Modern HR in the Cloud Blog

Compensation Coming Out of Its Cave

August 4, 2014 By: Chad Atwell

One of the peculiarities I've noticed through my own career in Compensation and of others in the profession is how easily we can become isolated in organizations. Compensation professionals can be a fairly reclusive bunch, but there are often very good reasons for why they might keep to themselves.

  • They are typically privy to a great deal of confidential data, including pay information for the highest ranks in the organization and behind-the-scenes negotiations.
  • They can easily be portrayed as the ?bad guy,? because they often say ?no? or limit what line managers can give their employees.
  • They operate in a world of numbers and analysis, very different than most of their HR colleagues. They may actually interact more often with their contacts in Finance.

This trait of isolation also stretches into compensation technology. Given the third point above, it's not uncommon in most organizations to find a compensation analyst or consultant with an unusually high proficiency in technology who has created one or more homegrown, highly customized compensation systems. In the absence of affordable or satisfactory solutions from vendors, they take it upon themselves to create tools needed to solve a problem or make their life a little easier. Most of these tools are built to help analyze market data, build compensation models or send out those wonderful worksheets used around the world by managers to enter data during a pay review cycle.

Initially, the compensation professional may receive a lot of praise for their inventiveness and commitment to solving a particular problem for the organization. Unfortunately, I often see these systems come back to haunt its creator. Like Dr. Frankenstein, it's not long before they start to see how difficult it is to maintain and defend their creation. Soon there are villagers at the door with torches and pitchforks who are concerned about security, upset over data errors or needing more real-time updates.

I have to admit I suspected compensation teams would be the absolute last in HR to migrate to the cloud because of concerns over data security and losing control of their homegrown systems. Fortunately, the new generation of HCM cloud applications provides more flexibility to meet the complex requirements of compensation professionals and gives them access to every necessary configuration option. As a result, I'm happy to report I'm seeing a tremendous number of opportunities where compensation is leading the charge to update their technology platform.

Even more, I'm seeing these once secluded compensation teams find new ways to link talent processes using the cloud. While the tie between performance ratings and pay decisions has been well established, more companies than ever are looking to bring in organizational and worker-level goal attainment information to calculate incentives. Commitments made in an employment offer (i.e., a one-time guaranteed bonus) can be stored and passed seamlessly to a manager as a reminder during the next pay review cycle. Workforce modeling can incorporate market data and provide a comprehensive view of how compensation and benefits costs will grow over time.

Given the flexible and integrated nature of HCM cloud applications and the tech-friendly traits of many compensation specialists, I look forward to seeing this sometimes-solitary profession at the center of building the comprehensive talent strategies of tomorrow's leading employers.

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