Misconception 3: compensation software will present a difficult learning curve – Turning Woes into Wows Part 3

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Turning Woes into Wows Part 3


Misconception #3: Companies believe that compensation software will present a difficult learning curve.


The reality: Modern compensation software is not designed to be used only by compensation experts or technology sophisticates. It’s intended for use by everyone in the organization—from HR professionals to senior leaders to front-line managers and even employees themselves. As a result, compensation software designers have made their products incredibly easy to learn and work with.

Users don’t have to learn how to collect and distribute crucial information, for instance, because software automates those processes, conveniently handling workflows and the chain of inputs and approvals. Most compensation software firms also offer ample formal training time to their clients but, in many cases, only “power users” take advantage of it.


The Organizational Benefits of Compensation Software

Although compensation software originated as a “big business” tool, it offers small and mid-sized companies significant benefits as well. According to Aberdeen, small businesses doubled their year-over-year revenue per FTE (8% versus 4%) after replacing rudimentary tools such as spreadsheets with more sophisticated tools such as software.



Of course, the benefits to small and mid-sized organizations go well beyond increased revenues alone. Modern compensation software:

  • Helps attract and retain top talent. As a recent Forbes article stated, “the best way to attract and keep the best and brightest is to pay them well.” That’s true no matter what stage of their career your employees are in. Compensation software helps you quantify your talent’s value and understand the competitiveness of your wages so you can guard against competitors stealing away your best and brightest.


  • Helps maintain employee engagement. Aberdeen also found that organizations using modern compensation tools are 22% more likely to have highly engaged employees. Again, software keeps payroll mistakes from occurring and helps you to ensure that your compensation is competitive, which helps to maintain engagement levels.


  • Helps link pay to performance. Compensation software is especially helpful in giving managers the controls they need to integrate performance reviews into the compensation process—giving them and their employees a more comprehensive view of the factors that impact pay, incentives and the like. Software also automates processes that link pay to performance; a top performer’s excellent review, for example, will automatically trigger the software to issue a bonus reminder to the manager or even generate bonus check directly.


  • Ensures alignment between compensation decisions and organizational guidelines and goals. Controls built into the software ensure that managers’ recommendations are in line with the official budgets and guidelines set by the company. If the controls spot a red flag, mangers are informed and given directions to correct the specific issues.


  • Improves data accuracy. Companies using compensation tools such as software have half the error rate of those that do not and one-sixth the error rate in tracking actual time worked, according to the previously cited Aberdeen report. Even in small and mid-sized companies, multiple spreadsheets are used to manage compensation—and many different people work in and edit these spreadsheets, and they do this work separately. The process is fraught with potential bottlenecks and error points—all of which are greatly reduced when spreadsheets are replaced by a single software solution.


  • Provides greater data integrity and security. With everyone in your organization using one software tool, data accuracy isn’t the only improvement you’ll make. Data security and integrity will be improved as well.


  • Rather than having your compensation data spread across paper documents and the hard drives of many different managers and HR people—which increases your risk that private salary data and bonus information could make it into the hands of a competitor or a disgruntled employee—compensation software requires password-protected access from your company network. Additionally, compensation software creates an audit trail each time someone logs in, adds or changes information, makes a recommendation, etc. No spreadsheet or other tools offers this level of protection.

Taken together, all of these benefits add up to tremendous savings in time, effort, peace of mind and administrative costs. Even smaller companies can save between 10 and 20 hours of management time (equaling $10,000 to $20,000, depending on company’s specific size) while delivering more accurate compensation.

There’s one more important advantage to modern compensation software. Small companies often can’t anticipate their needs as they grow, so many modern software scales easily to keep pace with an organization’s expanding and increasingly complex compensation processes and decisions.

In fact, today’s best software solutions help with every aspect of compensation—from simple payroll administration … to budgeting and allocation … to planning and benchmarking … to analytics and reporting.


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