In Plain Terms: What Is A Compensation Management Software and How It Works
Most HR leaders already know that business growth is tied to employee performance. And one of the main factors that impact individual performance? Fair pay.
As a result, forward-thinking companies are prioritising their compensation and management strategies, to retain and motivate their top talent. And one of the best ways to do this is using compensation management software.
Here’s everything you need to know about compensation management tools — from their benefits and features, to how to choose the right one for your company. Ready to level up?
What is compensation management software?
Compensation management software combines employee data and budget planning into one central system. It’s designed to help companies create compensation packages that attract top talent while making the most of your budget.
The Benefits of Compensation Management Software
Choose the right compensation management platform and you’ll find a huge range of benefits. Some of our favourites include:
- Streamlining processes: By automating manual processes like collecting salary data and calculating pay bands, your HR team can focus their time on more strategic initiatives, like developing your compensation strategy or reinventing retention.
- Helps inform decision-making: Employees want to know the company they work for is making fair and transparent decisions around their pay. Using a tool like Figures means you can make informed, equitable decisions.
- Enhances employee satisfaction: When employees know they’re being paid fairly, they tend to feel more engaged and motivated, which in turn can boost performance. Sharing salary bands also helps them envision a clear career development path, which can help to improve retention.
- Improved security: Choosing software with automated compliance features keeps sensitive employee data safe and secure.
- Pay equity: Compensation management software makes meeting your pay equity goals easier, particularly important for the upcoming EU Pay Transparency Directive.
- Improves overall business performance: ICommitting to creating an equitable pay structure can help you meet your goals for business growth because employees tend to be more engaged, and perform better when they know they’re being paid fairly.
Key Features to Look for in Compensation Management Software
There are a lot of compensation management software options on the market, so figuring out which one will suit your company best can feel like a challenge.
We’ve rounded up the essential features to look out for:
- Market analysis: To accurately benchmark your salaries, look for software that uses a large, real-time dataset. Ideally, this should be filterable by industry, company size, location, and more.
- Easy to use: Software that’s easy to use and intuitive to navigate makes a big difference!
- Scalable: Look for software that can scale as your company grows. Ideally, it should allow compensation data to be exported for the creation of reports.
- Analytics: Data-based insights, analytics capabilities, and gap analysis tools will all help you make the most of your data, and highlight what needs to change.
- Employee reports: Creating reports to show exactly how salaries are calculated for compensation reviews helps boost transparency and show employees a clear path to career development.
- Secure: It’s essential that any software keeps employee data safe. Look for certifications like the SOC2 and ISO 27001, and that the software complies with the European Union General Data Protection Regulation (GDPR).
And of course, Figures includes all these features and more. As Europe’s leading compensation management platform, we’re here to help you make salary decisions, the easy way.
How to Choose the Right Compensation Management Software
You know you need compensation management software — but how do you choose the right one?
It’s important to choose one that’s tailored to your company’s needs. If you’re a startup located in Europe, there’s little point in using a platform based on data from large corporations in America, for example.
Here’s how we recommend finding the perfect partner:
1. Define your goals
The first step is to work out exactly what your goals and objectives are. These could be anything from ensuring pay equity to attracting top talent or boosting trust with your employees.
This step also helps you identify the features your compensation management software needs, for example, the ability to calculate pay and bonuses, create total compensation packages or generate reports.
2. Research vendors
Now you know what features and functionality you’re looking for, it’s time to research vendors and find one that can offer what you need.
Often, a free demo can help you work out which software is going to suit you best, but it’s also worth calling each platform’s sales teams to get a better idea of what they can do for you. At this point, make a note of how much the software costs.
Why should every HR manager & C&B leader care about compensation management software?
Companies that offer cutting-edge compensation can not only attract top talent — but retain them too. By offering an equitable compensation and management structure that's been developed transparently, you can show your employees how much you value their contribution.
This, in turn, helps to boost engagement, retention, and productivity. And once you’ve boosted those, it’s far easier to grow your business.
Take inspiration from these 7 next-level companies that are doing compensation and benefits the right way.
How others made it work
Ready to be inspired by what’s possible with the right compensation management software? Here’s how Figures customers made it work for them.
When HR and Finance software company Lucca experienced rapid growth, they needed a clear salary policy to help attract top talent and continue scaling the company and used a combination of Figures and the compensation management software ClearWage to create a salary grid using accurate benchmarking data.
This approach helped them develop a sound salary policy, something that was integral to their successful pitch for Series A funding, worth €65 million. Lucca carries out salary reviews every six months, and the transparent salary grid, using accurate data from Figures, means employees can always see where they stand — and where they’re going.
“Figures is a goldmine. Data is essential – we can’t rely on our intuition or opinions,” said Lucca’s HR Manager, Charles de Fréminville.
When Fabienne Mizrahi joined E-learning company Lawpilots as the Head of People and Culture, she identified several pay discrepancies across their teams. Once she uncovered this was due to the lack of salary bands or a clear compensation framework, she knew they needed a reliable compensation management platform.
After researching a number of solutions, Fabienne chose Figures, as it offered all the features the company needed to create a fair compensation framework. One feature the company particularly appreciated was the quality of data and how this could be filtered.
“We are now better equipped with really reliable information where we can also set different parameters in size, in this stage etc. to really fit it to our needs,” explained Fabienne.
Thanks to Figures, Lawpilots eliminated pay discrepancies for existing employees. They also used our reliable, real-time data to inform employee performance and salary reviews, in addition to helping inform salary negotiations for new employees.
Implementing Compensation Management Software: A Guide for HR Leaders
Ready to start using compensation management software at your company? Here’s our handy checklist to get started:
1. Get approval from leaders and finance
It’s time to get approval from your executive team and finance department. Use the benefits we’ve outlined above to help get the buy-in necessary for your request to be approved. Come prepared for this meeting, with details of your top five software choices, plus the features and cost of each.
2. Create a timeline
Consider the ideal amount of time needed to find and implement your chosen software. Then add the amount of time you’ll need to train users and inform employees about the changes.
3. Choose your compensation management software
Once you’ve chosen your software, work on creating a strong relationship with the vendor, attend training calls, and get to know the support team you’ll be working with throughout the launch and beyond.
4. Train managers and other users
Decide who will be using the software regularly, and make sure they’re provided with the guidance and training they need to make the most of the software.
5. Involve employees
At this point, it’s a good idea to involve employees and let them know how the software will be used to improve company-wide pay decisions. This will help get buy-in and ensure everyone knows why and how the software will be used.
It’s go time! At this point, it’s a good idea to create a document outlining how the software will be used to ensure pay equity.
Level up your compensation strategy
The right compensation management software can help level up your pay decisions, making it easier to retain top talent and grow your business at the same time.
Ready to try the most complete compensation platform in Europe? Book your free demo today.