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How to Build the Case for Compensation Management Software

Jen Dewar
Feb 12, 2020 3:18:52 PM

So, you’re ready to ditch spreadsheets in favor of compensation management software. But how do you get buy-in when your company—and your team—have always analyzed compensation and executed annual compensation cycles in fragile spreadsheets? It can be challenging to convince decision makers to replace a familiar, tried-and-true tool.

Compensation management software needs to be seen as an investment in your organization. Build your case by demonstrating how it can impact your organization’s bottom line—and use business data to back up your claims.

Do your research

Building a case for new software generally begins with your own pain points. You’re tired of exporting and merging data from different systems, especially when a rogue keystroke throws everything out of whack. You’re dealing with dueling spreadsheets as multiple stakeholders make changes at the same time in different documents. Your managers are complaining that review cycles take up too much time—and you don’t disagree.

You know there has to be a better way, so you start looking for solutions to your problems—and find that compensation management software can make your life easier. But solving your own pain points is only part of the battle. Now you must also do the legwork to learn how a software investment might impact the rest of the organization. 

Have more in-depth conversations with your stakeholders to learn their pain points around compensation management. Managers don’t always understand compensation, but they’re responsible for making recommendations. Directors and VPs want to get through review-time as quickly as possible, but have to look in several places to get the context they need to make adjustments and approvals. Finance has to triple-check the end results of the compensation process before passing off to payroll, and often finds glaring errors due to someone “breaking” the spreadsheet. Compensation cycles are a time consuming distraction for all involved, and everyone wishes the process were a bit faster so they can move on to other things.

Learn how software can address those issues, so you have the right information to build champions for your cause. For instance, share how the right software can provide a more seamless compensation workflow between stakeholders so you can build a faster, more efficient process.

Rope in your manager

Have a conversation with your manager about their own frustrations with the company’s compensation processes. Go back and do more research if you need to. Then show your manager how compensation management software could impact them, you, and the rest of the company. 

Work together to brainstorm objections you may hear from decision-makers, and how you might overcome them. For instance, your CFO may be averse to adding a line item to the budget when spreadsheets are standard issue. Dig into your salary data to show how much money is wasted when all of your managers spend the better part of their week working on your compensation cycle. This element of co-creation can help your manager better advocate for the software, and become more vested in the final decision. 

A great time to do this is soon after you wrap up a compensation cycle, when the pain of planning and running it is still fresh in your manager’s mind. This will give you plenty of time to evaluate solutions, get leadership buy-in, and implement a solution before you need to begin planning for your next compensation cycle. 

Approach the executive team

Ideally, the HR leader works as a strategic advisor to the executive team, and already has strong relationships with decision makers. It’s helpful to have some informal, preliminary conversations with decision makers to gauge interest and learn about potential concerns. Then you can build a stronger case for your detractors, while identifying champions who can help promote your cause among the rest of the leadership team.

Set up time with all decision makers to formally discuss how the software can help address important business problems, like turnover, engagement, productivity, and profitability. Use data to show how a software investment will benefit the company’s bottom line, and be prepared to explain how you came to those conclusions.

For instance, dig in to your exit survey data to learn how many employees say they’re leaving your company due to compensation. Calculate the cost of this turnover (an estimated 33 percent of each employee’s base pay) and share it. This can be a powerful way to make the case for a more strategic approach to compensation (which, of course, software can help you accomplish).

A product demo can often be helpful to show decision makers exactly what the investment will buy. Most—if not all—decision makers will also be stakeholders in the annual compensation cycles and will be interested to see how the software can improve their personal experiences.

Final thoughts on building your case for compensation management software

The HR function needs to become more strategic to address modern business challenges—but spreadsheets can only get them so far. Compensation management software allows companies to make more strategic decisions around pay, so they can better attract, retain, and engage the talent they need to meet business goals.

Software needs to be considered an investment in the company—and should be tied to the bottom line in order to get executive buy-in.

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