9 Compensation Pains – and How To Fix Them

By Published On: February 13, 2024

Managing employee compensation is a challenge, with all-too-common hassles and pain points for anyone in HR and management. But you can overcome them with a few easy tips.

  1. Complex compensation structures
    Compensation packages can be complicated. Managing base pay, bonuses, equity, benefits and more—and understanding their tax implications and legal requirements—can be overwhelming.
    CWS tip: Make sure your compensation planning solution can include every type of compensation for a holistic view.
  1. Meeting budget constraints
    Balancing fair, competitive compensation with your organization’s budget can be like walking a tightrope. For most companies, the pressure to manage costs while trying to retain and attract talent is a constant struggle.
    CWS tip: A good compensation planning solution will allow you to set budgets by any demographic (e.g. country, department or cost center) and balance that with performance, compa-ratio or other guidance. This way, you’ll have a clear view of alignment between the budget and increase guidance.
  1. Keeping up with market rates
    Staying informed about current market rates for different roles and regional adjustments is essential for competitive compensation. This requires researching benchmarking and survey data, which can eat up a lot of time.
    CWS tip: Look for a benchmarking solution that has all the data you require for specific jobs and locations- you may need to use multiple sources. Make sure the necessary data can be stored and used in your compensation planning system for calculating things like compa-ratio or range .
  1. Pay for performance calculations
    Effectively aligning compensation with performance, including setting up and managing performance-based pay structures, is never easy. It requires objective performance measurement and clear communication.
    CWS tip: Make sure managers are well trained in order to remove subjectivity from their performance evaluations. Then, with accurate performance and benchmark salary data, you can build a guidance matrix to ensure proper compensation that helps retain your highest performers. 
  1. Assuring transparency and pay equity
    Maintaining compensation transparency and ensuring that employees are paid fairly and equitably is critical in this climate. This includes addressing pay disparities by gender or ethnicity and enhancing employees’ perceptions of your fair pay practices.
    CWS tip: Leverage your benchmark data to establish appropriate salary and incentive ranges, then use a compensation solution to analyze and identify gaps within your organization. Once you have completed an increase cycle to correct any discrepancies, provide employees with total compensation statements that demonstrate where they are within the benchmarks.
  1. Employee communication and personalization
    Effectively communicating compensation decisions and the rationale behind pay structures is crucial for employee satisfaction and retention. Employees increasingly expect personalized compensation packages that cater to their unique needs and preferences.
    CWS tip: Provide a detailed total rewards or total compensation statement to every employee. Be sure to include non-monetary benefits such as paid time off, flexible work schedules and work from home to give them a full picture of their value to you.
  1. Data management and system integration
    Collecting, managing and analyzing compensation data for informed decisions requires integration across HR systems. This leads many companies to choose well-known, all-in-one solutions that may not truly fit their needs.
    CWS tip: Carefully weigh whether an all-in-one solution that isn’t necessarily purpose-built for HR or your organization is the best fit for you. In an effort to be everything to everyone, these platforms can be prone to gaps, manual processes or incompatibility with your data sources.
  1. Global rules and requirements
    If your company is multinational, you know that managing compensation across different countries involves challenges regarding currencies, legal obligations and cultural expectations around pay and benefits.
    CWS tip: The best compensation management solutions will allow you to manage individual increases in the local currency and choose a preferred currency for normalizing summary data and reports. You will also be able to set up unlimited business rules to meet the needs of each locale. 
  1. Retention and motivation
    Designing compensation strategies that help you retain top talent and motivate employees while aligning with business goals is the primary goal of any compensation program.
    CWS tip: Addressing the challenges already discussed here will put you well on your way toward showing employees how important they are to your organization. Making people aware of the full value of your investment in them, as well as the processes you employ to ensure fairness, will pay big dividends in long-term retention and a highly motivated staff.

Even if you aren’t experiencing all of these pain points, addressing the issues that cause you the greatest headaches will help reduce friction for your HR team and managers. And, of course, it will contribute to greater satisfaction for your employees.

Consider leveraging purpose-built compensation solutions such as the TalentComp salary administration platform, DataEnvoy for off-cycle salary adjustments and CareerMap role planning. Learn more about these and other HR-specific solutions at CWS Software.

Recent Posts