Why compensation managers should wear capes

Compensation managers are tremendously valuable to any business. Employee salary and benefit expenses typically represent 40% to 80% of an organization’s gross revenues, and comp managers manage every penny of the process. Their work impacts productivity and is faster than a speeding budget. Some say they can leap office buildings in a single bound!

Compensation Managers Save the Universe

The Bureau of Labor Statistics states that compensation and benefits managers plan, develop, and oversee programs to compensate employees. While accurate at a simplistic level, the impacts of compensation work can be more powerful than a locomotive – and felt throughout an entire organization.

• Employee engagement and productivity – Perceptions of being paid fairly have repeatedly been shown to have a positive impact on employee engagement and productivity. If an employee believes they are compensated fairly, they are more likely to perform at a higher level.
• Employee retention – Fair pay play an important role in employee retention. High-performing employees can become a flight risk when they are not paid equitably and competitively. Voluntary turnover can be quite costly to a business. In addition to the costs of recruiting, training and lost production, other turnover costs can include reduced employee morale.
• Company profitability – Payroll is the largest expense at many organizations. A good compensation manager ensures employees are paid fairly, and also takes care to make sure they are not overpaid to protect organizational profitability.
• Legal compliance – Compensation managers ensure organizational compliance with applicable federal, state and local regulations such as the Fair Labor Standards Act and minimum wage laws.

Super Powers for HR Decision-Making

Since compensation programs have such a significant impact on an organization’s success, your organization should ensure the right tools are available for compensation decision-making.

• Compensation analytics – As compensation gets increasingly complex, organizations need a consistent solution for key functions such as market pricing that basic spreadsheets like Excel cannot deliver. Download our eBook to see what to look for in compensation software that will make your organization powerful.
• Salary survey data – Data from salary surveys can be a valuable tool in workforce planning. Read our guide on navigating salary survey data, and consider as well whether your organization could benefit by sponsoring its own custom compensation survey.
• Customized solutions – For total rewards solutions customized to your organization’s unique needs and goals, there may be times you could benefit from partnering with an experienced compensation consultant.