What is one of the major concerns with how firms administer compensation programs today?
As a compensation professional with over 20 years of experience, it’s amazing to me how many firms are still administering their compensation programs, possibly their largest fixed cost, with spreadsheets. The amount of potential exposure is actually frightening.
Every time my team and I would send out these very complex spreadsheets, I crossed my fingers hoping everything would be correct in terms of the data, calculations, populations, etc. Inevitably, there would be some type of error. We knew that automating this process would streamline it allowing for faster turnaround and greater accuracy.
If they’re not broken, why move away from spreadsheets?
Multiple studies have shown that nearly nine out of 10, or nearly 90% of spreadsheets have errors. For anyone in Compensation or HR who has been involved in compensation administration, it is inevitable that they have encountered major issues and errors using them. Hopefully, the errors are identified before decisions are made and payments are issued, but that is not always the case.
Here are common problems with using spreadsheets:
- input error from flawed data entry or incorrect referencing of data
- formula errors resulting in incorrect calculations
- sorting errors and mishaps occurring from the incorrect importing and exporting data
- version control errors when too many spreadsheets are in play
- security and access errors when employees may not intentionally have access to data that they should not see
And this does not even take into account the excessive time and opportunity costs associated with managing the spreadsheet administration process.
Is there a better solution?
Absolutely. Companies can leverage new technology by using secure, web-based, centralized compensation software to manage their compensation programs.
With less time spent on administration, more focus can be devoted to strategic and value-added analyses leading to greater organizational effectiveness.
When you move away from spreadsheet calculations, you’ll get a reduction in errors, greater security, less risk, audit trails and savings in both time and money. And that’s nothing to be afraid of.
Email me at firstname.lastname@example.org if you’d like to discuss how you manage your compensation.