Four Reporting and Analytics Trends That Impact Your Pay Practices

by Stephan Duncan - July 12, 2019
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Reports, analyses, and data visualizations are all important tools that can help you read, understand, interpret, and utilize data to make important pay decisions. The right reporting and analytics tools will allow you to identify pain points and outliers in your pay structures, analyze the impact of the changes you make, and help you communicate with employees more effectively about compensation.
Below are four trends we're tracking that are having an outsized effect on data collection, reporting, and analytics in the compensation function.

In Compensation, Data is King

In a data-driven field like compensation, you would think that data would play a significant role in determining every company’s pay practices. Yet only 46% of organizations use data analytics to manage and make vital decisions about their compensation programs, according to Salary.com’s recent Pay Practices and Compensation Strategy survey. Compensation professionals who responded to our survey shared their desire to use HR technologies to leverage data and turn it into meaningful analytics, but the survey also demonstrated that they've yet to take steps to make this a reality. In other words, while data is king in compensation, data analysis is just emerging.

Disparate Systems Are the Norm

When properly reported and analyzed, the wealth of data that HR and compensation professionals have access to can lead to critical insights into how effective your pay practices are at attracting and retaining top talent. Data can help you make critical pay decisions, effectively manage compensation budgets, and even help you articulate to employees how their compensation was determined. Yet compensation professionals are continually challenged by disparate systems, decentralized data, and siloed information.

As HR processes become more complex, organizations often diversify the types of technology they use to manage these processes - leading you to have one system of record for recruiting, one system of record for payroll and HR management, another for compensation, and on and on. The average company now has eight separate HR systems in place – and that number is projected to rise over the next twelve months, according to the 2018-2019 HR Systems Survey from Sierra-Cedar. And, thanks in part to a large number of different HR systems in use, 42% of organizations plan to increase spending on HR technology this year, according to the Sierra-Cedar study.

Managing multiple disparate HR systems can create data decentralization, and ultimately incomplete reporting and analytics in any one system. Without strong integrations between your ATS, HRIS, compensation management, performance management, and other HR systems, you could end up with multiple versions of the truth to contend with, creating internal miscommunications and limiting your ability to present a strong business case for pay program changes.

Data Visualizations Improve Communication

In an effort to tell more data-driven stories about HR's connection to the wider business, more and more organizations are leveraging data visualizations, visual analytics, and visually-enhanced reports to make data more digestible, accessible, and engaging. According to Sierra-Cedar’s 2018-2019 HR Systems Survey, 56% of respondents from large organizations say that they currently use visualization tools, and that percentage is projected to increase by at least 6% over the next 12 months.

Unlike compensation professionals who live with big data everyday, stakeholders in other business functions, and even in the broader HR department, may not be as comfortable sifting through spreadsheets to find the answers they're looking for. As you look to build stronger business cases for your programs and plans, it's important that you take the data languages of your key stakeholders into play.

Enter data visualizations and visual analytics. Unlike spreadsheets, data visualizations deliver quick, accessible answers to everyday viewers of the reports. Visual analytics focus stakeholder attention on critical data points, highlight key data items, and help you communicate with other stakeholders in your organization via their different data languages. Data visualizations can also help you tell a compelling story about a new plan's proposed outcomes by making it easier to link large data sets together in quick "snapshots" that gets your points across.

As visual analytics become more commonplace, you may need to develop new skills to get the most out of these new software applications. Learning to build data visualizations in programs like Microsoft BI and Tableau can help you keep ensure that you're telling the most compelling story possible for stakeholders.

Deeper Reporting Is Needed

Once you have mastered data wrangling, data integrations, and data synthesis and presentation, the next step is to dig deeper into your reporting practices. As the business and compliance landscapes have evolved, compensation professionals have been called upon to produce increasingly more complex and sophisticated reports and analyses to address very specific pay problems. Generating these deep reports can help you answer important compensation questions such as:

  • How much would it cost to adjust employee pay to new minimum wage levels?
  • Does salary compression exist in my organization?
  • What does 'fair pay' mean to my organization?
  • Are there any existing pay gaps in my organization?
  • If so, what variables influence these gaps?
  • What is my CEO pay ratio?
  • Which employees will leave my organization next?

Sophisticated reports like these can help you gain insights into problems such as pay compression between tenured and new employees, pay gaps between men and women, and any potential flight risk employees that would otherwise go unidentified, ultimately helping you build a more proactive compensation practice.

As your reporting and analytics practices change and these deeper reports become the norm, you'll find new ever-more-challenging reports you need to run in order to stay ahead of the curve. Data analysis is a living process in your organization, requiring you to always account for additional data points, data sources, and new stakeholders who need information. But over time, investments in reporting and analytics should pay dividends, allowing you to more effectively communicate the value of your compensation practices, plans, and processes to the business as a whole.


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