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Evolution of Compensation Management Systems

April, 2017

Pivot’s CEO Philippa Youngman was recently interviewed for Total Rewards, a quarterly publication focussed on Compensation, Remuneration and Rewards trends produced by Aon Hewitt for the Indian market.

Q. HR as a function has not been one of the early adopters of technology. However, the game has changed in the last couple of years. Do you see this shift?

Evolution of compensation management systems

A.  There is a shift in HR understanding in the sense that they are no longer playing an administrative role handling the softer aspects of HR, but it’s evolving to include taking ownership of people strategy, using metrics, focusing on aligning themselves with the business and partnering with the functional units. The rise of HRBP roles would indicate that HR is working closely with divisional and geographical areas which provide them the opportunity to pay close attention to the impact of HR on business activities. I think, in the early days HR felt that the human aspect of what it means to grow and support your employees would be taken away with the use of technology. However, what has transpired is that technology helps to highlight facts and therefore, either supports or reduces the subjectivity of people-related decisions. It also helps to reduce the mechanical aspects of people management processes that require no emotional intelligence, leaving HR to provide impact at a strategic level, knowing that the technology is offering security, efficiency and accuracy to the data and workflow.

Simultaneously, the expectations from HR as a function are also increasing. For example, managers desire to be empowered to make better compensation decisions for their teams using project goals data, KPIs and other performance indicators. Even where conversations such as performance ratings are out of the door, HR is still using some form of metrics to provide that objectivity in rewards outcome decisions. This is where technology is expected to change the game for not only HR but for organizations overall.

Managers desire to be empowered to make better compensation decisions for their teams using project goals data, KPIs and other performance indicators.

Q. What according to you are the main triggers for organizations to adopt HR tools and technology solutions? Any areas within HR where you see this happening more than the others?

A. From a business perspective, the trigger is the responsibility to provide a stronger experience to the decision-makers – line managers, CFO, CEOs – having a line of sight, transparency, accountability and empowerment. Technology enables HR to provide that superior data and analytics-backed experience and service to their stakeholders. Time is of the essence and with digitization as a focus area, organizations understand that technology is imperative for their success.

The compensation review process is the ideal first step towards systemizing HR. This is because there is often already a tool or process (usually Excel) that has been used to manage the data, the decisions and the communications to all those that need to be involved. However, such tools have limitations when we consider data security and integrity due to the usually high level of human interaction necessary to get input from many individuals, disaggregation and aggregation of data sets, etc. So the organization is often unaware of the potential risks associated with a process that is running smoothly due to the skill of a select few. A platform for change is often triggered when a key person leaves and their knowledge and expertise goes with them. At the same time, the compensation managers crave to use their HR qualifications to make an impact, rather than spend sleepless nights worrying about data integrity, human error or doing admin work. This is when we often get a call.

Q. Rewards managers are now expected to be more than salary increase administrators. In your experience, what are the key benefits derived by organizations through implementation of compensation management tools?

A. For three to four months of the year, the rewards managers are seen to become data manipulators to manage the process of salary decisions when their expertise often relates to the strategic benefits of rewards and their responsibility to the organizational and people goals. Getting the salary review process right, and doing it efficiently with the help of tools serves dual purposes – creates credibility among managers in the system and then provides the time for a rewards manager to assist with the policy evolution, strategic plan design, etc.

To me, data security and integrity is one of the often ‘hidden’ benefits. If the process goes well, then these two issues do not present themselves. However, any data breach or inaccuracy affects the credibility of all involved as well as the employer brand. It is hard to quantify in monetary terms what this means, however, we have heard of many stories where this has provided the catalyst to a purchase of a robust solution to manage the process. The financial analytics and reporting is a key output derived by organizations through these tools. Budget modelling, matrix simulations and the whole diagnostic and descriptive analytics and reporting around it can take compensation reviews and decisions to new sophisticated levels. From a strategy perspective, compensation reports are now focused on what to present to the board – the emerging trends, analysis and gaps and not just static data.

Managers’ time saved, reduction in timeframe to complete the compensation review, budget spend alignment with better transparency gained via automation are other common measures for organizations to see whether investing in technology has brought about the right results.

Q. Organizations are seeing a shift towards clearer rewards philosophies, sharper pay differentiation, and greater decentralization of pay decisioning and communication. Do you see these trends impacting the need for best-in-breed compensation management tools?

A. The key thing with making compensation decisions is providing real-time facts to the decision-maker to avoid the need to revisit or further negotiate outcomes. These include dynamic answers to questions such as ‘what is my budget?’, ‘how am I performing against that?’, ‘what are the key policy statements I need to be concerned about?’, among others. A traditional process would involve communication prior to a compensation review event that educates managers about current market trends, budget this year, focus areas, etc. and they are often expected to filter this as they make each decision. A best-of-breed solution often has its origins from the heart of the true business problem – recognizing the real-life experience and problem that needs to be solved and providing guidance at each phase of the decision-making process to ensure everything is staying on task and the expected outcome is delivered accurately and on-time. The beauty of best-of-breed is the depth of expertise and knowledge that comes with the tool, ease of configurability and flexibility. Organizations today face growth, mergers, acquisitions and restructures which need to be taken into consideration when it comes to pay. A best-of-breed provider is able to adapt to these in an agile manner. They do not need to develop a code from scratch if life changes, they can simply make changes at a click of a button and that is the efficiency that is required at the time of salary review which is usually a time bound process. Failure to comply quickly with organizational changes is not taken lightly – human beings are very attached to their pay outcomes and rightly so.

A best-of-breed solution often has its origins from the heart of the true business problem – recognizing the real-life experience and problem that needs to be solved and providing guidance at each phase of the decision-making process to ensure everything is staying on task and the expected outcome is delivered accurately and on-time.

Q. How do you see Pivot’s online compensation management tool benefiting organizations in India, majority of whom use Excel sheets for budgeting and salary increases and administration?

A. India as a nation has a large workforce and managing processes for those many people on Excel is often problematic. Audit and governance implications are important to consider. Excel, in essence, remains a manual tool and is personal to the creator. The data also has to ‘arrive’ from somewhere and ‘go somewhere’. Aggregation and disaggregation of data is inevitable for a salary review process and although a high level of care does occur, human intervention creates the opportunity for error. Analysis of compensation review outcomes can only occur at the point of aggregation, which is often after the decisions have been made. So, the rewards manager is left with two choices – narrow down the degree to which a people manager can make discretionary decisions to ensure organizational policy is delivered, or analyze it after the event and identify areas for improvement for the next year. With an online tool, more real-time analysis can occur and decisions redirected during the process to arrive at the desired outcome. Often the decision-making can be further devolved from senior managers because the system can manage the key aspects such as organizational policy and budget.

India comes with a workforce that is technology savvy and embraces innovation. This cultural shift needs to occur in the HR world simultaneously to keep up with the ethos of where the country wishes to head towards with regards to technology and digitization.

Q. How do you see the space evolving in the next five years?

A. In the next five years, I believe we will see an ecosystem of tools for each HR process where organizations can choose freely the best-of-breed tools that suit their organization’s requirements and culture. Data will move seamlessly between the tools even though the providers may be different. No longer will it be seen as necessary to choose one provider or associated providers for all HR needs due to data integration challenges. In addition to this, I see a rise in expectations from the tools to be able to combine both internal and external data to provide higher degree analytics for business aligned compensation discussions and decisions.

Pivot Software has partnered with Aon Hewitt to provide its solutions to Indian companies wanting to simplify the management of their remuneration review process. The interview was originally published in the latest issue of the magazine. It is also published here.

In discussion with Remuneration Management expert Alison Kennedy – Part 4

November, 2016

Blog 4This is the fourth in a five-part series of podcast interviews with Alison Kennedy, Executive HR and Remuneration expert, in conversation with Arishma Singh of Pivot Software. Today, we’re discussing the indicators that may help you predict if a supplier partnership will work and if there exists such a thing as a perfect software solution.

Arishma: Could you please tell us about what indicators you’d look out for, as a HR software solution buyer, that predicts that the partnership will work for you?

Alison: I will talk specifically about remuneration software because that is my area of expertise. For me as a Rem practitioner, it’s the knowledge upfront or the ability to be very aware that software is flexible and can be designed specifically around my business.

I’m not buying an off the shelf solution. I’m not buying you know chunks and trying to put them together and make it fit and make it work. I want something that is designed around my process, my time, my business, my industry, you know my structure, my organization structure even having matrix reporting, all those unique parts that make up your organization.

I wanna know that, that software is flexible and tailorable down to exactly the way I want it to work. And then on the flip side of that, if I am looking to make sure that its going to be a successful piece of technology for my business, its going to be around having high levels of reporting, like you know that we talked about big data and everyone gets excited about big data and data warehouses but if you can’t access that information in the way that you want to and if you can’t have a nicely delivered solution at that other end spits out the information in the way that executives can then focus on the areas that you want them to focus on without a massive amount of manual implementation as a interim step then I don’t think it’s a great solution for you. I think, you are moving your workload into a different area.

So, if I think about a rem review cycle, historically there is a lot of workload upfront on excel spreadsheet, as you are managing this process, you kind of tailoring it at the other end and then trying to produce report. If I have a system that can replace all that, I want the heavy workload of worksheets and excel spreadsheets, to go away, which the system will do but I also want the reporting needs to be streamlined and finetuned for me exactly the way I want them.

I don’t want to spend a lot of time playing with data at the other end either. Otherwise, I am just moving a problem to another part of the cycle. So, I think if you find one that is going to be able to tailor the entire process and have as an administrator of the system high levels of control into what I can do with it.

Even how I can adjust it half way through if I need to, that kind of level of I don’t know the flexibility within technology is part of making that piece of software work for you. It’s not about putting in a one standard package solution that is set and once it’s done, I can’t do anything about it. If I can change and manipulate along the way, then it’s even better.

 

Arishma: Are our expectations too high, for what an software will deliver for an HR process?

Alison: Of course! We always want more than what we can get.

There is no perfect solution for everything and there is always going to be a hiccup and you have to just understand and the 80/20 rule applies to everything. And even software solution. So, you know I think if we are talking about our expectations are, if you can go into a software development process with very clear expectations of what you are looking for and find a provider who can match and answer those queries, problems, issues deliver on it, then you are probably going to end up in a 90/10 solution which is ahead of the pack.

It’s doing way more than you could ever hope for. I think there are two sides to that.

There is the future part as well, which is solving my problems now and being flexible enough to adjust with me as my business grows or changes in the future. So, you need a supplier that can do both. You just don’t fill the space with one solution once. It continues to develop and evolve.

 

 

 

Arishma: Will we ever find a perfect solution? Is there such a thing as total satisfaction?

Alison: I think there is two parts to that. I think you absolutely can have total satisfaction with who supplies your software solution.

If you find a good match and build a good relationship, you can absolutely have a perfect supplier. The other part of that question is around can you be totally satisfied with the solution, and that to me, is you should never be satisfied with a solution because you should always be looking for ways to improve and develop and further streamline and or enhance whatever solution you put in.

You always on the very first time out of the gate will have a massive win when you convert a manual rem process into a software online based tool. You absolutely will. You will be winning all over the place and everybody will love you but it’s what you can do after that.

It’s how you further enhance the tool, develop the tool, make it more user friendly, align with the business, when a business has a massive reorganization and restructure, can it take it, can it move with you, can it change with you, how much manipulation can you do as an independent person versus how much you need to go back to the supplier to adjust but the ability for it continue to grow with you. That is where the satisfaction is. You shouldn’t be looking for satisfaction in the tool. It should come with the ability for it to meet your needs year after year after year. That’s where the satisfaction comes from, in its ability to evolve with you and change with you.

 

In the final segment of this podcast series, Alison and Arishma talk about the use of reference checks when assessing an HR tech vendor, the relevance of RFPs today and the importance of user experience when buying a software. Stay tuned!

In discussion with Remuneration Management expert Alison Kennedy – Part 3

November, 2016

Blog 3This is the third in a five-part series of podcast interviews with Alison Kennedy, Executive HR and Remuneration expert, in conversation with Arishma Singh of Pivot Software. Today, we’re discussing if and why buying HR software might seem difficult and how to find a great partnership with a supplier.

Arishma: Is buying HR software scary?

Alison: I actually don’t think it’s scary. I think it’s one of the more exciting things we can do now in HR, cos it is that evidence of moving forward, being more data and tech savvy inside the world that is absolutely data and tech savvy. We have got to start aligning ourselves with real world, so I don’t think it’s scary. It’s an important thing. I don’t think people should be frightened of it. I think if companies sat and looked at their overall budget, item lines that they spend, how much they spent on recruitment or how they spend on any other HR process, I think they would find the bulk of software isn’t a massive expenditure compared to your salary bill.

As HR leaders, I don’t think we should be scared of it, I think we should learn lessons where other people can provide their experience. So, if there are articles that talk about a particular program or a supplier or difficulties that they have had, you should read them and take into account how other people have experienced them but understand the context of that experience as well. So, there is no point in getting a view point of an organization that is so the other spectrum compared to your organization does because it just might be that it wasn’t the right fit for them and that supplier might be the perfect fit for you. So, I have to think that you have to take others experience with a grain of salt and with a big piece of context.

Arishma: How do you find that great partnership with a supplier?Alison Kennedy First Blog Picture

Alison: I think it’s just getting to know them as individuals and their background. So for me, if a supplier comes with a team on the other end of support line that has in-house experience that used to be HR Practitioners and understand the world that I am calling from, I think that gets you a lot further along the road than someone who might be a provider that is very tech heavy in terms of their employees.

You need the supplier to have that balance of people who have been in house and have been HR Practitioners and then have the expertise to convert that into technological solution for the problem that you have. I think finding the one that suits you is all about making sure that you have a good rapport, that people make sense to you on the phone and they can understand the way you speak in the environment that you are calling from and so the ability for them to understand your business and partner with you.

So, you know we have talked earlier about business partnership from HR point of view and partnering with the business.  It’s the same with the software supplier. They need to partner with you and your needs that are aligned with your business that’s behind you. So, I don’t think it’s an impossible thing.

You can absolutely can find really good fits but you just have to take the time and make sure that, that match is there for you. Technology can be built around any need that you have, so I would absolutely balance that with people that you are going to work with, with what you see the technology delivering.

In the next segment we discuss signs to look out for that will tell you whether a supplier partnership will work or not, and if there exists a perfect software solution. Click here to read the next segment.

In discussion with Remuneration Management expert Alison Kennedy – Part 2

November, 2016

Blog 2This is the second in a five-part series of podcast interviews with Alison Kennedy, Executive HR and Remuneration expert, in conversation with Arishma Singh of Pivot Software.

In this segment we are talking about the key HR issues facing organisations today and the role technology plays in the workplace, from an HR standpoint.

 

Arishma: What are the key HR issues faced by organisations today?

Alison: I think the biggest part is as a HR group is being relevant to the business but to each other, so you know one area or specialty of HR should not be run down the road without considering the impacts and issues that it is going to create with other parts of HR. I don’t think HR should operate in silos or specialty. I think they should all be walking down the road together and building the core skill or experience or expertise across the board as a group and the more they can interact with each other, the more successes they will have, in that a business from a practitioner HR point of view. I think if you are thinking from the other side and talking about the business itself, for HR I think it’s about your ability to go beyond HR. You know the business don’t have time to spend playing around in our industry. The business is what they are doing. So, if they are making computers, or if they are providing financial services, or if they are printing newspapers, whatever their core business is, is what should be important to you.

 

 

I think generically, it’s always doing more with less. I think over the coming years ahead, we are going to see HR more focused, downsize a bit further, the years of overwhelming growth and everyone’s a specialist, or the joint fun of having a HR team explode, I think those days are over. I think the necessity of businesses being very smart with the way they spend their money on non-business area is critical. And, I think HR needs to respond to that appropriately. So, technology is really about streamlining as much as you can, and getting faster at providing those backend services that help a business stay operational and help them run. You need to be more and more online, you need to be more and more electronic and less paperwork driven and HR needs to just be running full sprint away from the history of personnel and paperwork as much as they can.

Alison Kennedy First Blog Picture

Arishma: Can we as HR professionals or HR processes do without software? Or is it a necessary evil?

Alison: I think returning to paperwork is evil! I don’t think you can say software is a necessary evil. I think it’s very clearly the way businesses have developed and evolved and are becoming more streamlined and saving money, saving costs. You absolutely should be applying software where you can and having removing paper work from anything. So, I think there absolutely is no HR future without software.

 

Arishma: What about those that see themselves as Excel whizz? What would you say to them?

Alison: I think people who are Excel whizzes, should absolutely be the ones jumping onboard with software. Their mind is already tuned to a process style of approach, or a systematic approach to data, to understanding data and the way data interacts with each other within Excel spreadsheets, or having spreadsheets talk to each other. So, you know as a Excel enthusiast myself, I was very attached to my spreadsheets in the old days but I find technology is now just a new way to be excited about data. The data-mining you can do when you have technology or software based systems to hold the information is so much more fun than the old ways of playing with spreadsheets. But those HR people who have that skill-sets, they are the ones who should be on those teams of implementing software and they would be the ones looking at processes and figuring out what they are going to do with their big data need.

 

In the next segment of the series, Alison talks about why buying HR software may seem difficult but doesn’t have to be, and how to find a great partnership with a supplier. Click here to read the next segment.

In discussion with Remuneration Management expert Alison Kennedy – Part 1

November, 2016

Alison Kennedy First Blog PicturePivot Software is proudly supporting Alison Kennedy, in her upcoming presentation at HR TechFest 2016 in Melbourne, one of the biggest industry events in Australasia.

Alison has spoken at many industry events and comes from a diverse background in the Rem space where she has worked with many credible brands. She possesses a sharp mind that is forever interested in seeking challenge, change and growth.

We take the opportunity to discuss with Alison the current HR landscape, the use of technology to solve human capital challenges of today and what potentially lies ahead in the future for HR. So, let’s get to know Alison a little via an interview conducted by Arishma Singh from Pivot Software.

 

Arishma: Alison, what role does an MBA play in an HR career and where you are, in terms of assisting and advising organisations in their Remuneration related challenges?

 

Alison: For me personally, I think having the broader type of education was more important. I think if you want to develop HR career and end up consulting C suite and boards and really being able to nail the link between business strategy and what HR do, I think you have to have a more broad business background and business degree to be able to make those connections and understand what the business might need or want.

 

Arishma: What pulled you to the Remuneration space, from all the other aspects of HR? What fascinates you most about it?

Alison: I think, generally, it was joining Cullen Egan and Dell, I guess as a HR consulting practice firm, you know 70% of their practice back in the day was remuneration based. They were very much the leader in data provision and remuneration thoughts, strategy, application for organisations. So I think it really was the environment that I was in certainly.

And as part of HR, it’s the only part that has to interact with every other part of HR. You have to have an understanding of L&D processes to implement remuneration or to build reward strategies and frameworks for managers to apply. You have to have an understanding if there is a competency based framework, got be able to touch that.

With recruitment, you have to have great strong connections with how you position market data and how bring people into the business, what’s the pay point for that.

There is the life cycle question of how employees are going to grow and expand and how you going to continually reward them, whether the rewards are regular or whether they are more ad-hoc to do with performance, you get to connect with performance management!

If all the areas of HR, rem is this great central piece where you have to have at least knowledge awareness and some practical understanding of all the other parts of HR and the business for it to be as successful as it can be. Whereas, I think for some areas you get to sit in there as a silo and you can effectively operate there without interacting too much with the other area of HR, so it’s a nice way of being a social butterfly in Rem.

You get to play with everybody!

Arishma: So, over the years, what sorts of organisations have you worked with?

Alison: Its actually a really broad set of industries and organisations I have the opportunity to work for. So, in the early consulting days under the Mercer banner, we had lots of private and public sector organisations.

So people like Sydney Trains, Sydney Ferries and Buses, the education system, tempered with private organisations such as the Anglican Retirement Village, American Express, some smaller credit unions, even someone like British American Tobacco.

There is an interesting set that comes with the big consulting groups as opportunities are few and far between turns to work with such a broad network of organisations.

It really helps set you up, consulting point of view early on. And then when I moved out to the workforce, I went into Westpac, at PWC and then I moved back into private consulting and they were organisations like Vodafone, MBF.

When I, in 06 to 09 I went and lived in Hong Kong and I was internal there, I worked for an investment bank and most of my time I spent with this company called Equity Trust as their HR Director and that was private net worth individuals were our clients and working on private equity pieces of work was the focus for them.

And once, I came back from 09, I spent a bit of time in the Engineering space with places like SKM and Coffey International and then moving into a bit of media with NewsCorp and most recently then with Ventia.

There has also been a few small weird ones like working Rockwood cemeteries, you know peppered in there that keeps things interesting. Alison Kennedy

I have been really lucky in having the chance to walk in the door of so many different types of industries and organisations and I think fundamentally for me I believe thoroughly that you can practice remuneration anywhere and your skill set is all about understanding the industry and the business as quickly as you can, getting your head around how the business works and the space it operates in is more important than sticking say a Financial services career to be successful.

I think you can be successful across multiple industries as long as you’re adaptable, you are flexible, and you can ask the right questions to get up to speed quickly in terms of what the environment is that you are walking into.

This interview podcast is one in a 5-part series in the run up to the event.

In the next segment, we get to hear what are the issues that Alison feels HR needs to address. Click here to read the next segment.

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