Total Compensation Management

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2023 Vendor and Product Assessment

Total Compensation Management

Compensation management is a key talent management process involving all workers and managers within an organization. Determining and providing the appropriate compensation for each person — whether it involves base pay, merit pay or variable pay and incentives such as bonuses — is critical to attracting and retaining productive members of the workforce, including full- and part-time employees, contingent workers and contractors. The complexities of compensation often prove to be a core challenge for human resources departments as they strive to keep the organization productive, satisfied and motivated while ensuring equitable and defensible pay practices across the entire workforce.

The ability to offer a personalized employee experience, particularly when it comes to compensation and rewards, is a competitive differentiator and should be a key part of an organization’s efforts to attract and retain top talent. A tight labor market and shifts in worker expectations have put pressure on organizations to accommodate worker preferences in total compensation, where monetary and non-monetary reward schemes must be flexible enough to be personalized while still maintaining equity. Artificial intelligence and machine learning technologies increasingly make it possible to personalize compensation and rewards in a way that scales. New digital tools and capabilities in compensation are able to not only personalize rewards but can help organizations model compensation pool funding or compensation based on organizational structure. These systems can support complex plans and packages and automatically trigger a new compensation plan or configure individual packages when a worker’s status changes. They even can match jobs to compensation market data when no direct matches exist, analyzing the cost of adjusting compensation for certain job families or business segments. This is particularly relevant with the rise of skills-based hiring and promotion, where organizations must compare roles and related pay based not just on job family or title, but on the skills and competencies needed to perform in a job regardless of the functional title or organizational placement.


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