Press Releases

Ventana Research today released its latest market research on Total Compensation Management (TCM). We undertook this research to determine the attitudes, requirements and future plans of those organizations that use TCM software and to identify the best practices of those exhibiting the most competencies and outcomes related to it. Ventana Research set out to examine both the commonalities and the qualities specific to major industry sectors and across organization size. We considered how organizations perform TCM, issues they encounter in the process and how their use of TCM and related technology is evolving.

An investment in compensation management systems is a strategic step forward in human capital management (HCM) and our benchmark research finds that modernizing processes must be a priority. More than four-fifths of organizations (81%) said that it is important or very important to have a system to automate TCM rather than employ a piecemeal approach. A significant number of organizations (87%) told us they are confident or very confident that their organization currently manages compensation processes effectively. However, the research reveals that only a little more than one-third of participants (38%) are satisfied their compensation software meets their needs.

Organizations are improving their performance from a process and resulting outcome in the practice of TCM. Our research finds that 74% of organizations have reached the two highest levels of performance in our Ventana Research Performance Index. Among the four dimensions (Innovative, Strategic, Advanced and Tactical) in which we measure performance organizations are most mature in the Process (34%) aspect of their compensation practices. The journey to reach best in class and excellence is yet to be achieved by the majority of organizations.

"Organizations are still challenged in having an effective approach to total compensation to ensure they are meeting the employee to employer objectives," said Mark Smith, CEO and Chief Research Officer at Ventana Research. "The continued need for spreadsheets to augment HCM and talent management applications in over half of organizations continues to point to challenges in dedicated applications that are not evolving to meet the pressing needs for compensation."

Our overall analysis of TCM practices places less than one-half of organizations participating in this research at the top two of the four levels of our Performance Index and the majority of organizations at the lowest two levels. The analysis shows that organizations vary in their maturity in managing compensation but that less than one in five identify as innovative.

No matter what approach an organization is using for compensation management, there exists a demand to evaluate new software for this essential process. Over one-half of organizations (59%) are planning to evaluate and select a new software provider for compensation management.

Dedicated software to support the critical business priorities in compensation, like that in pay equity and diversity, equity and inclusion is necessary as the need to ensure fairness in compensation is essential to the principles of total compensation. This should be a priority for every organization in the modeling and execution for every employee no matter their gender or ethnic background. As well, diversity, equity and inclusion are key components of total compensation processes and systems. Less than one-half of organizations (43%) currently have a system to ensure that compensation is applied equally across diversity, equity and inclusion, with only one-third (32%) reporting they plan to address it over the next year. And for most organizations, supporting pay equity is a critical priority and necessity in their approach to TCM.

"The requirement for fair and equitable compensation has never been more apparent than in today’s macroeconomic environment,” said Quincy Valencia, VP and Research Director for human capital management (HCM) at Ventana Research. "In order to ensure the level of sophistication required in modeling and analysis of total compensation, it’s time for organizations to consider moving beyond the spreadsheet to systems purpose built to support proper execution of their overall total compensation management strategy.”

Most organizations are unaware of how to update and change their existing processes and systems to make their compensation practices more strategic and effective. Executives and managers need help to determine which capabilities could play a key role in reengineering the organization’s approach to compensation management. Understanding what the next generation of compensation systems can do is critical to advancing the sophistication of both purchasers and the marketplace.

Those interested in learning more about this benchmark research, sponsored by Salary.com, can view a summary of the report here. For more information on how to use this research in your organization, or to purchase a copy of the research report, please click here.

About Ventana Research

Ventana Research is the most authoritative and respected market research and advisory services firm. We provide insight and expert guidance on mainstream and disruptive technologies through a unique set of research-based offerings including benchmark research and technology evaluation assessments, education workshops and our research and advisory services, Ventana On-Demand. Our unparalleled understanding of the role of technology in optimizing business processes and performance and our best practices guidance are rooted in our rigorous research-based benchmarking of people, processes, information and technology across business and IT functions in every industry. This benchmark research plus our market coverage and in-depth knowledge of hundreds of technology providers means we can deliver education and expertise to our clients to increase the value they derive from technology investments while reducing time, cost and risk.

Ventana Research provides the most comprehensive analyst and research coverage in the industry; business and IT professionals worldwide are members of our community and benefit from Ventana Research’s insights, as do highly regarded media and association partners around the globe. Our views and analyses are distributed daily through blogs and social media channels including Twitter, Facebook and LinkedIn. To learn how Ventana Research advances the maturity of organizations’ use of information and technology through benchmark research, education and advisory services, visit www.ventanaresearch.com.

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