Compensation Audit: Checking Where You’re At
Over the course of a few years, things can dramatically change for employees. They could be in new positions, new departments can be created, and other functions of the business might change or even be removed.
Does your compensation system reflect those changes?
Information is critical to a company’s success, especially when leaders rely on that information to make decisions. As we see a push to more data-driven decision-making, companies need to perform more audits to ensure that their systems have clean data. Just a few errors could cost millions of dollars.
Whether titles no longer relate to the work employees do or salaries need some calibration, it’s time to take stock of where your company is at with its compensation information.
First, get employee information up-to-date. Having a SaaS system for employee information is a great way to make sure employees keep their information up-to-date. This can be through your HRIS or an employee portal. Send a reminder to employees to update their information, with managers checking titles and workgroup information of their employees.
Second, check salaries. Even if all of your salaries aren’t eligible for calibration against market rates, you can start with key positions. You then need to make a plan to calibrate all other positions, whether by department, type, or location. Ideally, you perform this as new positions are created, as new employees are hired, and when it’s time for annual rewards.
Third, run reports when you can. Many systems have standard reports, but make sure you’re identifying the information you really need to make good decisions. For example, you might want to compare performance data against compensation information, so that would require further analytics. These reports, though, help give context to compensation information in your company. Context helps you know why something might be happening or what other factors could be modified to get the desired results.
Get into the habit of conducting these audits early so your information is clean and ready to be used to make decisions. You’ll better inform your executives and help them understand what it takes to plan for the future.