2016 Compensation Impact Report

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Compensation Impact Q: when do you need an integrated HR Suite?

About the Compensation Impact survey

compensation impact survey

The survey was completed by 204 HR professionals from a wide range of organizations. The distribution of company size is shown in Figure 4.

What do companies like (or dislike) about compensation software?


If you are considering getting  new compensation software,  then it’s helpful to learn from the experiences of your peers.

Our survey asked a variety of open-ended questions  about  what companies  liked or didn’t like about  their compensation software.  The two main issues for small companies  were ease of use and flexibility; for mid-tier and enterprise  companies, integration was also an issue (see Figure 3).


Figure 3: Features  of compensation software most  frequently cited



Important  features


Small organizations

Mid-tier & enterprise organizations

Easy to use, learn, and implement






Flexible, configurable,  and comprehensive






Integration  with other systems












While no one mentioned global capability unprompted, when asked  if global capability mattered, 41% of companies with  over 1000 people listed  it as one  of the deciding factors.


Takeaways for small organizations


Takeaways for

mid-tier & enterprise organizations


1. When buying compensation software,  pay attention to ease of use, ease of training, and ease of implementation.


2. Be sure that you get the flexibility needed for your business needs now, and likely needs in the near future.


1. In addition to ease of use and flexibility, look closely at integration issues.


2. If you are a global firm, then the capability to handle global currencies will be a deciding factor in your choice.

When do you need an HR suite?

One perennial concern of HR leaders is whether the need to integrate different software packages  will create problems.  Overlooking integration issues can create headaches. On the other hand,  overemphasis  on buying pre-integrated modules can lead to headaches as well.

Pre-integrated but underpowered or inflexible modules often lead HR managers to leave the module unused  and instead go back to doing the work in Excel.

Each situation is different; for your specific situation, ask:

  • How much better is the standalone tool?
  • How difficult is integration in this case?



Takeaways for small organizations


Takeaways for

mid-tier & enterprise organizations


1. Integration  is usually not a top concern for small firms.


2. Compensation software  is usually Excel or an

in-house solution; people in the company may be reluctant  to switch.


3. Track the hours spent on compensation to determine the cost benefits for your organization.


1. Find another company that has done the same integration you are considering to learn exactly how easy or difficult it is.


2. Run a range of test scenarios on any software you intend to buy so that you don’t get stuck with a solution that is integrated, but can’t do the job.


3. Even though your company is big, getting  a suite to change  compensation software requires numerous requests  and is not likely.


The link to performance management and HR Suites

This survey focused on compensation software; however, it’s important to see compensation software through the lens of performance management.

Often the biggest issues in performance management arise from the compensation element, and if you don’t get this right it can be hard to get people to focus on goal setting or individual development.

Compensation Impact Takeaways for all organizations

1. One of the most important features of compensation software is that it should support making the right compensation decisions as part of the performance management process.

2. Get the compensation side of performance management sorted out first, and then
managers can concentrate on goal setting and development.

The 2016 Compensation Impact Report – New Small Business Rules, Simple Pricing, and Love of the Cloud

Why Compensation Software Matters to Small, Mid-Tier, and Enterprise Organizations

Insights from the 2016 Compensation Impact Report



Since compensation is the #1 reason that most people work for a company,  HR leaders invest a lot of effort to ensure that compensation is done right. For small companies,  the problem with doing it right comes at crunch time: four to eight weeks when compensation numbers are crunched  for final reporting.

The 2016 Compensation Impact Report shares findings that clearly separate small business from larger organizations in terms of needs, requirements, and ease of use.

Is compensation software  helping them to achieve that goal? We ran a survey of 204 HR professionals about  how they were using compensation software.  This report reveals what we’ve learned from the experiences and insights shared by HR professionals,  from entry level to executive in small, mid-tier, and enterprise  businesses.

The Compensation Impact Report - Why Compensation Software Matters to Small, Mid-Tier, and Enterprise Businesses
Download 2016 Compensation Impact Report


Key 1: Comp Plan execution is where problems usually arise.
Excellent compensation plans often get lost in translation due to inefficient tools like Excel.

Key 2: HR needs real-time insight to manage compensation.
You can’t wait until all the paperwork rolls up at the end of the process.

Key 3: Your compensation system must save time and money.
Be sure that the system has controls that ensure managers stay within budget, saving the organization from overspending and wasting time.

What is the impact of compensation on your company? (short survey)

Hope is in the cloud

If you are considering compensation software,  then an important question  is, “Do people find these systems effective and good enough to meet their needs?” Most do (see Figures 4 and 5). In particular, organizations are likely to be happy with cloud-based systems.

Compensation Software Satisfaction
Takeaways for Small Business

1. Most users are satisfied that compensation software is effective/easy to use and meets most needs (59% and 62%, respectively).

2. However, users are even more likely to be satisfied if it is a cloud-based system (76% and 90%, respectively).


Compensation Impact Report - Satisfaction with compensation software

Takeaways for Mid-tier and Enterprise Organizations

1. Mid-tier and enterprise organizations are more likely than small organizations to be satisfied that their compensation software is effective/ easy to use (71% and 74%, respectively).

2. However, users are even more likely to be satisfied if it is a cloud-based system (83% and 89%, respectively).


How much should companies pay?

We asked companies  how much they were willing to pay for a compensation planning system. Answers ranged  from organizations that couldn’t afford $25 per employee to those that would pay $75 to $100 per employee.  This distribution puts the average upper limit at around $50 per employee (see Figure 6).

compensation impact report - what would be too much to pay

Graph excludes participants who had “No opinion.”


Takeaways for all organizations

1. Most organizations won’t pay more than $50/employee for compensation softwar

2. 14% of organizations, presumably those with complex compensation needs, find that $75-$100/employee is justified.

3. The price will depend on the complexity and requirements of your compensation plan; many suites offer compensation software  as a cheap module addition to a suite.

4. Be sure that the solution offered will be able to execute your compensation plan because every business has a unique compensation plan.

What is the impact of compensation on your company? (short survey)



Where should you look for the payoff?

The survey showed  that HR managers are focusing on whether compensation software  can do what they need and do it easily. This isn’t wrong,  but to justify an investment  in software, don’t just emphasize  how it is good for the HR department; instead,  emphasize  how new software  is good for the organization  because  it improves the firm’s ability to manage compensation.

Takeaways for all organizations

1. The big value of compensation software comes from helping the organization to better manage its investment  in

2. An important secondary payoff from compensation software is that it improves efficiency within

3. Good compensation management helps to recruit and retain employees.

Download the 2016 Compensation Impact Report