Best Compensation Management Software
Buyer's Guide
No matter how much your employees love their job, a paycheck truly motivates them. As one of the essential parts of HR management tools, compensation management software lets you rest easy while it handles the heavy lifting.
Compensation management involves all the policies, procedures and systems that help determine how to correctly compensate your employees for their work.
Instead of paying thousands of dollars for a compensation manager, our buyer’s guide can lead you to a successful software implementation at a much lower cost.
Executive Summary
- Compensation management solutions can increase productivity and efficiency.
- The best compensation management plan will help you hire and retain top candidates.
- Dedicated compensation software can help you accomplish tasks and achieve your goals.
- Considering which features are most important to you is vital when comparing systems.
- Comparing popular solutions in this category will help you pick the best software.
- What Is Compensation Management Software?
- Deployment Methods
- Primary Benefits
- Implementation Goals
- Basic Features & Functionality
- Advanced Features & Functionality
- Current and Upcoming Trends
- Software Comparison Strategy
- Cost & Pricing Considerations
- The Best Compensation Management Software
- Questions To Ask Yourself
- Questions To Ask Vendors
- Next Steps
- Product Comparisons
- Additional Resources
What Is Compensation Management Software?
Compensation management software helps HR managers and administrators create and manage compensation and incentive programs. It streamlines employee data and the organization's budget to help create an optimum compensation strategy.
On the flip side, it lets businesses deliver optimal value to their employees for their work and services.
The primary purpose of compensation software is to:
- Reduce overall compensation costs
- Help HR and managers develop effective strategies for candidate hiring and recruitment
- Create and execute competitive pay packages through automation
Let’s explore standard deployment methods and the benefits of implementing compensation management tools.
Deployment Methods
You can deploy compensation software in two ways:
On-Premise: These systems host data on company-owned servers. You'll have to buy, install and maintain servers for handling and storage. You can access on-premise systems through a computer application.
Cloud-Based: These services host data on the vendor's server without you having to handle setup. They usually come with monthly or yearly subscription plans. Cloud solutions are accessible through a browser or mobile application.
Primary Benefits
Let’s look at some advantages of using compensation management solutions.
Hire and Retain Top Talent
Fair pay and competitive raises help motivate employees to put their best work forward. Compensation management software lets you develop appropriate and consistent compensation strategies that help retain top talent and hire skilled candidates. It enables companies to create competitive compensation offers that draw in qualified candidates by considering regional variations in cost of living and industry standards.
The software encourages employees to stick around by linking bonuses and rewards to performance indicators. This approach fosters an environment that values and promotes competitiveness.
Boost Morale
You can effectively develop strategic recommendations for compensation and boost your employees' morale by increasing their pay at the right time and by the right amount. This strategy will keep their morale up and encourage them to work harder.
Compensation management solutions contain training resources and innovative evaluation tools so that employees can combat burnout due to wage pressure.
You can automate bonuses, pay increases and other incentives to encourage excellent work. Employees feel appreciated, and their efforts are validated, which gives them a sense of accomplishment.
This step fosters employee satisfaction and loyalty, increasing morale and a more stable workplace.
Increase Productivity
A fair paycheck, positive competition, performance-based incentives and a mutual desire for improvement are significant driving factors for productivity. HR departments can concentrate more of their efforts on strategic aspects of their work by automating the administrative parts of compensation management.
Furthermore, associating rewards with performance encourages workers to put in more effort. Employees receive incentives to perform well in their roles because they can observe a clear relationship between their output and compensation.
Eliminate Pay Inequities
Conducting a pay-equity analysis ensures all employees get fair wages. Compensation software makes this complex and time-consuming process much more manageable. It regularly updates strategic changes and provides in-depth insights into pay equity to ensure fair pay year-round.
Compensation software enables salary comparisons between employees, considering several variables — location, experience, performance and job role. By establishing uniform pay bands and ranges, it upholds uniformity.
Furthermore, potential pay gaps based on employee characteristics such as gender or race can be identified by the software's analytics features, providing companies with the necessary information to rectify any inadvertent bias.
Encourage Transparency
Many factors affect an organization’s compensation plan. Moreover, there can be different salary, bonus and stock combinations regarding compensation packages. It’s only fair for employees to know and understand this distribution to decide whether they get fairly compensated.
The right compensation software helps managers communicate these statistics smoothly and keep employees informed and updated.
Since they know they're getting paid fairly in relation to their peers, employees are encouraged to trust in the process. The software's reporting features also provide information about compensation disparities to fix.
Open communication about compensation and benefits helps control expectations, reduces discontent and promotes an open, just and equitable workplace.
Expert recommendations and analysis on the top Compensation Software
Implementation Goals
| Goal 1 Attract and Retain Talent | Compensation is the driving factor that brings your employees into the office five days a week. Correct compensation is vital if you want to keep them. Well-structured and competitively balanced compensation packages can become a crucial draw for prospective employees. With the robust analytics capability of compensation software, organizations can benchmark their offerings against industry standards and adjust them in real time to ensure competitiveness. |
|---|---|
| Goal 2 Boost Employee Productivity | By providing competitive and meaningful pay packages, you can enhance employee motivation and boost performance, resulting in higher organizational success. Reward and recognition features contribute to a performance-oriented culture where employees are motivated to reach or exceed their targets. Regular incentives and rewards stimulate motivation, increasing individual and team productivity. Compensation software also enables transparent and effective communication about compensation. When employees can view and comprehend their earnings, bonuses and benefits, they are more likely to feel valued and work harder, thus amplifying productivity. |
| Goal 3 Streamline Compensation Practices | Compensation software simplifies your existing payment practices. You’ll want to assess your specific compensation practices to understand which features and tools will be the most helpful. The software also bolsters clear and transparent communication about compensation practices. The ability to configure varying compensation plans for different employee tiers or roles fosters an equitable, performance-centric work environment. |
| Goal 4 Foster Transparency | Transparency in compensation is vital for worker fulfillment. Compensation management software creates a consolidated system via which HR departments and employees can access compensation information. This openness can increase confidence, inspire employees and decrease pay disparities. |
Expert recommendations and analysis on the top Compensation Software
Basic Features & Functionality
| Automated Calculations | It can be tricky for organizations with departments with multiple geographical locations following different currency exchanges. Automated calculations reduce errors and ensure that employees receive accurate and fair payments. This feature also saves time and simplifies compensation planning, allowing HR professionals to focus on more critical tasks. Compensation management software can help organizations streamline their compensation processes and improve efficiency. |
|---|---|
| Salary Management | Compensation management tools use AI to create dynamic payment models. Employers can match employees' starting salaries to their roles and performance, promoting internal fairness and motivation. Managers can set compensation cycles that are weekly, monthly, quarterly, or yearly, as well as propose and approve compensation plans. The software specifies detailed compensation guidelines, programs, and policies and displays employer and employee contributions. It also enables market data analysis for informed salary decisions, keeps a historical record of employee compensation and allows the publication of compensation plans. |
| Budget Planning | Bonus forecasting capabilities enable businesses to calculate and distribute incentives accurately. Budget constraints also prevent overspending. The compensation forecasting feature uses predictive analytics to estimate future salary and bonuses. It also empowers management to make informed budget allocations, ensuring optimal resource utilization. Merit matrix capabilities link pay increases to employee performance and foster meritocracy. Finally, the real-time budget consumption overview ensures constant monitoring of spending. |
| Reporting and Business Intelligence | Compensation management tools let you customize compensation and budget reports. Users can easily access the dashboard's power, which includes an array of standard views and drill-down features for a more detailed understanding. Pre-built, standard reports enhance convenience and consistency. Finally, automatic report delivery scheduling ensures that all critical information reaches personnel on time. |
| Performance Tracking | If you already use a performance management system, this feature is vital. Linking your compensation management tool to your performance management solution will allow you to implement the proper pay-for-performance compensation strategy. The solution includes rating scales for indicating an employee's level of performance or achievement. Then, it distributes bonuses and incentives accordingly. The company can deploy the appropriate compensation strategies by effectively tying goals and contributions to merit, bonus and incentive payouts. |
| Rewards and Recognition | Employers can create explicit reward statements for their employees, promoting transparency in the recognition and compensation of efforts. Additionally, the software provides grid or list views of rewards. The compensation management solution also boosts recognition by enabling reward letter printing. Planning for reward eligibility aids in ensuring fairness and motivation in reward allocation. Companies can also use the software to control the frequency of rewards, ensuring that high-performing employees are consistently recognized. Furthermore, using pre-built templates makes creating reward letters a breeze. |
| Integrations | Compensation software offers API access, allowing for customized integrations with third-party applications. This capability lets businesses efficiently use external functionalities to fetch, create, update or delete information. Calendar integration allows seamless scheduling and reminders with planners such as Google Calendar, Microsoft Calendar and iCal. Compatibility with leading payroll software, as well as integration with leading talent management software, round out a robust integration offering that improves and simplifies compensation management. |
Expert recommendations and analysis on the top Compensation Software
Advanced Features & Functionality
| Data Segmentation | This feature enables companies to divide their data into smaller, more manageable sections — or segments — based on demographics, employee roles, performance metrics, geographic locations or any other helpful parameter. This type of segmentation allows teams to gain a more transparent, precise understanding of complex compensation databases. It helps manage compensation across departments, levels or organizational locations. This practice paves the way for more informed and equitable decisions about salary structures, bonuses and other reimbursement aspects. |
|---|---|
| Regulatory Compliance | Compensation management tools include compliance features to ensure that the company follows pay policies, state mandates and federal regulations. Automatic identification and marking of guideline awards make the task easier. Compensation management software can help organizations ensure EPA compliance by providing a centralized platform for managing employee compensation data and ensuring that employees performing the same job receive equal pay. Additionally, the software can assist organizations in tracking critical employee data, digitizing manual HR processes and improving compliance with FLSA regulations. Compensation software can assist organizations in meeting GDPR compliance requirements by incorporating features such as data encryption, access controls and retention policies. |
| Accessibility | All users, including those with disabilities, should be able to use the software. This feature includes text-to-speech, an on-screen keyboard and mouse options. The software should also be compatible with assistive technology (AT) and other operating system accessibility features. Compensation management software with accessibility features can assist organizations in creating a more inclusive workplace and ensuring that all employees have equal access to compensation information and tools. |
| Equity Management | HR managers can use compensation management tools to distribute equity awards, such as stock options or restricted stock units (RSUs). This feature allows businesses to effectively and transparently allocate equity-based compensation. It helps keep all stakeholders informed about their equity status by calculating vesting schedules, monitoring share ownership and analyzing dilution scenarios. Equity management features can motivate employees, boost retention, and attract potential talent by providing a fair and understandable representation of ownership stakes. |
| Forecasting and Modeling | Deploy compensation software to use predictive analytics to forecast upcoming expenses, sales, revenue, user levels and more. Following forecasts, you can simulate alternative compensation scenarios and assess their possible impact before implementing them. These features can also assist organizations in analyzing the potential effects of changes in business operations and making informed capital allocation decisions. |
Expert recommendations and analysis on the top Compensation Software
Current & Upcoming Trends
Tracking projected market growth is excellent, but there’s a world of evolving compensation trends to consider.
Variable and Flexible Pay
Companies use compensation software to manage variable pay components such as bonuses, commissions, rewards and incentives to remain competitive while maintaining financial stability. These elements link to performance metrics, business goals or specific achievements.
The Future of Pay report by Ernst & Young shows that executives (CXOs) had the highest percentage of variable pay, at 25.2%, in 2022. This trend is expected to percolate down the hierarchy until a substantial part of the workforce becomes eligible.
Directly rewarding employees for their performance and productivity can motivate them to achieve greater results, improving overall business performance and profitability.
AI and Machine Learning
One of the most groundbreaking trends of 2023 is the application of AI and machine learning to compensation management solutions. These technologies are introducing a new level of automation and predictive capabilities.
Following pervasive concerns about pay fairness and transparency by employees, many total rewards leaders have experimented with AI and ML algorithms to approach the issue from a new perspective. If done right:
- Algorithms will consistently emphasize compensation philosophy and policy
- AI will free up time for managers to concentrate on high-value activities like explaining payment practices to employees and advising on boosting their pay
Though the AI uptake in compensation management solutions has been slow, a recent Gartner survey shows promising results for those who have opted for it:
- 79% of companies reported that they standardized payments using AI
- 72% said managers have more time for high-attention tasks like performance coaching
- 57% said algorithms assisted their efforts to pay for performance
Break down the trend, but keep it succinct. As with the product section, the goal is to give a brief overview, not cover the trend as thoroughly as you would in a trends article.
Only use stats if they apply to the broader point.
Demands for Pay Transparency
Compensation scenarios should be characterized by pay transparency. The 2022 Compensation and Culture Report by Beqom reveals that 60% of US employees would change jobs in favor of enhanced pay transparency.
This trend is bolstered by the New York City Pay Transparency Law that made it mandatory for employers to disclose salaries and promotion prospects in their advertisements.
To keep up with this trend, companies are adopting compensation management software that ensures transparency and compliance with all state and federal regulations.
Rise of Skill-Based Pay
The transition from paying for jobs and titles to paying for skills and competencies is one of the most significant changes in compensation management. This practice entails paying workers according to the value they add and the skills they exhibit, not according to their position or level of seniority.
This strategy can assist you in supporting employee growth and career mobility, fostering a culture of learning and innovation, and adjusting to shifting market demands.
To put this strategy into practice, you must:
- Identify the essential competencies and skills
- Evaluate present and future performance
- Create incentives and pay plans to recognize their contributions
Expert recommendations and analysis on the top Compensation Software
Software Comparison Strategy
When choosing compensation management software, it’s essential to formulate a well-considered comparison strategy to ensure the selection of the most suitable solution for your organization's requirements. We recommend the following steps:
Understand Your Needs: Identify the key features and functionalities that hold the highest priority, such as automated calculations, data segmentation, forecasting modeling and compliance.
Explore Integration With Other Systems: It’s imperative that the software seamlessly integrates with your existing recruitment software and payroll systems, facilitating streamlined workflows and ensuring data accuracy.
Review User Reviews and Ratings: User reviews and ratings provide valuable insight into the software's performance and user-friendliness. Prioritize compensation software that boasts positive reviews and garners high user ratings.
Request a Demo: This practice allows you to witness the software in action and pose any inquiries.
Engage All Stakeholders: Involve all relevant stakeholders in the decision-making process. This inclusive group should encompass HR professionals, managers and employees using the software.
Cost & Pricing Considerations
Like any other system, the pricing of most compensation management platforms depends on the features the vendor offers. Other factors like the size of your organization and the type of plan you choose also affect prices.
Other essential points to consider while choosing a plan are:
- Pricing Models and Ranges: Some vendors offer a subscription-based pricing structure with several package options (tiers) designed to accommodate different budgets and needs. The price range for this software category can be between $20 and $40 per month, with an additional $3 to $6 per employee.
- Hidden or Unexpected Costs: These costs can include costs for system installation, data migration, maintenance and updates, user training and additional charges for services. It's essential to be aware of these potential costs and factor them into your budget.
- ROI and Value for Money: Good compensation management software can provide significant ROI by reducing the cost of turnover, improving efficiency and driving down expenses related to software licenses, HR and IT resources, employee engagement drivers, turnover and compliance.
Expert recommendations and analysis on the top Compensation Software
Best Compensation Management Software
It's challenging to decide on the right software when you have a hundred options. Although no solution is perfect, there’s one that’ll fit your definition of perfect.
Let's look at some leading options to help you avoid confusion and select the best compensation software.
COMPview
What It Does
COMPview is a feature-rich cloud-based solution that includes performance tracking, report generating and integrative capabilities. It empowers managers to monitor sales performance across departments and territories.
Detailed reports on each employee’s performance streamline the compensation process. HR managers can use it to customize the organization’s compensation plans at any point in the sales cycle.
COMPview also enables hassle-free data imports from other platforms like HRIS, CRM and more.
COMPView dashboard showing incentives comparison. Source
Product Overview
| User Sentiment Score | 91% |
|---|---|
| Analyst Rating | 81 |
| Company Size | S | M | L |
What It’s Best For
| Capability | SelectHub Analyst Score |
|---|---|
| Platform and Security Capabilities | 94 |
| Budgeting and Forecasting | 91 |
| Bonus Management | 84 |
| Dashboard and Reporting | 80 |
| Rewards and Recognition | 67 |
CompAccelerator
What It Does
This tool is a viable solution to solve incentivization woes in sales performance management.
Using CompAccelerator, you can consolidate data in a single digital location to eliminate the need to maintain multiple spreadsheets and obtain a comprehensive understanding of budget and payment cycles.
The adaptable user interface helps you create more effective workflows. Achieve budget-conscious approvals and recommendations by providing managers with the most recent data on available rewards.
Product Overview
| User Sentiment Score | 97% |
|---|---|
| Analyst Rating | 71 |
| Company Size | M | L |
| Starting Price | $15000 |
What It’s Best For
| Capability | SelectHub Analyst Score |
|---|---|
| Budgeting and Forecasting | 91 |
| Rewards and Recognition | 89 |
| Bonus Management | 84 |
| Dashboard and Reporting | 80 |
Compport
What It Does
Compport is a proactive solution for all incentivization, analytical and automation needs.
Managers can follow up on and replicate successful offers while overseeing sales performance. Employees can participate in surveys about payment plans, awards and workflows.
This tool lets you monitor staffing, turnover and performance trends from one place. Identify performance patterns and make operational adjustments to enhance sales.
It can be daunting for specific users, especially those new to compensation management software. Successfully learning and navigating the system may require a considerable time investment.
Compport compensation dashboard.
Product Overview
| User Sentiment Score | 96% |
|---|---|
| Analyst Rating | 67 |
| Company Size | S | M | L |
What It’s Best For
| Capability | SelectHub Analyst Score |
|---|---|
| Dashboard and Reporting | 100 |
| Bonus Management | 96 |
| Platform and Security Capabilities | 94 |
| Rewards and Recognition | 78 |
| Budgeting and Forecasting | 74 |
CompTrak
What It Does
CompTrak is highly scalable cloud-based compensation software that comes with mobile support. It eliminates spreadsheets and human errors while automating workflows.
Track various compensation plans, bonuses and equity programs from a centralized digital position. CompTrak is notable for its user-friendly design and adaptability. Its adaptability enables firms to tailor the program to their requirements and operations.
The equity management tool is a significant advantage, especially for organizations that provide equity as part of their compensation packages.
It has a unique modeling feature that simulates allocations and rewards before officially releasing them.
Product Overview
| User Sentiment Score | 94% |
|---|---|
| Analyst Rating | 65 |
| Company Size | S | M | L |
| Free Trial | Available |
| Starting Price | $500 |
What It’s Best For
| Capability | SelectHub Analyst Score |
|---|---|
| Dashboard and Reporting | 80 |
| Platform and Security Capabilities | 76 |
| Bonus Management | 64 |
| Budgeting and Forecasting | 61 |
CompAnalyst
What It Does
Salary.com's compensation management tool allows managers to make insightful payment choices, evaluate pay practices and manage compensation process demands.
Boost performance and employee satisfaction while enhancing company performance through data-driven decisions and compensation optimization. Maintain employee engagement through clearly defined, measurable goals and promotion plans.
Its top offering is the automated survey participation feature. A centralized compensation data source library that automates the distribution, execution and analysis of employee surveys.
CompAnalyst’s Reporting Dashboard.
Product Overview
| User Sentiment Score | 88% |
|---|---|
| Analyst Rating | 64 |
| Company Size | M | L |
| Starting Price | $0.01 |
What It’s Best For
| Capability | SelectHub Analyst Score |
|---|---|
| Dashboard and Reporting | 100 |
| Budgeting and Forecasting | 74 |
| Platform and Security Capabilities | 73 |
Expert recommendations and analysis on the top Compensation Management Tools
Questions To Ask Yourself
Before you jump to the final stage of selection, you should be clear about your expectations from a solution and how well it fulfills your requirements.
Use these questions as a jumping-off point for internal discussions.
- Is the system secure enough to handle sensitive employee data?
- Is the software flexible enough to meet your organization's needs?
- When and how should you implement the new software?
- How many employees will need access?
- Which HR functions are my pain points? Should I invest in dedicated software or an all-in-one platform?
Questions To Ask Vendors
Once you've narrowed your search, you'll likely have a few systems that stand out. While no system is perfect for everyone, the best option for your business will be available. Asking a few questions will help you to decide which is best for you.
About the Software
- How well can the software integrate with other tools like performance management systems workforce management software?
- What's the learning curve, and is training provided to support user adoption?
- How intuitive is the UI — navigation, wording, feature accessibility and screen layout?
- To what extent can the software automate tasks?
- What’s the product roadmap?
About the Vendor
- How often do you offer updates and enhancements? Do they impact the software's accessibility?
- How will the vendor stay relevant in the next five years?
- What customer support and training do you offer?
- Is your product customizable?
- How can your software’s capabilities benefit companies in my industry?
Expert recommendations and analysis on the top Compensation Management Solutions
Next Steps
Compensation management software aligns organizational goals and tasks, increasing productivity and employee morale via fair pay and the right incentives. They also eliminate long, troublesome calculation, assignment and payment planning sessions.
Aligning organizational goals and tasks increases productivity and employee morale via fair pay and the right incentives.
Ready to browse for solutions? Grab our free product comparison report to shortlist relevant features ranging from salary management to reporting and dashboards.
Product Comparisons
- CompAccelerator vs. COMPview
- Compport vs. COMPview
- CompAccelerator vs. Compport
- CompTrak vs COMPview
- CompAnalyst vs Compport
Additional Resources
Top 10 Compensation Management Software Leaders by Analyst Rating (of 132 products)
(of 132 products) GET THE IN-DEPTH REPORT
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