Today’s HR departments have to do a lot more than just calculate compensation. To keep employees invested, your HR team in control and your strategic business plan on track, you need dedicated compensation management software. Here’s what that looks like.

Compensation management can feel like it’s all about crunching numbers. And without the right compensation management software supporting your process, that’s what it becomes.

But compensation is more than just the numbers. You can break it down into three categories:

  1. Direct financial compensation: Base salary or wages, bonuses, commissions, and equity or long-term incentives.
  2. Indirect financial compensation: Retirement plans, benefits, compensation for continuing education, etc.
  3. Non-financial compensation: Career development, training, recognition opportunities, work/life balance, etc.

These elements are a vital part of maintaining a stable and qualified workforce. In fact, building a strong compensation strategy is one of the most powerful resources HR professionals have at their disposal to attract, retain and motivate talent. But without the right software, the time and effort it takes to properly configure, manage, plan and communicate compensation is tedious, difficult and often ineffective.

Here’s how compensation management software can help.

What is Compensation Management Software?

Compensation management software guides, controls and simplifies the calculation and allocation of complex merit, bonus and equity awards. The goal is to drive employee engagement, performance and retention while freeing up managers and HR staff to focus on strategy, communication and other important initiatives.

Compensation management software allows managers to:

  • Make strategic and informed compensation decisions
  • Eliminate waste in your budget
  • Ensure most valued employees get what they deserve

But not all platforms are the same. When searching for a solution to manage the entire compensation cycle and replace your manual processes and spreadsheets, look for at least these 9 key features.

9 Essential Compensation Management Software Features

1. Total Compensation Allocation

As mentioned above, compensation encompasses much more than just salary. So, you need software that can streamline the total compensation cycle allocation process—simplifying the administration of even the most complex plans.

You should be able to program your process to accommodate for different variables, including plan guidelines, salary cap limits, and different merit, bonus and equity plans governed by different rules and budgets.

Also, planning managers should be able to access all of this from a centralized planning dashboard, making it easier to see what’s happening in the organization and make informed decisions.

2. Total Compensation Communication

Another major facet of total compensation includes how you’re communicating this information to employees. Look for a solution that offers online employee compensation statements.

This allows managers to share compensation statements with employees at the right time with the right support, messaging and context. Instead of manually downloading and attaching sensitive and complicated PDFs to emails, managers can view statements through an online portal and, when ready, share them on demand.

Specific key features of online employee compensation statements include:

  • Dynamic formatting and content
  • Company branding
  • Multi-lingual capability
  • Target and actual award statements
  • On-demand manager publishing
  • Automated email notifications
  • Optional support for total rewards communication content

3. Automated Plan Workflow

Once you have plans in place, your software should automate the planning manager’s workflow.

You should be able to set approval hierarchies and workflows for different plans and establish triggers and alerts that notify and route information to the appropriate people when action is required within the compensation process.

4. Simplify Complex Award Calculations

On average, when planning with spreadsheets, expect an error rate of 5% or more. Plus, the time spent on manual processes is inefficient and costly to your organization.

Compensation management software capable of complex award calculations can help you eliminate these costly calculation errors and save time.

5. Global Pay Requirements

For large, international organizations, you need a tool that can accommodate all the local areas you operate in.

Your software must include flexible location profiles, multiple language options and automatic currency conversion tools, allowing you to fulfill global pay requirements while still managing and planning everything in one system.

6. Review & Reporting Tools

If you want to make better compensation decisions, you need robust review and reporting tools. So, your software should allow you to:

  • View budgetary allocations across the organization throughout the planning process.
  • View compensation information for individuals or departments.
  • Understand underlying compensation trends.
  • Create standard or ad-hoc reports of compensation data.
  • Visualize trends and other graphical representations of data.

7. Auditable & Compliant Processes

As labor laws evolve, your compensation processes need to keep up. Software makes this much easier.

Maintain compliance with corporate policies, state mandates and federal regulations regarding compensation with built-in compliance features. These can include automated identification and flagging out of guideline awards.

Plus, compensation management software should be able to trace all actions by capturing every keystroke and compensation decision. This makes your processes defensible, highly auditable and compliant.

8. Automated Budget Controls & Flexible Budgeting

Budget over-runs due to compensation are usually not caught until it’s too late. And last-minute changes to budgets once planning has started creates enormous amounts of rework.

With automated budget controls and flexible budgeting features, you have complete visibility into the process to ensure money is not only spent appropriately within budget but also spent effectively. And if a budget changes; no problem! Simply use the system to reset and recalculate.

9. Integration

For best results, your compensation management software must be able to interface and align with whatever HRIS/HCM, performance management, payroll or financial software you use.

These integration capabilities provide for a seamless flow of data from one system to another—feeding many of the features listed prior.

This allows you to keep using the HRIS/HCM tool you know and love for other HR functions while leveraging a more tailored solution for your precise compensation needs—all in one place.


Compensation management software is a must for HR professionals struggling with spreadsheets, long and stressful compensation cycles, and complex plans.

These features – all staples of HRSoft’s COMPview™ software – come together to allow managers to make informed compensation decisions while allowing senior management and HR oversight.

COMPview clients realize an average of 2-3% savings of annual budgeted compensation spend. See how it works by scheduling a brief demo today.