Skip to content

Can Your HCM Platform Handle Your Compensation Management?

If you recently implemented a Human Capital Management (HCM) suite, or are considering it, you may be wondering if it will be able to manage your compensation programs, in all their complexity. Will it handle your different incentive plans, variations across markets and geographies, global complexities, specialized calculations, exceptions, and your unique organizational structure and approval processes? Will it fully cover all related processes within the software to support governance, audit, and compliance requirements? Good questions!

A place to start is with this brief checklist, Evaluating Your HCM Platform for Compensation Management. It takes less than 5 minutes to complete—try it!

While the benefits of HR digital transformation and a cloud platform are compelling, many HCM suites are limited in their compensation management functionality, especially for large enterprises, and can benefit from being supplemented by a dedicated compensation solution.

When a company is implementing a core HCM system like Workday, SAP SuccessFactors, Oracle HCM, or Cornerstone, the Compensation and Benefits team needs to understand whether the compensation module of the suite will meet their needs. If not, will a dedicated compensation solution be required to implement the team’s strategies efficiently and without compromise? Rewards are too important to company performance to be an afterthought.

What should you look for?

Whether you need compensation management software, and which type, depends on factors such as your company size, geographical scope, organization structure, and the types and complexity of compensation programs that you need to deploy. Here are a few of the areas that are worth investigating to evaluate whether your HR software can meet your needs:

Organizational structure. Complex or frequently changing org structures may be beyond the capabilities of an HCM software suite to handle.

Geography. Regulations, pay structures, currencies, and other factors like expats complicate the picture for global companies.

Compensation basics. Benchmarking, data management, process management, and empowering managers with data may be needed for efficient pay processes.

Variable incentive complexities. In a large enterprise, sophisticated bonus plan structures often are required in order to achieve specific goals. 

Modeling. Accurate simulation and modeling can result in cost-optimized compensation and significant savings. 

Size. The number of users, data volumes, and calculation requirements are the key factors here that affect performance.

Long-term incentives. For your compensation platform to be inclusive of all rewards, you may need the ability to handle long-term and deferred compensation.

Sales compensation. Consider the value of having sales incentive compensation on the same platform where you can easily get a view of total rewards.

This is not an exhaustive list, but these are a few key areas that could help you decide if you should be looking at a dedicated compensation platform rather than trying to make it work with your general HCM software.

Get it right the first time

When digitizing your compensation management, it pays to take the time to do a thorough evaluation of your needs and an accurate assessment of the capabilities of your HCM software. Without that analysis upfront, you may find yourself trying to force-fit your compensation plans into a system that does not have the flexibility to support them, leading to compromises, workarounds, inefficiencies, and compliance challenges.

A convenient online checklist

For an aid to help determine whether your HCM software is capable of meeting your needs for managing total rewards, try our free online checklist,  Evaluating Your HCM Platform for Compensation Management. It takes less than 5 minutes to complete, and it just may save you a lot of time and money!

HCM Compensation Management assessment


Blog feed

Complying With the SEC Pay vs. Performance Disclosure Rules

Learn from the Best: 2024 Compensation and Performance Management Top Events

5 Key Compensation Trends for 2024

Closing Pay Gaps: A Data-Driven Structured Approach

5 Steps to Making HR More Strategic, Part II: Measuring Success and Taking Action