3 Considerations for Your Compensation Management System

3 Considerations for Your Compensation Management System

Designing a compensation management strategy to reflect the ever-changing needs of today’s business landscape is challenging and complex. There are many factors to consider, and any compensation management system must be flexible enough to incorporate changes from year to year.

While each company’s priorities for a compensation management strategy will differ, here are a few considerations that prove to be useful in just about any organization:

  1. Budget Allocation
    Your company’s budget is perhaps the greatest influencer of how your compensation management strategy will play out. The Thriving Small Business encourages compensation professionals to consider how the budget will be divvied up amongst salary and benefits. For instance, if 90% of compensation will go towards salary alone, you must think of creative ways to stretch the remaining 10% to cover benefits.
  2. The Market
    Your ERC recommends asking this question: How does your company intend to pay associates – at market, above market, or below? Keep in mind that the entire compensation package (not just salary, but also benefits) can be leveraged as a tool to attract and retain top talent. If you offer a slightly lower salary than some of your competitors but provide above-and-beyond health insurance, be sure to communicate this to prospective and current employees.
  3. The Tools You’re Using
    If you’re still using spreadsheets, this is one of a few possible indicators that it’s time to upgrade to a new compensation management solution. As organizations grow, it becomes increasingly important to utilize reliable tools that promote a strong compensation management system. Over time, spreadsheets become difficult to organize and track, which makes it more likely for costly errors to occur. Compensation planning software can eliminate the risk of errors, and it also provides security so that you can keep your sensitive data safe.


Compensation is critical for illustrating how your company values its employees, so it’s important to get it right. Using the strategies above will allow you to create a compensation management solution that is equitable yet competitive, so that it meets the needs of both your organization and its people.

HRsoft is a leading provider of strategic talent management software that improves manager effectiveness and business results. Our full suite of cloud-based HR software solutions includes applicant tracking software, compensation planning software, total rewards software, stay interview software, performance management software, and content management software. To learn more about our Compensation Management Software, COMPview, click the button below!

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