TM - November 2007 - (Page 36)

recruitment & retention assessment & evaluation compensation & benefits performance management learning & development succession planning COMPENSATION MANAGEMENT IN THE TECHNOLOGY AGE Daniel Margolis Compensation management has the potential to be a massive — and massively tedious — process. In a large company, managing compensation might involve an untold number of performance evaluation forms and various modes of compensation. Then, you add syncing all that to payroll and researching market conditions, and you have what could be a full-time job. But, as with almost anything else, technology can dramatically simplify this process. Scott Ewart is senior director of human capital management (HCM) product strategy for Oracle, a software developer. Two years ago, Oracle acquired PeopleSoft, which significantly enhanced its compensation management product suite. Oracle uses its own products internally for everything it does, Ewart said. “It allows you to create a compensation plan that meets corporate objectives and push that plan out to the workforce to ensure that everybody’s driving toward the common compensation business objective,” he said. “You can do allocations for bonuses, stocks and salary increases. It’s a tabular format, so you can look at your employees’ past information, at their performance and how they were rated in an appraisal process. You can look at grades and where they sit in the rankings of the grades and make decisions as you’re doing those allocations. The decision support is right there.” Managing compensation can prove particularly challenging when doing so on a global level, and using technology can help. “If I have a team of people that are not only in the U.S. but are in the U.K. and in India, I can easily look across different groups of people across different currencies,” Ewart said. “I can pivot around my information, and make sure that I’m allocating equally, even though I’m looking at multiple countries. It gives me the ability to look at the whole picture and then act locally.” All this convenience doesn’t necessarily ensure compensation management is made fairer, but with any luck, technology will assist a talent manager in meeting that goal. “The technology itself doesn’t make it fair — it’s still up to the people doing the allocations and making those decisions, but it gives you all the tools that you need to do that,” Ewart said. Automation also can ease the process of tying learning to compensation. “Say you need to be certified before you get the bonus for your role,” Ewart said. “You can have a learning alert when that has happened, so that we can go ahead and trigger the bonus to take place.” Another potential benefit of computerizing compensation management is environmental — the process can become largely paperless. For some companies, however, this might be challenging to accept. Ewart said some companies find it difficult to divorce themselves from their paper files, feeling lost without them. “It is a tough transition for some companies to go through, but you can certainly turn it into a paperless process because your compensation plans are entered and the information is captured, it’s rolled out to your teams and those budgets are allocated,” Ewart said. “From there, the allocations are pushed into payroll or out to your stock administrator, reports are run and the appraisals are all done online. The information or the result from the appraisal is available to you without having any paper involved.” more complex — there is more focus on creating and delivering HR strategies and services that drive desired business results. Today’s HR and talent management professionals are required to provide systems to support the design of work positions, recruiting, rewards, recognition and strategic pay in addition to career and succession planning and employee performance and development systems. Meanwhile, HR department head counts have been reduced, requiring HR organizations to manage more costeffectively and provide purposeful guidance with fewer human resources than ever. Additionally, organizations need to re-evaluate how they approach compensation management because of heightened global competition. Challenged by rapidly shifting environmental change, companies have begun to realize simple merit pay plans alone do not provide adequate rewards for highly soughtafter top performers and are ineffective in proactively motivating desirable performance. Before advances in compensation technology facilitated greater visibility and collaboration, organizations tended to rely on traditional salaryincrease methodologies (such as cost-of-living salary increases or a standard progression of rate increases within a pay range for a particular job) to calculate basic rates of pay and salary ranges and determine how to move individuals from one pay grade to the next. This model ties salary to the length of service versus actual performance. With compensation technology in place, organizations can accommodate variances in pay plans. As more organizations recognize the positive business effects of performance-based pay, the need for technology to manage and accommodate differences in pay plans and 36 talent management magazine www.TalentMgt.com http://www.TalentMgt.com

Table of Contents Feed for the Digital Edition of TM - November 2007

Talent Management - November 2007 Editor's Letter Contents Letters to the Editor Human Performance Leading Edge Learning Connections Viewpoint Finding Candidates with the Right Fit Turning HR Data Into Business Intelligence Compensation Technology: Drive Higher Performance, Gain Competitive Advantage The Art and Science of Influence Training the Ethical Workforce Making the Best Managers Application: Pre-Hire Testing Drives Down Employee Turnover at Advnace Auto Parts Dashboard: The Role of Learning Business Process Outsourcing Insight: Nationwide Insurance: On Employees' Side Advertiser's Index Editorial Resources Full Potential

TM - November 2007

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