For years, Human Resources as a profession has been running to “catch-up” with other professions in the adaptation and use of technologies.
Over the past few years, new technologies have emerged to help companies manage multiple aspects of their “human resources” and compensation management is one of the chief beneficiaries of them.
Previous versions of compensation management software were centered around goal management and alignment. These technologies have progressed to include a valuable suite of data analysis features. In expert hands, this data can be used to create several benefits for enterprise organizations.
As the recent economic times demonstrate, there can be substantial fluctuations in revenue over time. In times of decreasing revenue, it becomes crucial to control costs in order to maintain profitability. With the cost of the workforce being a large percentage of most companies’ costs, CFOs turn to the value of compensation analytics to make strategic decisions on how to manage the workforce.
Good analytics also help use make better decisions and reduce the temptation of “gut instinct” for decision-making. Good and accurate compensation information across the enterprise allows managers and Human Resources to make better and more equitable decisions.
The topic of pay fairness has received a great deal of attention during the current pandemic. This has become particularly problematic as companies have had an increasingly difficult time filling job openings. We need to be able to measure pay equity in order to conduct accurate pay fairness assessments that includes base salary, bonus structures, job classes, and performance values reside inside compensation applications.
Statistical procedures in combination with compensation analytics reveal the true compensation picture that can be communicated both internally and externally, and satisfy compliance requirements. This analysis, including modern predictive analytics, can help to ensure that employees are being compensated fairly and without bias.
In addition to pay equity, transparency of pay has become an important conversation both locally and at the national level. If one of the objectives of our compensation system is to align organizational goals with employee performance, transparent decisions allow employees to have a better understanding of what the company is trying to achieve.
Analytics are the new “mantra” in Human Resources. Using various analytical tools enables us to do a better job helping the company utilize its’ resources more effectively and become more competitive in the marketplace.
People analytics experts are finding new ways to use data to make better decisions within the Human Resources function, drive value to the bottom line, and increase employee satisfaction.
One of these areas is employee compensation. For many companies, the largest expense line in the financial reports is often the cost of workforce. Because of this, compensation analytics has become a strong focus for executives that need to keep costs in line with revenue to maintain a healthy, profitable company.