Last time we looked at the core value of solid compensation reporting: controlling costs, helping managers make decisions, helping employees understand their pay, and overall increasing the efficiency of the compensation cycle. But beyond these core benefits, the right analytical tools can have tremendous value for the organization, strategically, financially, and operationally.
Meeting diversity, equity, inclusion, and belonging goals
There is more to establishing a culture of DEIB than equal pay, but compensation is certainly an important part – putting your money where your mouth is. Pay equity analysis can flag pay gaps that may create the risk of attrition or even lawsuits. However, this requires more than just comparing women’s pay to men’s pay.
To determine whether you have bias in your pay practices, unconscious or otherwise, you need to analyze your data to establish peer groups not only according to demographics like gender or race but to compare peers with similar attributes — education, training, skill sets, tenure, performance ratings, etc.
That’s a lot of data crunching but that’s what computers—especially those utilizing machine learning—are designed to do. The payoff can be great if you become that company with a stellar Glassdoor rating, low turnover, a loyal workforce, and a strong employer brand.
As Tanya Jansen, beqom’s CMO pointed out in a recent webinar on The Secret to Transforming Diversity through Performance and Pay, the longer you wait to close pay gaps, the more expensive it becomes. The cost of losing and replacing an employee you have trained is high, and a negative reputation can take years to repair.
Technology tip - Ensure fair pay: There is power in pulling together HR, performance, and compensation data to enable equal pay analysis. Predictive analytics can find the root cause of pay bias and prevent it from happening in the future, as well as identify attrition risks.
Last but not least: finance, audit, and compliance
Reporting is not just about columns of numbers to help understand pay. It is about transparency into the whole compensation process, allowing visibility into compensation plans, approval processes, and pay distribution. It gives clarity to budgets, forecasts, and accruals. It shows the results of simulations and models. And it provides the audit trails and analysis needed by auditors and regulators to ensure data integrity, accountability, and legal compliance.
Regulations change over time, but if you have a controlled system you will be able to produce whatever information the authorities require.
Technology tip - Provide transparency and compliance: Ensure you are able to track your compensation planning and allocation processes and provide an audit trail of changes and approvals, as well as other compensation-related reports required in the legal jurisdictions in which you operate.
Compensation technology can be game-changing
The right compensation technology can provide the reporting and analysis you need, as well as ease your compensation lifecycle. Digitizing your compensation management can dramatically improve operational efficiency, lower costs, enable execution of business strategy, aid in attracting and retaining talent, and support audits and regulatory compliance.
Use our free online Rewards Maturity Assessment tool today to evaluate key elements of your compensation management capabilities and see where you might benefit from a dedicated compensation management solution.