Enterprise Compensation Management – Impacting An Organization’s Bottom Line

Human Capital Management Plays a Strategic Role in an Organization’s Profitablity & Growth

Progressive organizations understand strategic management of their organization’s single largest operating expenditure, Employee Compensation, plays an integral role in the overall organization’s success.

The average organization invests .29 cents in labor to drive a $1.00 in revenue according to the Saratoga Institute. This ratio illustrates the challenge organizations face with creating compensation effectiveness in relation to increasing company revenue. While acknowledging the value that top performing employees provide the organization is important, progressive organizations understand strategic management of their organization’s single largest operating expenditure, Employee Compensation, plays an integral role in the overall organization’s success. Human Capital Management (HCM) executives within these types of organizations seek ways to optimize compensation spending and employ Enterprise Compensation Management (ECM) software tools and models designed to align individuals with the organization’s goals and strategies.

Investment in ECM software tools can be justified as these tools provide measurability against the organization’s bottom line. ECM software tools can assist in the development and support of the salary planning and compensation process across the entire organization, increase budgetary control in employee compensation plans and benefits, provide flexibility and review of new methodologies such as pay per performance models, and ensure the ability to manage risk mitigation across the organization.

ECM software tools emphasize the shift in Human Capital Management from a tactical cost center to a strategic organizational asset as the financial impact of lowering employee turnover, aligning budgetary goals, and increasing productivity are recognized by executive management and business analysts alike when determining the total valuation of an organization.

Salary Planning & Compensation Management Software Tools Provide Soft and Hard ROI Returns

Building a business case for an ECM software investment, especially a solution custom designed for an organization’s cultural environment, can be challenging. Organizations must be able to justify the expenditure and prove the business value prior to purchasing and implementing an ECM software tool. Organizations that have been successful in building a business case for investment in ECM software tools have experienced improvements across key functional areas including human resources, business departments, and information technology and have included both strategic as well as quantifiable ROI benefits and savings.

Organizations that have the ability to effectively increase their productivity due to better decision making have far reaching implications for an organization, this soft benefit, while difficult to measure, is still a tangible business value tied to the implementation of ECM software tools and should be considered a strategic improvement. While hard benefits such as providing management with the ability to make better compensation decisions that reduce turnover in top performers or increasing the effectiveness in the reduction of cycle time and number of resources needed to support and execute employee compensation processes are quantifiable in ROI dollars.

One of the most significant areas of benefit organizations profit from is the ability for them to optimize their compensation spending while remaining in alignment with the organization’s budget. Using an ECM software tool provides HCM managers greater visibility and analysis into the entire compensation planning process within an organization. A good ECM software tool supports optimization in allocation of merit increases based on performance, effective establishment and execution of compensation ranges, and variable pay for performance support.

Enterprise Compensation Management Tools Financial Impact on an Organization’s Bottom Line

Human Capital Management executives are stewards of the organization’s strategic business performance. Their ability to directly link pay with performance, manage compensation to corporate budgets, attract and retain top performers can have a prolific impact on an organization’s bottom line. Providing ECM software tools that increases the HCM management team’s ability to align a workforce with corporate performance goals is imperative. The costs for not providing the HCM team with such tools could financially affect an organization’s bottom line and negatively impact the organization’s ability to compete within their vertical market, taking months if not years to recover lost market share and profitability.

About Maelstrom Solution’s Enterprise Compensation Management Software Tools

Maelstrom Solution’s Salary Planning tool is an easy to use web-based application that allows HCM managers to work effectively with business managers across the organization as they plan raises and promotions for their employees during annual or quarterly planning cycles. The ECM software tool provides a quick summary planning page of all employees as well as a more detailed page to plan multiple actions for individual employees. The ECM software tool retrieves employee and salary data stored in organization’s proprietary databases, such as PeopleSoft, and allows an HCM manager to manipulate the data and then store it back into the organization’s database. Collaborating with multiple resources across the organization is easy and efficient, email notifications and approval processes are automated, and a variety of detailed reports are available for internal review and analysis. For more details contact sales@maelstromsolutions.com