A total rewards system is essential for effective governance, risk management, and compliance. Arguably, you cannot ensure full compliance without an integrated and capable total rewards management system.
Today you must comply with rules around gender pay and diversity equity, data privacy (General Data Protection Regulations), transparency and compliance reporting (Sarbanes Oxley, CRD IV), revenue recognition rules (ASC 606, IFRS 15), and other regulatory scrutiny and auditing. While those rules will undoubtedly shift and new regulations will arise, the key to answering all of these is access to real-time compensation data with in-system simulations, which enables you to manage regulatory compensation requirements for covered employees throughout the year and to mitigate any legal or reputational risk by being proactive on pay equity and other compensation-related matters.
To maintain compliance now and in the future, look for these features in a total rewards management solution:
- Flexible, granular security model. A flexible security model gives Compensation Analysts granular control over who sees what aspects of the system and data, helping to protect data security and privacy, while empowering those with a need to know.
- Traceable, auditable data flow. Just about any compensation process requires collaboration and iteration. Therefore, a total rewards solution should include workflow capabilities to drive the process steps and manage rounds of review and approval. The review and approval process should be traceable via an audit trail so that you have evidence of how you arrived at the final approved numbers. Audit reports should be easily accessible for periodic access and configuration change reviews.
- Ongoing management of covered employees. Include a separate process to define and manage covered employees, like Material Risk Takers. This process can be open year-round, then integrated with the final round of the compensation cycle, so that this information can be kept up to date.
- Real-time simulation. To ensure sufficient accruals, the system should provide the ability to run real-time accrual simulations on live rounds without having to replicate the entire population and rules offline.
- Easy adaptability. A configurable rules engine, one that’s easy enough for users to adjust themselves, allows HR and Sales administrators to adjust business logic for eligibility, bonus calculations, recommendations, or even the stock splitter, to address changing business strategies or regulatory requirements.
- Single source of truth. For control and auditability, you need a single, centralized data model that is readily accessible to employees, managers, and comp analysts for reporting and analysis in real-time. Having one unified total rewards platform also reduces the number of integration points required, which lowers operational risk.
Compliance with Advantages
By replacing key processes performed in Excel or MS Access databases with a more controlled and auditable solution required for compliance, you’ll likely reap other benefits as well. Firstly, as with automating any manual system, you’ll see a drop in errors and eliminate version control problems. But beyond that, you may discover cost savings from overpayments and errors, faster and more accurate management of bonus and merit pools, and fewer errors in financial accruals for pools.
For more must haves in your digital HR transformation, download our Integrating Total Rewards Management eGuide.