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Top 3 Problems in Managing Your Compensation Process

CompAccelerator makes age old process management pitfalls a thing of the past.

Learn how to address the problems in your process before you try to solve them.

As a veteran in the HR industry, I have encountered many of the pitfalls associated with the compensation planning process. Every step of my journey had its obstacles, and even the most intuitive solutions weren’t as simple as they should’ve been.

Some professionals are bogged down in a spreadsheet purgatory, trying to shoulder the problem alone, while others may have already tried to address spreadsheet problems only to find themselves facing a whole new set of issues.

Here are some common compensation process management problems encountered by HR professionals.  To get past these problems, you first need to recognize them.  It also helps to know that the right solution is out there

Spreadsheet Users: “Death by Spreadsheets”

If you have already moved past spreadsheets, jump to the next section to see how it aligns with your current top 3 problems.

These events aren’t exclusive to this scenario, but they are common in my experiences.  If you are using spreadsheets, you are feeling some of this pain. And when you go to “fix” these problems, they likely hold your focus when looking at package solutions.

1. A single version of the truth/version control:
Changes to the spreadsheets like moving an employee from one manager’s spreadsheet to another, or correcting data such as salaries, pay ranges, or grades, will result in multiple versions of the spreadsheet held by different people. This often creates a cleanup effort at the end of the process to determine what the true final answer is. Moving to package solution eliminates this by consolidating the data centrally to give you one version of the truth. You simply move to one place to correct or update the data and capture everyone’s answers.

2. Errors:
Cut & paste, sorts, and copying formulas can all result in errors that may be difficult to spot, requiring extensive auditing of the process before committing it to payroll. Even then, errors slip through and are even more challenging to pull back, particularly if the payment has already hit employee bank accounts. (Yes, we have examples of clients who paid out bonuses to the wrong employees and discovered it AFTER the funds were in their Bank Accounts). A logical solution is locking down the spreadsheets, but depending on your managers’ Excel skills and your consistency of locking each sheet, they seem to be able to modify the excel infrastructure you have created.  Obviously, with a purchased solution, the configuration will be consistent and out of their reach to change.  Common cut & paste formula copy, and manager worksheet re-engineering efforts are eliminated.

3. Timeline:
Because of the two issues mentioned above, the timeline for the process is drawn out. Often, the date at the end of the process cannot be moved as it is usually tied to a Board of Directors meeting where large compensation actions are approved. So, reworking spreadsheets to move people and data, along with the audits needed to catch errors, can have compensation working long hours to fit everything in with an unmovable end date.

Here you get into a cycle that can snowball. Many long, late-night hours needed to comb through the data and double-check spreadsheets result in tired employees who make more mistakes that, if discovered, further result in additional audit time and continued late-night hours. Multiple spreadsheet-related activities drag out the timeline as well.  Reworking and redistributing spreadsheets, rollup activities to get company-wide results, and the auditing we mentioned to mitigate the first two issues we discussed all tack on extra time to get the process completed.  Package solutions simply eliminate many of these steps once the process is going and ease the time pressures considerably.

So it sounds like jumping from spreadsheets to a package solution will solve all the problems!  Or so it would seem.  But once the move is made and contracts are signed, you discover a whole new set of problems are waiting for you.

You move past spreadsheet problems and now discover…

If you are just making a move from spreadsheets to a package solution, you’re in luck.  You are getting a glimpse into the future that could help you avoid these issues. If you are already living these problems, there is still hope.

1. Lack of Functionality / Flexibility:
Either you believed a compensation tool could do something that it couldn’t, or your needs have changed, and the tool you have cannot adapt to the need. In other words, to run the process you want to run, the current tool falls short. It is more ridged than you thought.

2. Dependency on others:
To configure or change the compensation process in most tools, HR depends on technical staff. This staff could be the internal IT department, an implementation vendor, or the software vendor who sold you the package. Making simple changes to the layout or rules for a planning process requires coordinating schedules with someone else. Getting changes back will depend on the backlog that your external resources are facing and not be driven by the realities of HR’s timeline. You moved from total freedom in Excel to a state of dependency, often to do even the simplest things.

3. Business Agility:
Sometimes a package is flexible enough to meet a new need that surfaces, but the time and resources required to make the change remove the opportunity from the table. It would only be possible in some systems if you knew the “need” much earlier during the initial configuration. Forget about adjusting a live system.

In this case, HR must reconcile for the need AFTER the process is done. By adding this extra step outside the solution, there is now room for inconsistencies. You have re-introduced the issues you once had in spreadsheets. If you cannot pivot quickly when the business demands it, you are locked into a system that is inhibiting your business agility as an organization.

Take steps to avoid these problems.

Don’t just change out one set of pains for a new set.  When you are searching for a package solution, be sure to have these issues in mind.  Ask questions to weed out packages that will lead you down the wrong path.

Dive into the flexibility of the solution.  Does the vendor have any client stories to help make the point that their software is flexible?  What are some nuances in the compensation process you have seen in the past or anticipate as possibilities in the future?  How can they address the need in the tool being considered?

Understand the typical implementation team required.  This will provide insight into the resource demands the system will have when you go to make changes in the future.  Will you be dependent on technical resources?

Know if there are limits on your business agility. Ask, or better yet, have them show you how the system is easily and quickly configurable to support sudden changes in requirements. Do they have solid, relevant stories to share from other client experiences in achieving business agility using their solution?

If your experience with compensation solutions leads you to believe we are setting the bar too high, we encourage you to look at CompAccelerator.  After an entire career’s worth of trial and error, we created a leap in evolution for compensation management solutions—fewer resources, free of dependencies, and truly agile. Put Dartican through the paces and see how we can make these issues a thing of the past.