Having a healthy, competitive employee compensation program can improve existing employee morale and also make attracting top talent a breeze. Compensation data that’s in line with your competition can give your hiring managers important information they’ll need when making a job offer to a candidate (this applies to raises and bonuses as well). Additionally, it can help your company remain compliant with Fair Labor Standards Act (FLSA) regulations when you can easily show that equitable compensation is paid across the board.
So, how’s your compensation management program looking? If your answer is, “I don’t really know” or “We don’t have one,” keep reading.
What is Compensation Management?
Compensation management is how companies ensure that their salaries and bonuses are equitable, competitive and in line with market data. The process also includes managing your employee benefits to make sure they’re meeting the needs of your employees. The compensation management process makes up a pretty big part of human resources because it can have an impact, whether negative or positive, on hiring, employee retention and engagement, and overall company performance and brand.
The Five Benefits of a Compensation Management Program
- It helps ensure pay equity. The data found in your compensation management program can help you determine if there is a gender, race or ethnicity wage gap at your company, Often, this data will uncover discrimination that your HR leaders are either overlooking or unaware of. View the regulations for pay equity in your state.
- It can help attract top talent. A good compensation management program can also help you ensure that the salaries your company is offering are competitive. You’ll have all the data you need to benchmark your salaries against the compensation to see if you’re either low-balling or being too generous with your job offers.
- It can help retain existing talent. Some folks confuse compensation with salary. While salary makes up a large part of a total compensation package, you also need to include bonuses, health and life insurance, vacation time, the value of stock options, retirement savings plan contributions and pension plans. When you can provide a big picture of your company’s contributions, your employees can easily see how much you’re investing in them. And when employees are happy, they tend to stick around longer.
- Reduced administrative tasks. Your HR professionals need to be focused on strategy, not data entry or questions from employees. Managers can have access to the compensation management platform, enabling them to see information they need to make informed payroll or bonus decisions without constantly bugging HR.
- Fewer errors. Manual data entry in spreadsheets or software solutions that require duplicate entry because they aren’t connected to each other should really be a thing of the past. By using a compensation management program, you can greatly reduce the number of data entry errors when information is entered “one and done” and carries across all relevant databases in your human capital management system.
Compliance and Compensation
We listed #1, “It helps ensure pay equity” for a reason. If you don’t have a handle on your compensation and salary bands across the entire company, you could very easily get into some hot water with the government. And ignorance is no excuse. If the IRS discovers that you’re paying some folks more than others and there’s a distinct pattern (such as paying men more than women who do the same work), the company could find itself subject to penalties, fines and even lawsuits. Stay on the right side of federal regulations!
Communicating total rewards and compensation to your employees makes good business sense when it comes to outlining the full extent of your company’s value. By implementing a regular system for gathering and distributing this information, your organization can better demonstrate the investment in its employees. If your compensation program isn’t as great as it could be, get in touch. Compensation management systems can help!
To get out of the weeds once and for all, you need everything related to comp in one system. Automate planning, mitigate risk and spend more time developing strategic comp plans with Paycor’s compensation planning solution.