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7 Major Risks of Using Spreadsheets for Compensation Management

Your classic spreadsheet-based compensation management is a ticking time bomb waiting to explode. One wrong spreadsheet entry can cause payroll errors, employee dissatisfaction, and blow your payroll process right up your face. What SMBs don’t realize is that while spreadsheets are useful in their own way, they are useful only to a certain extent. 

Adapting an “It ain’t broke, don’t fix it” will only make existing risks spiral out of control and leave a hefty financial impact on your organization’s bottom line. While band-aid solutions like adding more staff members or creating an exhaustive compensation strategy checklist may help a bit, these instant fixtures will make little to no difference in the long run.

Before you get all geared up to fix the mess left behind by your manual compensation management process, you need to have a clear understanding of the worst parts of the spreadsheet-centric compensation management process. While there are an array of challenges involved, listed below are seven major risks of using spreadsheets for compensation management.

1. Spreadsheets are cost-intensive and not collaboration-friendly 

Compensation management is a crucial process that has multiple stakeholders and a slew of compliance restrictions that need to be met. When data is spread across a series of spreadsheets, stakeholders are forced to sift through overflowing spreadsheets and long email threads to track an employee’s compensation.

When the only way to exchange information is cumbersome and time-intensive, its time-intensive nature impacts the productivity and efficiency of stakeholders ranging from employees to functional managers and HR leaders, making it injurious to your organization’s growth by increasing operational costs and shrinking profit margins. 

2. Spreadsheets are prone to manual errors and inaccuracies

Despite being vitally important to the operation of a company, the compensation spreadsheet is not as rigorously tested as it needs to be. Even when it is subjected to critical reviews, there are chances of people involved to misinterpret the data and overlook incorrect formulas paving the way to create yet another spreadsheet blunder like an hefty $11 million severance error.

3. Spreadsheets are obstructive to compliance

The biggest roadblock for enforcing leave policies is the most trusted spreadsheet. Inherent lack of controls in spreadsheets make it easy for people to edit or update data without being detected. Often, edit history isn’t just enough to keep security risks at bay. 

When there aren’t proper measures in place to prevent people from viewing or editing their compensation details, it can open an extremely potent can of compliance worms that range from time theft to outright money laundering.

4. Spreadsheets lack transparency and visibility

When there is no visibility into historical employee compensation details, organizations will not have enough data to compare compensation metrics and analyze whether their employees are being paid in a fair way. 

Both functional and HR managers need a bird’s eye view of every little detail that matters from pay policy to payment cycle and miscellaneous employee benefits. Trying to extract this information from emails and excel sheets is futile. Drawing up a conclusion from inaccurate data, or banking on your intuition, is a huge gamble that can affect the brand’s reputation.  

5. Spreadsheets cause confusion and chaos

When compensation is completely managed using spreadsheets, there’s a high chance for older versions of these documents being circulated and used by both functional managers and employees. Such instances of data mismatch can cause endless disputes, employee dissatisfaction, and more.

6. Spreadsheets lead to long and windy approval cycles

When all confidential compensation data is saved on online forms and spreadsheets, getting things done at the right time is impossible and leads to a long and complex cycle. In such instances, HR managers are forced to create endless copies of compensation-related documents and distribute it manually to the team. 

7. Spreadsheets cannot establish accountability

While old-school compensation management excel templates can help organizations save a few bucks in investment, it’s siloed interface that doesn’t communicate with other payroll administrative apps. As a result, HR managers end up spending too many hours tying up loose ends on spreadsheets and chasing after stakeholders to get necessary input or approval.  

Switch to sophisticated compensation management

Manual compensation management processes impede day-to-day HR operations, and also cost a lot more than you may realize. Your compensation management practices are unique and so is the way you use spreadsheets to manage employee remuneration. 

For you to get a clear idea of whether a spreadsheet is sufficient for your compensation management practices or if you can benefit from a cloud-based compensation management software like Compport, it’s best to see for yourself how each tool works with your employee compensation information, carrying out the operational tasks that you normally require. 

Get a free demo today and see the magic it can bring to your business.

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compensation management Uncategorized

Do SMBs need compensation software?

HR and compensation management are two critical aspects of any early-stage company. They are indispensable disciplines in enterprises and large scale companies because managing and processing compensation and benefits can take a large portion of a professional’s time. This is more evident in large companies but their importance gets diluted in small and medium businesses, and sometimes rightly so. 

Most small and medium businesses are limited by budget and so the extent to which these companies can go to attract new talent in a competitive landscape while being fiscally responsible to themselves is small. They prefer using manual-labor-intensive tools like spreadsheets which cause a huge dent in their productivity and accuracy. This can be quite an alarming signal when it comes to audits and compliance where the records are marred with errors. Still, SMBs often disregard the benefits a compensation management tool brings to the table. 

5 compelling reasons why every SMB needs compensation software

No matter the size of the company, C&B professionals face issues in determining the right pay and relevant perks that incentivize and motivate employees while rewarding them for their contributions to the company. They struggle to create a win-win situation for both the employees and the organization. 

A near-perfect scenario is when employees are motivated to perform their best work and are rewarded fairly without causing a dent to the company’s bottom line. This is the gap compensation management software tools like Compport intend to fill.

Greater accuracy

When you use Manual methods like spreadsheets and other programs to manage compensation, the chance of error is high. A missing zero can have a tremendous impact on your reputation as well as when it comes to audits. In the case of a compensation tool, all the data is stored in one place. A record change in one place, say the employee details, automatically alters all other relevant records and significantly reduces the risk for human error. 

Better control

Another reason why most small businesses struggle with spreadsheets is that there’s little to no control. Anyone can access the sheets and make changes. Though spreadsheets allow user-based permissions they lack the granularity a compensation tool offers. If you are using a tool like Compport fit, administrators can implement user-based restrictions and budget controls as fail-safes. You can create roles for employees based on the requirement and can generally have more control over the processes.

Ease of use

Compensation is a pivotal function to any company and when manually done it can suck up a lot of your time; precious hours that can be focused elsewhere that can benefit your organization in other ways. Using a compensation management tool is as simple as the push of a button. Once the initial set up is done, the rest of the process is mostly automated, thereby freeing up your time. 

Improved data security

Data security is something companies should care about right from the start, no matter the size, particularly when they are dealing with sensitive payroll information of its workforce. Most modern compensation tools come with enterprise-grade security and privacy standards built-in. This ensures that your data cannot be accessed by unauthorized people and its integrity is protected.

Scalability

Most SMBs make do with spreadsheets and they work to an extent. The real problem comes when the companies grow in size and the number of employees increases. It simply doesn’t mean the addition of a few more rows, in worst cases, it can mean dismantling the entire system and reassembling it to accommodate the growing needs. Using a compensation management tool future-proofs your business to growing compensation requirements.

Take the leap to automated compensation management

While medium and large enterprises have more complex processes, smaller enterprises require simpler processes in which there are little to no complications. Most compensation tools in the market are geared toward the former segment, completely neglecting the needs of SMBS.

With Compport FIT, what we have now is a fully digitized, self-serve model that is extremely independent and does not require a steep learning curve to get started. You can also now fill the expertrise gap. This means that the tool will help consolidate and automate some of the core HR processes in terms of compensation management, shrinking your dependency on an expert who more or less is a costlier alternative.

SMBs can now digitize core HR processes with the world’s first compensation management software that can be purchased and implemented, directly. Compport FIT is easy to use and designed with the needs of small and medium businesses in mind. It’s user-friendly, agile, flexible, and cost-effective. Start your free trial today.