Employee compensation is every company’s biggest operating expense. When managed properly, it can provide significant value for everyone. But when managed poorly, it can cause trouble. Since 2023 is right around the corner, here’s how compensation management software can change the game for the new year.
Compensation management software offers invaluable advantages, no matter how large or small your company is. This tool helps ensure your employee salaries remain competitive, appropriate and equitable. It also supports you in creating and maintaining a company benefits program that meets employee needs.
Fair compensation is one of the core building blocks of successful companies, and if you want your organization to thrive in the new year, you need compensation management software. Here are four reasons why.
#1. Notice Existing Pay Imbalances
Even the most successful companies may have a pay gap, but they will never know it without conducting a pay equity analysis — analyzation that can only happen with compensation management software. Human resource (HR) professionals only have so much time in a day, and they often overlook imperfections in existing compensation procedures. A pay gap can cause low engagement turnover and compliance issues, which can be detrimental to an organization. By implementing compensation management software, your team will become aware of pay gaps and other flaws so you can rectify them immediately.
#2. Offer Competitive Compensation
Competitive, fair compensation is pivotal in hiring and retaining employees. The salary and other benefits you offer a candidate could make or break whether that person decides to land at your company or go to a competitor. And when you pay existing employees competitively and fairly, you increase your chances of retraining employees for the long haul.
The challenge is that you have a certain budget to work with and internal pay equity to consider. So how can you ensure that the compensation works well for both sides?
Compensation management software is the answer. This tool can help you outline every position in your company, down to every department and individual worker, so job values and responsibilities are clear. Then, you can see where new and existing employees would fall into the outline. This detailed process will help you reach financial business goals that would otherwise be extremely difficult to plan for.
#3. Retain Valuable Employees
Employee turnover can create internal disorganization, especially when top performers leave a company. Compensation management software can help you avoid this by creating a strategic raise cycle based on the facts. Plenty of managers make crucial compensation decisions based on what they know — but the bottom line is that managers can’t know everything. Companies are too large and complex for leaders to pinpoint every positive thing an employee did or didn’t do during the year. So instead of basing monetary decisions on inaccurate information, compensation management brings all of the data together, so raises and bonuses depend on performance, job value and pay equity. And the ability to see the data for any period of time allows you to make the best choices for your organization and employees.
#4. Improve Overall Pay Transparency
Discussing compensation used to be taboo — but not anymore. These days, employees talk about their salaries openly with each other and their managers, and they expect transparency from organization leaders. Being open about how compensation is decided at your company can help you create trusting, honest relationships with your employees, and compensation management can play a key role here.
For example, maybe you just hired someone new who received a higher salary and less stock in your company than someone who you hired three years ago. Compensation management software will be able to provide data about these monetary differences so everything is clear. This tool can tell you:
- How stock changes an employee’s projected value
- Salary discrepancies based on different job titles, amount of relevant experience and more
- Job responsibilities
- Monetary value of every responsibility and how that affects role value
At the end of the day, compensation management software paints a full picture of compensation differences so you can be transparent about the decisions you make at your company.
The approaching new year is your clean slate for making company changes and improvements.
Compensation management software is the tool you need to make data-driven business decisions so that your company and employees thrive. If you want to make the best financial choices in 2023, be sure to invest in the best compensation management software.
Want to make data-driven financial decisions at your company? HRSoft’s award-winning COMPview Software makes competitive, fair and consistent compensation easy to implement across any organization. Contact us to learn more.