How compensation technology is evolving to drive better understanding of pay and bonus drivers
Traditionally compensation technology has been deployed to achieve some basic operational goals, including:
- streamlining data management and integrating data to give a single consolidated view to increase data integrity and data security;
- automating processes with workflows that guide users intuitively through processes;
- ensuring information is distributed and shared in a transparent and open process that is fully auditable.
These are all eminently sensible, but to really drive a return on investment we need to leverage compensation solutions to deliver much more than this. We need solutions that can help us to achieve those three key pillars of reward strategy.
- We want it to help us to recognise who our high performing employees are, and make sure that we reward them competitively so we retain them.
- We want to ensure that we deploy reward programmes and tactics so that they drive productivity and the achievement of business goals.
- And we want to engage our employees, particularly in this environment where the employer/employee contract is changing from the traditional paternalistic relationship to one of choices and flexibility.
Operational benefits
So how can compensation solutions evolve to do this? First, sticking with operational benefits, compensation technology should automate low value tasks so that you can focus on high value outcomes that provide more insight into your workforce’s pay and bonus drivers.
But you need insight delivered through great analytics to provide evidence linking reward to individual and business performance. More and more vendors are incorporating business intelligence tools to do this that ultimately can empower and guide stakeholders (managers and employees) to make powerful informed compensation decisions in real time.
Calibrating multiple talent metrics
Valuing talent in order to distribute compensation budgets is no longer two dimensional. It’s not just about performance ratings and market range penetration. We need to be able to calibrate multiple talent metrics that capture the loss impact of employees, or those with most potential to drive the business in the short or medium term together with multiple market benchmarks. Many vanilla or out of the box solutions can’t handle the basic fact that compensation is becoming more complex.
That complexity is also being driven by the increasing need for reward segmentation due to the growing diversity of our workforce and the need to leverage different types of talent. We have to broaden our approaches to reward to engage different types of employees. We’ve seen this demonstrated successfully in the benefits arena with the focus on employee choice, but less so in mainstream compensation solutions.
More than an annual process
Finally, we need reward solutions that don’t just support annual decision making processes. Traditional models of performance management are being challenged and more employers are moving to ongoing approaches to talent assessment with continuous conversations and feedback incorporating coaching and development. With this approach, rather than an annual evaluation, it is inevitable reward allocation will follow suit.
Managers will want to be able to benchmark their employees on an on-going basis and allocate awards when the effort takes place and to be more in line with project, team and skills-based approaches to working. So we need technology that can provide real time information and year round, with up to the minute benchmarking data and the ability to track budget throughout the year.
What’s key is that you do not let your chosen compensation solution inhibit the way you deliver reward or let it stop you future proofing your approaches, and that it ensures that you can deliver on your reward strategy.
Author is Ruth Thomas, Senior Consultant at Curo Compensation.
This article was provided by Curo Compensation.
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