Top Features of Compensation Management Software

HR departments today must do far more than simply calculate compensation. You need dedicated compensation management software to keep employees engaged, your HR team in control, and your strategic business plan on track. This is how it appears.

Compensation management can appear to be all about numbers. And that’s exactly what it becomes if you don’t have the right compensation management software to support your process.

HR Tech News:

MakeShift People First Scheduling Solution Now Available on SAP Store

However, compensation is more than just numbers. It can be divided into three categories:

  1. Base salary or wages, bonuses, commissions, and equity or long-term incentives are all forms of direct financial compensation.
  2. Indirect financial compensation includes retirement plans, benefits, and compensation for continuing education, among other things.
  3. Non-monetary compensation includes career development, training, recognition opportunities, work/life balance, and so on. These factors are critical to retaining a stable and qualified workforce. In fact, developing a strong compensation strategy is one of the most powerful tools available to HR professionals for attracting, retaining, and motivating talent. However, without the proper software, the time and effort required to properly configure, manage, plan, and communicate compensation is time-consuming, difficult, and frequently ineffective.

What is Compensation Management Software?

Compensation management software directs, regulates, and simplifies the calculation and distribution of complex merit, bonus, and equity awards. The goal is to increase employee engagement, performance, and retention while freeing managers and HR personnel to focus on strategy, communication, and other critical initiatives.

Managers can use compensation management software to:

  • Make informed and strategic compensation decisions.
  • Cut down on budget waste.
  • Ensure that the most valuable employees receive what they are due.

However, not all platforms are created equal. Look for at least these 9 key features when looking for a solution to manage the entire compensation cycle and replace your manual processes and spreadsheets.

Top essential features of Compensation Management Software

1. Allocation of Total Compensation

As previously stated, compensation is much more than just a salary. As a result, you require software that can streamline the total compensation cycle allocation process, making even the most complex plans easier to administer.

You should be able to program your process to account for various variables such as plan guidelines, salary cap limits, and various merit, bonus, and equity plans with different rules and budgets.

Planning managers should also be able to access all of this through a centralized planning dashboard, making it easier.

2. Communication of Total Compensation

Another important aspect of total compensation is how you communicate this information to employees. Look for a solution that allows you to view employee compensation statements online.

This enables managers to communicate compensation statements to employees at the appropriate time, with the appropriate support, messaging, and context. Managers can view statements through an online portal and, when ready, share them on demand, rather than manually downloading and attaching sensitive and complex PDFs to emails.

Key characteristics of online employee compensation statements include:

  • Dynamic content and formatting
  • Corporate identity
  • Multilingual abilities
  • Statements on target and actual award amounts
  • Manager publishing on demand
  • Email notifications that are automated
  • Support for total rewards communication content is optional.

3. Plan Workflow Automation

Once your plans are in place, your software should automate the workflow of the planning manager.

You should be able to configure approval hierarchies and workflows for various plans, as well as create triggers and alerts that notify and route information to the appropriate people when action is required during the compensation process.

HR Technology Update:

Leading Organizations Choose Qualtrics to Boost Employee Engagement and Retention

4. Make Complex Award Calculations Easier

Expect an error rate of 5% or higher when planning with spreadsheets. Furthermore, manual processes are inefficient and costly to your organization.

Compensation management software that can perform complex award calculations can assist you in eliminating costly calculation errors and saving time.

5. Pay Requirements Around the World

Large, international organizations require a tool that can accommodate all of the local areas in which they operate.

Flexible location profiles, multiple language options, and automatic currency conversion tools must be included in your software, allowing you to meet global pay requirements while managing and planning everything in one system.

6. Tools for Review and Reporting

You need powerful review and reporting tools if you want to make better compensation decisions. As a result, your software should enable you to:

  • Throughout the planning process, view budgetary allocations across the organization.
  • View compensation data for specific individuals or departments.
  • Recognize the underlying compensation trends.
  • Create standard or ad hoc compensation data reports.
  • Visualize trends and other graphical data representations.

7. Processes that are auditable and compliant

Your compensation processes must evolve in tandem with labor laws. This is made much easier by software.

With built-in compliance features, you can stay in compliance with corporate policies, state mandates, and federal regulations regarding compensation. These can include automated recognition and flagging of guideline awards.

Furthermore, compensation management software should be able to track all actions by recording each keystroke and compensation decision. This makes your processes more defendable, auditable, and compliant.

8. Budget Controls that are Automated and Flexible

Budget overruns due to compensation are frequently overlooked until it is too late. Last-minute budget changes after planning has begun result in massive amounts of rework.

You have complete visibility into the process with automated budget controls and flexible budgeting features, ensuring money is not only spent appropriately within budget but also spent effectively. And if the budget changes, no worries! Simply reset and recalculate the system.

9. Integration

Your compensation management software must be able to interface and align with any HRIS/HCM, performance management, payroll, or financial software you use for the best results.

These integration capabilities enable a continuous flow of data from one system to another, feeding many of the previously mentioned features.

This allows you to continue using your favorite HRIS/HCM tool for other HR functions while leveraging a more tailored solution for your specific compensation needs—all in one place.

Top 10 Management Compensation  Software

  1. Paycom


  3. UKG Pro

  4. Lattice

  5. Anaplan

  6. Payfactors

  7. Leapsome

  8. SAP SuccessFactors

  9. Ceridian Dayforce

  10. Workday Compensation


For HR professionals dealing with spreadsheets, long and stressful compensation cycles, and complex plans, compensation management software is a must. A software solution that can cater to the needs of allowing managers to make informed compensation decisions while allowing senior management and HR oversight.

[To share your insights with us, please write to]