02 Dec How do Compensation Planning Tools work?
Compensation today has moved far beyond the mere exchange of money for talent (or time). A high quality compensation plan must be able to:
- Make the most of each budget allocated to each department and employee
- Give employees a sense of security and satisfaction that they are being paid according to market best practices
- Motivate workers into going above and beyond the call of duty because of attractive and relevant incentives that are directly linked to stellar performance
Businesses should invest in strategic compensation planning that doesn’t assign random pay packets to employees but considers the implications of every dollar spent and strives to be internally equitable and externally competitive.
What Makes a Compensation Plan Strategic?
A strategic compensation plan is typically defined by the following characteristics:
- It has tangible goals – A strategic comp plan respects the fact that compensation is a business entity’s biggest expense and talent motivator. Thus it has specific goals and associated metrics with which to measure progress towards the stipulated objectives so that there is no vagueness or confusion in what the compensation dollars are actually achieving.
- It has means to measure employee satisfaction – A comp plan is incomplete without a robust way to gauge employee satisfaction. This can be done through surveys or more proactively and holistically through stay interviews.
- It benchmarks employee salaries – Salary benchmarking is a critical part of a strategic compensation plan. Employees are always aware of their true worth and they keep tabs of the offers made by competitors in the market. With benchmarking you can identify an ideal salary package for every position and then analyze the fairness of the compensation, incentives and benefits being provided to the company talent.
- It communicates rewards to employees effectively – Last but not the least, strategic compensation plans account for a rewards philosophy which can be tailored so that employees can move beyond their base package and realize all the benefits that the comp dollars mean for them.
Strategic Compensation Planning Software Solutions:
Comp planning can be complicated. Platforms like COMPview create an auditable planning process for transparency in comp communications and powerful reporting services to bypass costly spreadsheet errors make the process simpler.
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!