Solutions for Managing Risk in Compensation Planning

Solutions for Managing Risk in Compensation Planning
February 26, 2018 Michael Gerthe

Have you factored in this risk?

Solutions for Managing Risk in Compensation PlanningI spent a good part of my early career heading up the HR technology area at companies like BP and Amgen.  At that time, there were far fewer solutions on the market and we often had to build them in-house.  One thing we kept in mind was the need to maintain them, and for annual process tools, the need to repeat the setup effort each year.

Building tools that made the administration easier took longer, was more of an investment, and in tight timelines put a strain on us to finish in time.  But as these toolsets ended up being used for many years, I found the additional investment was well worth it.

The challenge is preparing now for a future you may not even see yet.  In my role I was worried about risk, accuracy, and deadlines.

At the root of all three…people.

Some people are more talented than others.  Plain fact.  There are key players who get things across the finish line, and those who need help getting things across the finish line.  When considering the setup of an annual process tool in the years to come, I had to ask myself, “Will I have the right resources, the right people, available at the right time each year?”.

The other more concerning scenario tied to people; institutional knowledge.  Or rather the loss of it.  People leave.  They may move to other parts of the company or leave the company altogether.  And if they are THE key person who knows how to set up and run your process tools, your only hope is that they left early enough for you to have time to locate a replacement who can learn the setup and administration in the time you have before go live.  That’s not so bad when they leave 6 months before your deadline, but what if they leave just when setup was to start?

I know of three ways to manage this risk.

  1. Throw money at it. Hire a consultant with the skills you need to get the turnaround time you need.  If your budget can take it and the timeline is tight, this may be your smart move.
  2. Process documentation. Step by step instructions like a recipe to success.  As long as there are no changes to your process you planned to make, this can get you there.  However, I’ve seen the thick binders one client kept to document the configuration of their compensation planning tool.  The tombs of knowledge took a long time to step through each year, and the mind numbing effort could be prone to human error.  You must also remember as enhancements are made to the software, or if you modify your process in anyway, someone needs to maintain the process documentation to reflect these changes.
  3. Pick a solution that mitigates this risk. Make sure the setup and administration in the software is so intuitive and easy, this is no longer a risk to worry about.

The good thing about approach #3 is that annually the configuration will include tool enhancements and is therefore always current.  No binder maintenance as in #2.  An intuitive, easy administration broadens the field of people who can get it across the finish line, negating the spend required in #1.

In the management of people risk you are directly impacting Accuracy and Deadlines.

When considering solutions, be sure to consider the people side of the equation.  Will the complexities or ease of setting up this software increase or decrease my people risk in the future?  There is a cost to not considering it that could be more than dollars.  Configuration mistakes destroy accuracy and missed deadlines destroy credibility.  This is a career risk no one should need to carry.

You might have perceived that I am partial to #3, managing this risk at the solution level.  That is one reason Dartican is the market leader in Time-to-Value for Compensation solutions.  Care to see what that would look like?  Contact us to see how our solutions can work for you.