Compensation management systems – How to Avoid the 3 Frequent Questions

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What people least like about compensation management systems echoes the usual objections to software changes; that the new software doesn’t integrate with existing systems, is complex, and difficult to use.

Any change in software will cause these objections, out of habit and out of efficiency. Learning something new means stopping what you did and adapting systems. Plus, maybe the software is complex and inflexible, how do you identify what to look out for?

Complex Compensation

In a recent survey with HR.com, we  found what businesses like most and here, what they like least about compensation software.  These 3 issues continually arise throughout the survey:

  1. Why does my compensation management system not integrate with other HR systems?

This is a comment repeated again and again about compensation software in the survey, that it was not integrating with other HR systems. In an HR world driven by data, compensation software most of all must integrate with other systems. Maybe Legacy software driven from an industry that began over 10 years ago is to blame for the inability to adapt to new standards.

Sometimes a company updates its compensation plan, and resulting tech requirements, and the compensation software can’t adapt. When this happens, the company makes a request. But if not enough people make that request, the change won’t be made. Most often you can’t buy the change, because the end result will only benefit your company. Maybe what you ask for is not out of the ordinary, but if the software is not going to adapt, you’re stuck.

Which is why this complaint frequently arises, because when you’re stuck you are also in a long term, software commitment, wishing you knew this before you started. Yet integration with other systems is the foundation of software development in general; the flow and delivering of data to key stakeholders, while retaining security and privacy, are critical.

The challenge here, unlike with other tech decisions, is not necessarily driven by the other HR systems. Compensation software must be flexible to work with the variety of Suites and HR solutions available. While having it all under one roof sounds like a good idea, some compensation software in the Suite is not flexible enough for your needs.

Takeaway: Doing your diligence and asking the right questions about your HR systems and integration is key. Don’t assume and wait until later.

  1. Too Complex?  Ease of Use Rules

This word has become a code concept in compensation management systems; virtually every vendor discusses complex compensation, and how they simplify it. Yet the true power of simplicity lies in the compensation plan, and the software interface.

Is the compensation plan too complex, or is the software too complex? Some are not going to be happy with learning new software (see #3 below). Here’s 2 comments that show the problem:

  • Complexity and Too Complicated

“You never learn how to use all the tools, or you can’t tweak them to fit your needs.”

  • Over engineered for small companies

Small companies usually are moving from Excel or Access, or sometimes their own unique software that solved their problems. Compensation software with all the bells and whistles is too much for many small companies to digest.

Takeaway: Ease of use rules, which means researching the software and your compensation plan to make sure they fit together.

  1. Slow Implementation and Training?

  • Implementation process can be difficult
  • Processing Time for changes
  • Training and Change Management (in the beginning)

Onboarding software is a challenge we’ve written about before, and at the core of slow implementation. If your compensation management systems are not configurable, and requiresIT’s extensive time, prepare for a super slow process. Combine the resistance of change for people to learn new software, with overloading IT requests, and suddenly it all becomes more complex.

  • Training can be done in a few ways. The usual way is to do a focused intensive, with everyone in a room, then following up individually to help people progress. Instead of studying what the software can do, others set up situational training, where employees solve a problem while learning a specific function of the tool.
  • People learn more by doing than memorizing, which is why most training is weak (and it’s not just compensation software). Keep your employees focused on specific tasks they can achieve, instead of learning the many extras that may or may not be relevant.

Takeaway: Evaluate your compensation software on its ability to be configured and implemented quickly, within at least 90 days if possible. Understand that your comp plan, and company, will impact this if you do not manage the training and onboarding well.

Depending on your level of HR experience, choosing a compensation management system may seem simple at first glance. After all salary admin, bonus, plus long and short term incentives are built into most compensation software.

While the answers may not change, why do the same questions remain about compensation software?

Because as one of the 13 pieces of the HR Stack, compensation software is used to “validate and administer the pricing of job categories.” That means it touches many parts of the business that are changing much faster than they previously did. The way data is integrated, validated, and administered is what creates pay, based on a solid compensation plan. If any part of the preceding sentence is done lightly, errors and inefficiencies arise.

Compensation software can take this challenge to a new level; many companies rely on Excel, an old and once efficient habit that is waning in the face of new data standards concerning privacy and security of documents. Many employees, managers, and senior executives will interact with compensation software at some point, concerning what people are paid. They will have differing levels of tolerance for learning the new software, so be sure to not just encourage, but validate why compensation software makes their job easier when it’s running.

The best compensation software experience comes from a strong compensation plan; fitting the needs of that plan to the capabilities of compensation software is the best way to avoid the 3 questions.