Financial services institutions have unique challenges in planning and executing their HR compensation processes. With costs related to compensation totaling up to between 70 and 90 percent of their operating expenses, there is a need for a solution that is capable of managing their complex requirements.
Core HR talent suites don’t support compensation management at the level of sophistication required and have proven to be too restrictive to cater to financial institutions highly individualized and requisite compensation processes. As a result, many aspects of the processes are handled through expensive workarounds, manual procedures, or compromises.
Technology, however, does exist to fully automate all of a firm’s compensation processes, which can dramatically improve operational efficiency, lower costs, enable execution of business strategy, aid in attracting and retaining talent, and support regulatory compliance.
The digital transformation is already happening. Many of the world’s leading financial institutions have streamlined their compensation lifecycle with an automated total compensation solution, securely in the cloud.
Introducing the Compensation Cycle
How cloud-based technology helps:
1. Planning and Accruals—who will get paid what?
- Rapid simulation—run the actual compensation plan calculations within the model.
- The iterative accrual process—change a few assumptions and rerun the model, with a full audit history of the plan versions and related approvals.
2. Setup—going into the details of the system setup
- Set up the organizational structure allowing for multiple, flexible hierarchies within the system.
- A central system provides much greater control and security since you can determine user access at a very granular level, both in terms of data and tasks, based on the user profiles.
3. Recommendation Rounds—the operational part of the cycle
- Rather than a blizzard of emails with spreadsheet attachments, manager recommendations can be routed. automatically through an approval workflow with the appropriate levels of approval.
4. Reporting and Payroll—real-time reports, any time
- Run all of the reports needed to understand compensation spend, analyze pay fairness, assess compensation effectiveness, and provide the data required by all stakeholders.
5. Communication—generate and distribute
- Move away from email, spreadsheets, and paper printouts.
- Select the population and push a button.
Master Your Compensation Cycle
This cycle can repeat for different compensation types or plans with different calendars, such as Salary, Bonus, and Long Term Incentives. It often involves significant complexity related to organizational structure, differing local requirements, or within the plans themselves. In each step, most firms struggle with managing tasks in an efficient way.
Download our “using cloud-based technology to master your compensation cycle” white paper to find out how most complex financial services compensation cycle processes can be mastered and made vastly more efficient, accurate, and timely while lowering risks and providing the transparency and process controls required for regulatory compliance.