The Evolution of HR Digital Transformation

HR Digital Transformation

The idea of digital transformation in the HR department is nothing new. At one time, Excel was even a digital transformation for the department. And ever since then, new digital offerings have continuously occurred. But one HR function seems to have had less digital focus and has continued to rely heavily on spreadsheets…compensation.

The Transformation Journey

Phase 1: Basic Enablement

In the eighties and nineties, employee databases and payroll software became more common among businesses of all sizes. These software solutions focused on digitizing and managing the employee database and enabling more seamless, digital payroll management & execution.

Phase 2: HCM Point Solutions

The next step in the transformation journey came when point solutions emerged for automating and managing discrete HR processes and functions that spanned beyond basic employee data management and payroll, including Recruiting/Candidate databases, Performance Management, and Benefits Administration.

This was also about the time when integrations became more of a burden as more point solutions entered the market.

Phase 3: Integrated HRIS Platforms

This “burden” resulted in a focus on unified platforms that spanned the full spectrum of HR-related stakeholders and functions. HR teams saw the value of one integrated platform outweighing the need for best-in-class point solution functionality.

As functionality expanded and became more robust, there remained one big problem with the unified platform approach — HRIS/HCM compensation modules have proven insufficient for managing anything more than simple compensation strategies.

This insufficiency has resulted in many compensation teams still managing some aspects of compensation on spreadsheets. In a recent, independent survey conducted by HRSoft, over 60% of organizations said they utilize spreadsheets in some manner, often in conjunction with their HRIS, to manage and plan compensation. And results from a 2022  Ventana Research Total Compensation Management survey found that only 38% of participants are “satisfied their compensation software meets their needs.”  

What does this all mean? Compensation Chaos.

The Compensation Chaos Solution

As a result of this compensation chaos, organizations are faced with making one of two poor choices:

  1. Eliminate specific, differentiating compensation strategy elements from their organization in favor of vanilla approaches. This makes organizations less competitive in their management of human capital.
  2. Manage the compensation lifecycle outside the HCM/HRIS—in Excel—to accommodate customization. This leads to major OpEx exposure due to errors – estimated at 1-3% of total comp spend annually.

HRSoft brings a third choice to the table that eliminates compensation chaos. The HRSoft solution is the only unified, purpose-built SaaS platform that digitally transforms the ongoing lifecycle of compensation management, providing a digitized, integrated system of record for designing, approving, executing, and measuring even the most complex compensation strategies.

HRSoft empowers organizations to confidently design customized, multi-faceted compensation plans that reflect their values, convert new hires, align employees to value creation, and reduce costly turnover. See a short self-guided tour of our product to see how we can help eliminate compensation chaos.