Agility is the key to survival in business, now more than ever. HR business partners have a key role to play in enabling the business to be able to execute adaptive strategies as market conditions change. One important way they can do this is through agile compensation management.
Compensation is not only a large cost, but a major lever that can be used to direct the behavior of your workforce. In times of change, it is critical to be able to implement new strategies. So how do you know if your compensation systems are up to the task?
When the pandemic was in full swing, we published an eGuide on Agile HR to identify the must-have capabilities to ensure you are well equipped to manage change. Agility is still important today, so it's worth recapping a few of the key "Agile HR" strategies:
Flexibility to model, plan and execute new strategies
Intelligent planning requires that you understand the impact of any proposed changes. In a large corporation, a small change to a comp plan or to the organization structure can result in a big change to payouts and distribution and can affect not only costs, but employee motivation, pay equity, and ability to achieve corporate goals. You need to be able to create models and run accurate what-if simulations.
Centralized compensation management software can provide the needed data and analytics. Executives will need hard numbers to make the best decisions about which path to follow. You need the capability both to plan and then quickly execute a change in strategy.
Data to optimize compensation spending
Whatever the reason for the change, during periods of change it is important to watch costs closely. In an earlier blog post we looked at how you can optimize compensation spending when times are tight. In short, this requires having the right data in a centralized place where you can analyze it to determine compensation effectiveness, benchmark it to the market, and create accurate cost models. Once you can clearly see your compensation spending and understand its ROI, you can know how to optimize it.
Ability to quickly realign and motivate sales teams
When markets or events require the sales teams to pivot, your systems need to keep up. Territory and quota management can be complex, but to adapt effectively to change, you need to be able to re-allocate quota on the fly and adapt comp plans to reflect the current realities, to provide proper motivation and direction to the sales force. Again, this requires the ability to quickly model and evaluate compensation plans to see the impact on costs and performance.
These are among the capabilities you need to quickly adapt to change and put your company on a path to survive and thrive. Change can happen for many reasons, but one thing is certain: if you don’t have the right compensation management systems, you limit your options for response—or risk chaos if you try to implement policies that you can’t execute with the systems you have.
Our Compensation & Hiring Survival Kit provides survey data, hiring tips, and other resources to help you navigate today's changing workforce and adopt the right compensation strategies to compete for talent.