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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