Annaly Capital Management Case Study

Power and simplicity for ‘capable and empowered’ planning managers

About

Annaly Capital Management, Inc., is one of the largest mortgage real estate investment trusts in the United States. Based in New York, it manages $86 billion and is publicly traded on the New York Stock Exchange.

The Challenge

Historically, Annaly Capital Management managed most of its compensation planning in spreadsheets. In 2021, the company adopted Compose from Decusoft for compensation planning. We spoke to Morgan Littman, who specializes in compensation in Annaly’s Human Capital group, about the firm’s experience with Compose.

Why did you decide to get compensation management software?

We are not a firm that applies one formula to everyone. We are a meritocracy and look at our employees as individuals. Using spreadsheets was viable when we were smaller, but it became unsustainable as we grew. Before moving to Compose, we had to make a separate spreadsheet for each planning manager and then reaggregate the data into a master sheet once they entered compensation decisions. This required a considerable administrative burden and left room for error.

Why didn’t you use the compensation module in your human resources software?

It was too rigid for our needs. For example, as a planning manager, your compensation decisions roll up to whatever manager is your supervisor
in the system. At our firm, we have different ways of involving people in decision-making. We needed every aspect of the process to be customizable.

Customer service was also a primary decision-making factor. We needed a dedicated representative to call in case of emergency and not every
vendor offers that.

The Solution

What are the benefits of switching to Compose?

We have the flexibility to operate in a way that works best for us, and we don’t get stuck like we would on a general HR platform. Considering the last example, we can create the exact manager rollup we want and change it at any time. That’s huge.

Another benefit for compensation managers is the accessibility of information. Compose provides us with a central repository of data that we can trust, so we don’t have to look through many spreadsheets.

What feedback did you get after your first planning cycle with Compose?

Managers say they prefer to use Compose because it is easy to use and reliable. They go in, enter their compensation decisions, pop out, and they’re done. We set up the Compose planning grids with all the information they need, including several years of employee compensation data and other indicative information.

The grid automatically allocates the proposed bonus between cash and deferred compensation based on our guidelines, but the split can be overridden if needed. As managers enter each bonus decision, they see a live total of what’s left in their pool, so it’s easy for them to stay within budget.

The managers are not responsible for sending and receiving files. A lot of products over-complicate the process in ways that aren’t relevant to us, so you wind up paying for things you don’t need.

Has there been any pushback to your move away from spreadsheets?

No. We have a highly capable and empowered group of planning managers. Most are Managing Directors or on the Operating Committee. Some of them want to manipulate the data and organize people in very particular ways. They like that Compose can filter and sort their planning grids exactly how they want them. Those who want to use Excel have the option of downloading the grid directly from the platform.
Another benefit for compensation managers is the accessibility of information. Compose provides us with a central repository of data that we can trust, so we don’t have to look through many spreadsheets.

The Results

How has Compose changed how the human resources department operates?

The biggest impact is how much time we save, especially when building compensation statements for employees. We have robust statements that include compensation, benefits, and 401k data.

Before, we had to run the spreadsheets through mail merge to produce them for employees, which was not an effective use of our time. Producing statements with Compose is seamless.

What has Decusoft been like to work with?

What really differentiates Decusoft is their customer service. You get to know the people on your account, and it’s a major difference maker to work with nice people who you can trust. Compensation planning can be stressful, and having support from Decusoft has helped to alleviate a lot of that stress.