Compensation planning is a process that can get tricky very quickly depending on the variables at play and the methods used. Each complication is sort of like a snowflake; it seems harmless at first, but once they’ve all accumulated on your driveway and you have to shovel them it’s a different story altogether. If your compensation planning process isn’t properly optimized, it can turn into weeks of headache, heartache, and lost productivity.
If you’re having difficulty with compensation planning, your first step should be finding where the issues lie. What is tripping you up and making the compensation process so difficult? For this, start with the accumulation of data. Do you have managers giving you data on your direct reports? Often times waiting on them to get the necessary information to you can be agonizing. If this is an issue, try to set up a rigid schedule for them to adhere to, so you can get the information you need on time.
How about the complexity of the data you’re managing? Depending on how large or complex your organization is, this is one of the areas in which major issues can come up. That goes double if your compensation mix includes compa-ratios, stock incentives, prorating, merit increases, and so on. The keys to easing this aspect of compensation planning are to organize and automate.
Many compensation professionals do their compensation planning with spreadsheets. Adding data into the master compensation spreadsheet from various other sources can be incredibly time-consuming, especially if you’re constantly hunting for the right information. Store all of your information in a rigidly organized manner so that you know exactly where it is when you need it. And double (or triple) check your work! A small error somewhere in the data can lead to a massive scavenger hunt for even a misplaced number or decimal point.
An even better strategy is to get technology to work for you. Automating the compensation planning process can cut down on user errors and speed up the process immensely. This might mean making heavy use of excel macros if you’ve got the time and expertise to implement them properly. Another method is investing in a compensation planning tool which can eliminate the need for spreadsheets altogether. It all depends on what makes the most sense for your organization, and how mired the compensation process has become.
Compensation planning can be difficult, but it doesn’t necessarily need to be. By planning ahead, utilizing rigid organization and automation, you can make the process considerably easier. It all starts with looking at your existing process, finding what works and what doesn’t, and working to improve from there.