While it may be common knowledge that financial services organizations include annual cash components as the cornerstone of their compensation plans, effectively managing the more unique and complex aspects of these plans is essential. Awards allocation processes and decisions at these organizations can be very dynamic and iterative, and while average overall compensation levels may vary across industry sub-sectors, the operational challenges of managing the compensation process are the same. HCM leaders within financial services must reconcile how to attract and retain people using creative compensation plans while also acting within the constraints of a shrinking bonus pool. It is critical to select and deploy software built to manage these activities in a comprehensive way that utilizes data and inputs from across the entire organization.
Creative strategies are necessary to draw top talent in an environment where rapid wealth accumulation is often a primary personal driver, and the difference between having an “A-player” instead of a “B-player” in a particular role can translate into huge differences in revenue delivered. These creative strategies lead to greater complexity in both general plans and individual packages, and they include elements such as instruments that convert to cash or actual shares based on a company’s stock price increasing over time or deferred compensation payouts when total compensation thresholds are reached. Software tools used to manage compensation in these organizations must be able to support some of the most complex compensation plans found anywhere, including potentially supporting dozens of distinct Long-Term Incentive (LTI) plans.
