Compensation Management: Benefits, Objectives & Tools
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Compensation management involves cost control, pay fairness, legal compliance, and more. Moreover, compensation management software helps automate and streamline processes and provides data and insights to improve compensation strategy.
Compensation management is essential for companies as it directly influences employee happiness and the capacity to recruit and retain talent.
And according to this Glassdoor survey, 67% of job searchers stated pay and compensation were among their top factors in choosing where to work.
In this blog, I’ll cover what compensation management is, its benefits, and its main objectives. I’ll also highlight the key features, pricing, and customer reviews of four excellent tools to manage your compensation plans.
Compensation management is the process of establishing, executing, and determining employee pay levels, perks, and incentives.
It seeks to recruit, retain, and inspire salespeople by offering fair and competitive pay packages based on market compensation analysis. Tying compensation and incentives to individual and organizational success also assists firms in aligning employee behavior and performance with company objectives.
Here are a few benefits of compensation management:
On the other hand, poor pay management procedures can result in excessive staff turnover, low morale, and lower productivity.
That’s why companies should have fair and competitive remuneration packages based on market research and connected with corporate objectives.
Read: When is sales commission legally earned
Here are the eight main objectives of compensation management:
The salary package is critical in drawing skilled personnel to the business.
This guarantees that the business gets to choose from a bigger pool of candidates and also helps develop a favorable image for the firm in the employment market.
So how do you do that?
You should examine elements that attract outstanding personnel to offer a good wage and benefits package.
This includes providing:
Compensation management helps control payroll expenses by ensuring that remuneration is based on market norms and that employees are compensated based on their abilities and experience.
This may entail performing frequent market surveys and revising remuneration packages as needed.
Cost control measures help guarantee that the company is not overpaying or underpaying employees. Detecting underpayment is also necessary as correcting it on time is way of cost control instead of waiting till voluntary attrition.
While cost control is necessary, you also need to ensure that employees are fairly paid for their efforts.
This ensures that there’ no discrimination based on gender, color, or other personal traits. Doing so fosters a healthy work atmosphere and decreases the likelihood of legal complications.
You should also guarantee that its remuneration rules and procedures are open and non-discriminatory. That’s why you need to evaluate your pay processes and frequently resolve discrepancies.
Compliance with labor rules and regulations is vital for the company. And compensation management assures compliance with labor laws and regulations governing compensation and benefits.
This helps to avoid legal complications and protects the organization from any litigation.
It also helps ensure adherence to minimum wage rules, overtime restrictions, and other labor requirements concerning compensation and benefits.
Pay management may inspire employees by giving incentives, bonuses, and other benefits for outstanding performance. This can boost employee motivation, leading to higher productivity and better company results.
Additionally, you should explore other methods of motivating personnel like:
You can use compensation management to increase productivity by tying sales compensation to performance and providing incentives for meeting organizational objectives. Some parts of the compensation, such as variable pay, are linked to sales performance reviews.
This can assist in aligning employee behavior with business goals and boost productivity. You can also offer training and development programs to hone employee skills and knowledge.
Moreover, you should ensure that your sales team has access to the resources and technology needed to do their tasks efficiently.
Pay management offers benefits like health insurance, retirement programs, and other perks contributing to employee well-being. This can boost staff morale, leading to higher productivity and better business results.
You can also take measures to create a good work environment that appreciates employee feedback and fosters a work-life balance.
Retaining salespeople is just as crucial as recruiting them.
This saves businesses time and money on recruiting and training expenditures.
To keep workers, the organization should make them feel valued and respected. This involves offering frequent feedback, acknowledgment, and opportunity for progress.
The firm should also guarantee that sales employees are adequately rewarded and that their pay packages are evaluated and altered regularly.
Compensation management software is a form of human resources software that assists businesses in designing, implementing, and managing their sales compensation plans. It automates and streamlines operations such as data gathering, analysis, and reporting in compensation management.
Here are some of the important aspects of compensation management software:
Let’s look at the following compensation management software, its key features, and ratings to make an effective decision while choosing one.
ElevateHQ is a sales commission software for modern teams that offers solutions like sales ops, finance, and accounting.
Key Features
Pricing
Pricing starts at $25/user per month.
Customer Ratings
Paycom is a cloud-based HR and payroll automation software that helps businesses manage their salesforce with time and attendance management, application tracking, reporting, and other tools.
Key Features
Pricing
Contact Paycom's sales team for a customized quote.
Customer Ratings
UKG Pro Suite, formerly UltiPro, is a cloud-based human capital management (HCM) software that helps organizations streamline their HR and payroll processes.
Key Features
Pricing
Get in touch with their sales team for price quotes.
Customer Ratings
Salary.com is a cloud-based solution that manages employee pay plans and streamlines compensation processes – helping companies make informed decisions.
Customers like Salary.com because of its extensive pay data, analytical tools, customization possibilities, and customer service.
Key Features
Pricing
Contact their sales team to request a customized quote.
Customer Ratings
Compensation management focuses on attracting the right sales talent, maintaining legal compliance, and enhancing productivity – while ensuring that employees are fairly rewarded for their efforts.
To streamline compensation planning and management, use specialized compensation management tools like Paycom or UKG Pro to analyze important data and get valuable insights.