In order to find the best compensation management software for your organization, you should first conduct a thorough needs assessment. In addition to documenting the current state of your compensation policies and packages, you should also ensure that you have up-to-date knowledge of applicable laws and regulations.

While determining the needs of your business, be sure to involve all your stakeholders. In particular, involve investors, executives, managers, supervisors, and employees so you can understand what they like and dislike about your current compensation system (if it exists). Additionally, spend time planning for the future and learning about current HR trends and how they will affect your firm.

When you begin to research compensation software vendors, you might discover that most products include some essential features:

Centralized dashboard to visualize your compensation program at a glance
System for publishing compensation policies, bonus structures, and other documents
Tools for budgeting salaries and benefits
Import and export functions for sharing data with other applications
Integrations with other human resources management software

Pay attention to product reviews, especially those provided by customers of each respective product. Although you should never assume that everything in the reviews is completely accurate, you can glean from them important facts that can guide your shopping experience.

Involve other stakeholders in the acquisition process. By accessing the opinions and perspectives of others, you can avoid missing important considerations that can result in big mistakes.

When you have a list of potential solutions, enlist the help of your employees in assessing the trial versions of each product. If a product offers only a demo available, involve as many people as possible in observing the application in action.

By involving your entire team, especially the people who will use the software, you make your employees feel valued. Also, if they’re involved in the buying decision, they may have more incentive to learn the new software and put it to use.

Top Compensation Management Software Features

Structuring: Companies can decide what types of compensation to offer and then create multiple reward structures that apply to their various departments and job levels. Components may include salary, commission, bonus pay, and perks such as paid time off, deferred compensation, and company equity.

HR Events: Compensation software can help companies record and manage employees throughout their lifecycle with the organization. After hiring, it can adjust compensation for hiring, promoting, transferring, and terminating workers.

Automation: Software can automate many tasks, eliminating the need for redundant data entry. As a result, it can save time while improving the quality of your compensation management activities. Also, managers should have the ability to set triggers that send notifications to designated people when their attention is required.

Historical Tracking: Compensation management software can track compensation on a per-employee basis over time. Managers can use this information to make decisions about individual employees and to conduct compensation analysis for organization-wide reviews.

Compliance: Companies can define compensation rules for their organization to ensure compliance. They can also use their software to define applicable local, state, and federal laws and regulations for the purpose of preventing violations.

Integrations: The best compensation software products will integrate with popular human resources management applications. In particular, they should work well with performance management applications so companies can create robust performance-based compensation packages.

Analytics: Managers can view the performance of their compensation strategy with regards to their budget. In addition to global assessments, users can assess performance on a departmental and individual level.

Reporting: With the right software in place, companies can run standard and custom reports to document their compensation expenses and related activities. These should include visual reports that can alert managers when adjustment to their strategy is needed.

Data Management: Using their software, businesses should have the ability to import and export data. This includes selecting data ranges that may include individual employees and entire departments.

Security: Choose software that allows you to define access levels on a per-user basis. This will help you to prevent unauthorized users from accessing confidential information. The software should provide the ability to audit user activity to guard against misuse. Additionally, only choose software that has a solid reputation for online security. Your compensation management software contains sensitive information that you must keep safe from online threats.

Geographic Compatibility: If your business operates multiple locations in diverse localities, regions, and countries, you should look for compensation management software that allows you to define multiple locations. Within each location, you can define local compensation policies that account for local laws and regulations. The software should also offer language and currency options so that you can maintain uniformity throughout your organization.

What to Avoid

Software developers market their products in different ways. It’s your job to realize this so that you can make valid comparisons as you shop. In other words, you should avoid shopping only by price. Naturally, low-priced options might attract your attention. However, those often may either omit features that you need or make them available as expensive add-ons.

Similarly, companies that operate in either specialized or highly regulated industries should avoid settling for a product that’s offered for general use. Although applications designed for your industry may cost more up front, they could potentially provide a lower total cost of ownership over time.

Selecting the Best Compensation Management Software

So, what’s the best compensation management software for your organization? In most cases, there’s no single correct answer. Start by assessing the needs of your business and comparing them to the capabilities of the software products on the market. Afterward, make evaluating the best options a team effort. In the end, you will have the necessary information and insights to make a strong buying decision.

Check out our list of compensation management products and reviews. You’ll be surprised at how quickly you can find the software that fits your business and budget.

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