Effective compensation technology and software systems are difficult to select and a bit tedious to implement. Human resources and the compensation function are no different from other critical aspects of an organization in that great enhancements have been made or are being made with technology in their operational and management processes. Specialized compensation technology and software now exists to allow more efficient processes for most major compensation processes. This is particularly true in the compensation function where as few as ten years ago only a few PC and LAN-based software packages existed. Today, there are hundreds of special purpose and full-scale program management systems from which to choose.

As we assist clients with their consulting and co-sourcing needs, we tend to see misuse of a system’s intended design, unintended negative effects of implementation choices and/or major functional holes in the system selected and implemented. This is not a statement to lay blame or give credit to any particular provider – even our own products and services can’t meet all clients’ needs completely. Rather, it is a simple statement of “procure with caution.” With that in mind, our experience has taught us several lessons that should help others with their effective compensation technology and software selection and usage.

Lesson 1: Think Through Your Immediate and Potential Needs

Even if you are only looking for the most task-specific types of system needs, such as the hosting of your survey data online or providing a market pricing mechanism, it is important to take a holistic approach when selecting potential vendors. A compensation program is a system with transactions that may purposefully or accidentally effect future or previous transactions. If for example you use a market-based approach to job grading, then it would be helpful to ask the vendor product to allow you to not only market price a job, but also recommend a grade assignment. Effective compensation technology does not mean the system has to do it all.

Value Thinking

We have seen many situations where our clients have begun to search for automated tools for one specific purpose, but be “wowed” by the possibilities of some systems available in the marketplace. Or, we see situations where clients begin to search for tools with basic salary administration, only to find that there is great potential in also automating functions like sales compensation, variable pay administration, stock administration, etc.  While organizations may be confined because of resource and budget limitations, it is good to think through opportunities and needs broadly, and to understand the potential that exists for your organization with new technology.  As we have seen with several implementations where self-service and workflow tools are provided to managers and employees, the managers and employees may come back to you wanting more automation after seeing the power of more automation to the Human Resources function. It is good to be one step ahead of your customers in knowing the possibilities and the organization’s ability to support more technology before it is requested by your customers! The big question will be the cost-benefit of this additional functionality – how much more investment would it require to get that functionality and what benefits would your organization receive from it.

This may give the appearance of functionality or scope creep to some more seasoned in software and technology – if you give a mouse a cookie he’ll want a glass of milk – but the technology should fit your budget and match your processes to the greatest extent possible. It certainly never hurts to ask and is much better than wishing you had implemented something slightly more robust.

Lesson 2: Even Automated Technology Doesn’t Run On Its Own

During and after implementation of a new software system, the job duties and responsibilities, as well as the qualifications, of the HR team will begin to change. The challenges then arise of the competencies of the existing HR team and if and how the team will need to change to fit the needs that flow with process changes effective compensation technology.

We suggest that when any new technology in HR is implemented, HR leadership assesses what specific roles will change with new or revised process. To the extent additional training or competency development is required, this should be included as part of the implementation. There may be even greater implications in terms of real job or role changes – some existing jobs may become obsolete while other new jobs may be created. The success of the system implementation will be very dependent on how well people and process changes are understood and planned for along with the technical implementation activities.

In-House or Out-House

HR team re-tooling assumes that the organization will continue to administer all tasks in-house. A growing trend in the market and in our own client engagements is that of out-sourcing or co-sourcing. Co-sourcing is becoming more common and creative within the HR and compensation function, by providing an organization the ability to move select components of processes and technology to a service provider, while still maintain control of key components internally. One of the major benefits of these approaches is that, while HR re-tooling may still be needed, specific and hard-to-train technical skills can be found through a partner rather than hired into the organization. Many times, the move to a more co-sourced or outsourced approach to the compensation function will move administrative tasks outside the organization, allowing the HR team to focus and develop its competencies more around more strategic work and partnership with customers.

Lesson 3: Microsoft Excel is Technology After All

It never ceases to amaze us what can be done with spreadsheets by those fully competent in their design and macro development. We find that for our smaller clients, well-designed spreadsheets or Microsoft Access databases or a combination of the two can cost-effectively reduce administrative time and increase service delivery to the organization.

The major drawback with continuing to rely on Excel and Access as tools is the missed opportunity for workflow and process re-design that is inherent in larger off-the-shelf systems. Developing technology solutions with tools like this in-house usually means mirroring processes that are currently in use, regardless of their effectiveness. Larger systems however force organizations to review their processes during implementation and may, unless an investment in custom development is made, change their processes to conform to those in the software.

About RSC Advisory Group, LLC

RSC Advisory Group, LLC is a management advisory and consulting firm specializing in pay and performance. The RSC team is comprised of long-time senior advisors and technical specialists who work with clients across the United States. We employ a client-centric approach to help clients in several compensation areas:

  • Board & Executive Total Compensation
  • Employee Pay & Total Rewards
  • Sales Compensation
  • Global Remuneration
  • Compensation Surveys & Research

Contact us today to see how we can help you and your organization.

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