The Dangers of Spreadsheets for Compensation Planning

Dangers of Spreadsheets for Compensation Planning

The Dangers of Spreadsheets for Compensation Planning

Traditionally, Excel spreadsheets were the go-to tool when managers need to craft compensation plans. Spreadsheets get the job done because they can store data in a table and present them in a fairly readable manner. However, every experienced compensation manager knows that there are limitations to using spreadsheets, and that solely depending on spreadsheets for compensation planning is like working with a ticking time bomb.

Here are 5 dangers of spreadsheets for compensation planning that you should be mindful of:

1) Lack of Guidelines and Standards – Spreadsheets are versatile. You can use them to build complex databases and compute simple mathematics. Not surprisingly, this lack of policies and procedures on how each spreadsheet should be used is also one of its downfalls. If there are many different people working on the same spreadsheet, it is very possible that a handful of them may be confused and commit mistakes in manipulating the wrong data.

2) Logical Mistakes – Compensation planning on spreadsheets require the construction of formulae and equations and not every manager is adequately proficient in writing the logic of these equations. Mistakes can come from something simple such as calling the wrong function or subtracting instead of adding.

3) Data Input Errors – Spreadsheets start out as blank sheets. As they grow into complex programs, data input errors are unavoidable. While some are harmless and can be rectified after thorough review, some mistakes can make a huge impact. A simple “1,052” typed instead of “1.052” can change the number by orders of magnitude.

4) Tedious – Building a spreadsheet program from scratch is tedious and tiring. A complex program using an Excel spreadsheet can potentially be slow and buggy because of poor software engineering tools.

5) Poor Synchronization – A spreadsheet is versatile, which means it is not specifically built for a single purpose. This makes spreadsheet integration with existing databases or user interface very difficult. Even when they are able to interact with each other, there is no guarantee that data will not be lost between communications.

How to Avoid the Dangers of Complex Spreadsheets?

The answer is simple – don’t use spreadsheets for complicated tasks!

Compensation Software applications built for this specific purpose work much better than the versatile “one-size-fits-all” spreadsheet. They save you precious time and the headache of errors that come along with using spreadsheets for complex compensation management.


HRsoft – The Leader in Compensation Management 
HRsoft is a leading provider of compensation management solutions for strategic HR departments. For more information on our compensation management software, COMPview™ click the link below!

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