Ivy Jan 09, 2014 No Comments
Does the current compensation program need adjustment?
How is the incentive management enabling the company to deliver on financial goals?
Where to place merit bonus money to discover employees that are underpaid?
Is sales incentive compensation driving sales performance capability?
As organisations expand and employee strength increases, there arises the need for a comprehensive review of compensation packages for benchmarking and action plans. Today, salary payouts increasingly relate to skill sets, experience and performance. To ensure that compensation and incentives are suited to performance levels, periodical reviews and analytics have become unavoidable, as leadership, talent and work culture, drive performance metrics. Devising unique pay-for-performance and compensation strategies and effective talent management metrics set forth dynamic work cultures and high workforce quality, key factors of a high-performance organisation (HPO).
Incentive management is also the fuel that drives sales performance and revenue growth. In companies, where sales performance management capabilities are allowed to erode, ‘capability gaps’ emerge, affecting the various KPIs of the company. This is where the tool of compensation analytics steps in, bringing strategic advantage to a company.
As part of Business intelligence (BI), compensation analytics brings value to an organisation. Besides attracting and retaining high performing employees, an effectively designed compensation plan has the ultimate impact on the quarterly reports and financial metrics that investors care about.
So what is compensation analytics?
The science of scrutinising compensation data with a view to forecast, model and detect patterns; with the ultimate goal of designing methods for optimising the ratio between performance and compensation and making suggestions thereon.
Key roles
# review health of current pay plans to analyse their cost-effectiveness
# optimize salary benchmarking for an effective ROI (Return on Investment)
# support compensation budgeting
# analyse compensation programmes to ensure goals are met in keeping with company philosophy
# drive performance for a competitive edge in business
# discover any irregularities like internal pay inequity or compensation levels, that may put the organisation at risks of legal compliance
# identify whether incentive management is aligned to motivate employee performance
As users cite retention and efficiency benefits of compensation analytics, vendors have begun offering software that offer real-time cloud-based compensation data and services, that set apart an organisation as a sought-after employer in the job market. This additionally ensures that a company keeps the cream of the crop employees, especially during times of economic shift or staff downsizing.
Compensation analytics, when leveraged, helps produce a stronger organisation. It is simply a smart way of doing business.
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