Employers have grown so accustomed to using manual and semi-manual spreadsheet based systems that they rarely pause long enough to consider the cumulative cost and risk their legacy systems actually carry. Because such drawbacks are generally difficult to measure, we find only vague acknowledgement of their existence combined with a ready willingness to accept them. But, we're not talking about some minor short-term project here: we're discussing the planning and management associated with one of the organization's largest ongoing expenses. So, what, are some of the major characteristics of these systems that limit companies' abilities to develop and implement highly effective compensation strategies? Let's look.

• INEFFICIENT: Manual and semi-manual compensation systems require teams of meticulous, highly reliable workers with a penchant for accuracy, even in mundane and highly repetitive work. Building, maintaining, and compensating a team large enough to handle the challenging task of compensation administration effectively is timeconsuming and costly, especially when staff turnover and replacement is considered.
• ERROR-PRONE: A system that requires regularly exchanging documents back and forth between different individuals, whether hardcopy or digital, is an invitation for error. If senders and recipients are geographically dispersed and direct communication infrequent, the chance for misunderstandings and errors multiply significantly.
• EXACERBATED TIMELINES: Getting documents to all those who must act on and subsequently return them, often repeatedly, is generally time consuming and always subject to delays.
• INCONSISTENT: Without direct central scrutiny and control over compensation planning and implementation processes, there is ample room for misinterpretation and misuse of programs and systems. While some users do this unknowingly, others are inclined to "bend" the system or program to fit needs they perceive to be unique, e.g. an international subsidiary or remote business unit. If you have 500 managers using compensation spreadsheets, you really have 500 instances of using a mini-application, each subject to individual user interpretation and unwanted changes.
• LOW SECURITY: Little needs to be said about the security of manual and semi-manual compensation systems. Spreadsheet technology and computers have become ubiquitous, and commonly used transmission methods. typically, email.provide little security.
• LIMITED INSIGHT: Even after investing the time and effort to correctly roll up hundreds of spreadsheets, management is frequently left with only limited insight about how well its compensation plans are being executed and the impact they are having on performance. Moreover, the difficulty of manually rolling up and analyzing large volumes of compensation data is usually sufficiently great enough that companies are inclined to do it infrequently.

Considered as a group, these inherent weaknesses of manual and semi-manual systems make clear the challenges companies face in attempting to design and implement the sophisticated compensation strategies they will need to remain competitive as labor markets and employee expectations continue to evolve.

Compensation's Growing Complexity

Driven by greater technological capabilities, a more savvy workforce, and growing competition for prime talent, compensation managers are designing increasingly complicated pay packages to lure and retain top performers. And, to improve their return on compensation dollars, they are gradually nudging the focus of pay plans away from base salary toward incentive compensation. Many firms have adopted some level of pay-for-performance programs that attempt to directly link compensation to performance against specified objectives. However, actual performance tracking and comparison with objectives occurs infrequently. Despite the challenges some companies have experienced, interest in pay for performance initiatives remains strong.particularly in the U.S. and Europe.perhaps because, intuitively, they make so much sense.

The continuing trend to globalization is another factor complicating the design and administration of compensation plans. Many domestic organizations are already aware of the difficulties created by having operations in multiple states or provinces, each with its own set of labor laws and reporting requirements. But, when organizations launch international operations, often through mergers and acquisitions, they add a whole new layer of complexity to their administering their compensation plans. Now, they must cope with fluctuating currency exchange rates, foreign pay customs, and still more sets of regulations. Standardizing compensation and implementing change consistently across multiple foreign and domestic jurisdictions can therefore be a major challenge. It frequently requires program designs that are more flexible so organizations can expand in new directions and markets without causing major upheaval to existing systems.

The Sarbanes-Oxley Act of 2002 is also a having an expanding impact on how companies manage compensation. It sets new accountability standards and criminal penalties, not only for boards and audit committees, but for corporate management, as well. Companies are therefore becoming more aware of the need for compensation systems that provide greater control, speed, transparency, reporting, and analytical capabilities. Reliance on manual and semi-manual systems in this time of elevated public distrust and scrutiny is a liability few can ignore.

Related indirectly to both Sarbanes-Oxley and pay-for-performance is a move by many organizations to instill more equitability throughout their compensation systems. Measuring the degree to which equitability exists can be exceedingly difficult with manual and spreadsheet-based systems where insight is severely limited. Comparisons can be drawn using such factors as pay grade and length of service, but more sophisticated performance measurements and exceptions are beyond the capabilities of most manual and semi-manual approaches.

Technology Delivers Critical Advantages

Today, several developers talent management software have created solutions that help organizations design and manage compensation systems far more effectively than in the past. While many narrowly focus on sales and other specialized areas, one group of firms, including Authoria, now offer sophisticated, broad-based solutions that help mid-size companies and large enterprises build, implement, and maintain highly effective systems, even on a global basis. Here's a brief overview of the advantages offered by Authoria and other leading talent management solution providers.

• LOWER COST: By automating the labor-intensive processes inherent in compensation administration, organizations realize substantial net savings in time and labor costs that can be refocused on the critical strategic issues of compensation management.
• FEWER ERRORS: Automating labor-intensive processes dramatically reduces the likelihood for errors that often go unseen and carry significant financial and human costs.
• TIGHT CONTROL: Comprehensive solutions centralize the control of compensation programs while enabling compensation administrators to give managers and other users the level of control they deem appropriate.
• BROAD VISIBILITY: Compensation managers and administrators can view activity, obtain updates, and discover problems in real time, enabling them to act promptly when necessary to avoid costly errors and misunderstandings.
• MORE CONSISTENCY: Continuous company-wide visibility enables companies to assure their plans, processes, and rules, are being implemented consistently, even across global enterprises. This includes the consistent granting of policy exceptions.
• IMPROVED SECURITY: Automated centrally controlled systems eliminate much of the risk inherent of manual and semi-manual systems where confidential data is routinely conveyed via courier and postal services, email, and interoffice mail.
• DEEPER INSIGHT: Managers and administrators can conduct a wide range of analyses and generate reports anytime to gain the insight they need to make informed decisions.
• HIGHER ACCEPTANCE: Eliminating the tedious tasks required of managers and administrators while making those that remain faster and easier, increases willingness to attend to them promptly.

With so many major benefits, these new comprehensive applications offer a superior alternative to the "spreadsheet hell" to which so many organizations have grown accustomed. Another important consideration is that some can be installed, tested, and fully operational in surprisingly short time, even within 90 days.