Can Excel still keep up with evolving compensation management needs? We explore how organizations can move towards an agile compensation philosophy.
With the talent market heating up, compensation has emerged as a driver of competitive advantage for businesses. HR teams are working harder than ever before to hire and retain top talent.
But current trends suggest this is not enough. A 2022 survey by Robert Half reveals that nearly half of the employees (49%) believe they’re earning less than they deserve. The sentiment resonates more profoundly with Gen Zers (57%) and women (52%). The study also found that one in three employees will consider quitting their job if they don’t get a hike by the end of the year.
There’s clearly a disconnect between what employees want and the value that their employers offer. Organizations are still struggling to reward their talent appropriately. Developing a compensation strategy is a key first step towards retaining talent and driving profitability.
Unfortunately, it is easier said than done.
Compensation Management and Excel: A Combination Best Forgotten?
While most organizations have some form of compensation strategy or philosophy, they’re often misaligned to economically ground truths. For instance, hybrid work has emerged as the dominant working arrangement for organizations as uncertainties around Covid-19 remain. This means companies may need to recalibrate their compensation initiatives to performance. New metrics call for new modeling. And that’s where traditional tools like spreadsheet programs and Excel fall short.
A Ventana report found that 71% of compensation teams still rely on Microsoft Excel for compensation management. This poses a challenge as compensation models become more complex. Excel simply can’t keep up. For instance, a company may maintain a small performance budget for different business units, geographies, pay currencies, and more – which becomes challenging to model or track on spreadsheets.
In addition to compensation modeling, compliance and security also pose a significant challenge for organizations relying on excel sheets to manage their compensation data. Excel sheets are notorious for data inaccuracy or calculation errors. In our industry guide to variable compensation management, we’ve outlined how 83% of users report finding errors in calculations when using Excel.
From an operations perspective, spreadsheets are responsible for becoming bottlenecks as data is not readily available to all stakeholders easily. Spreadsheets promote siloed working and limit collaboration between HR and finance. Once a compensation plan design has been approved, users must manually re-create all the data in the compensation management system or HRIS to initiate the plan.
So, then a break-up between compensation teams and Excel is inevitable. Current business needs require an end-to-end compensation management platform that not only offers superior configuration options but also streamlines data capture, compliance, and strategy.
Agile Compensation Management: Moving Beyond the Spreadsheet
Agile compensation management is more than just technology, it calls for a change in the mindset about how we view compensation. Instead of being rigid, agile compensation promotes flexibility, which is the need of the hour for most organizations. And technology facilitates it.
Agile approaches call for a cultural change in the organization – moving from spreadsheets to a more sustainable compensation platform that promotes collaboration and flexibility on how we compensate people for the work they do will ultimately make a difference in the way talent perceives us.
Smart compensation management systems like Compose automate the entire compensation process so teams can spend their time on more high-value strategic tasks instead of managing multiple spreadsheets. Compensation automation offers multiple benefits such as variable pay forecasting, modeling capabilities, easy audit, and access controls, powerful analytics, and more.
Are you ready to ditch Excel? Book some time to find out how Decusoft can help evolve your compensation process to Ignite Amazing!