For many companies there is limited governance around the cycle, no audit trail, whilst processes are peppered with issues around version control and data integrity of spreadsheets. This often results in long hours, loss of visibility of progress and significant budget overruns. On the one hand this is surprising given that for many companies, people costs can represent over 70% of the cost base and yet such a core process like compensation planning is managed manually by spreadsheets, but on the other hand ……….what are the alternatives?
As I look at the rapidly evolving Talent Management (TM) market and the products now available in the market, compensation appears to be the ‘problem child’ – the last big one to be addressed. And the reason for that is that it is arguably the most complex to deal with. Compensation (both salary and bonus) structures, rules, hierarchies differ between companies of different sizes and operating in different sectors and geographies and therefore a single system capable of accommodating these differences needs to have an exceptionally high degree of configurability and scalability as well as workflow control and powerful reporting.
In looking to the key industry analysts, some interesting nuggets have emerged in recent years :
- Gartner’s view that TM vendors have not yet driven rapid adoption of compensation solutions and that adoption of compensation solutions is generally thinner than other TM components.
- Ventana, in a 2012 Compensation Trends Report say that only 15% of participants said they were very satisfied with their compensation management software and 41% need access to 2 or 3 systems to get a complete view of compensation.
- Bersin state that in companies, compensation data analysis is often incomplete, plans cannot be completed in a timely fashion, inequalities arise and errors abound.
A pretty bleak looking, yet consistent, picture and one with recurring (annual), yet fundamental issues, which have yet to be addressed by the TM, HRIS and ERP providers.
For companies, compensation planning solution options are:
- More of the same……keep the spreadsheets which will grow in scale and complexity thus compounding the same challenges.
- Develop a proprietary compensation planning system – difficult and costly and needs ongoing investment to accommodate future changes.
- Use their HRIS/ERP compensation module, if indeed there is one. This is even more costly in terms of bespoking and ongoing support, inflexible and very limiting. With this option you will most likely end up re-engineering your core compensation processes and structures to shoehorn them into the limitations of the application. It is staggering, but we hear these conversations all the time !
- Use a TM solution – again caution. Many TM suites that offer ‘integrated compensation’ have very limited compensation functionality. You hit the same issues as the HRIS/ERP option above.
- ………...or go with a best of breed comp solution either in isolation or as component of a TM suite. Yes they do exist!
Compensation planning is too important to compromise on. Technology exists that will take you to a place where your annual compensation review cycle is much simplified, underpinned with both fairness, transparency and with a demonstrable and defendable link between pay and performance. You can have absolute confidence in calculations and the integrity of the underlying data. Key-man dependency can be removed, budget over-runs can be eliminated eliminated and you can ensure consistency between Line Managers recommendations and …………………life can get demonstrably better for the compensation and reward professional.
This isn’t an unachievable utopia. So don’t assume spreadsheets are the only option and don’t settle for second best! Raise the gaze.
To learn more about Curo, click here.
Gerry was one of the founders of Curo and has been CEO of the company since February 2012. Prior to this Gerry was founder and CEO of Vebnet – a market leading global employee benefit solutions business. Vebnet was a start-up in 2000, grew rapidly over an 8 year period and was acquired by the Standard Life Group in October 2008, one of the leading providers of savings and investment solutions to both individuals and corporates. Solutions were implemented across Europe, Asia, US and Latin America.