Blog Post
Quick Read
April 24, 2018

Flight risk, pay equity and more: Making your data work for compensation

How do you create a compensation strategy that drives business outcomes, and is fair to everyone? Use your data. Here, Ceridian’s Director of Product Management Paul Jelinek discusses how to make your data work for you.


Recently, I wrote about how companies need to evolve their talent management strategies to remain competitive in the changing world of work.


A key part of evolving talent management is evolving your compensation strategy, or the way you reward your employees. As the world of work continues to change, compensation should be a key part of a company’s overall strategic plan, incentivizing employees on behaviors that help them meet business goals, whether it’s company growth or improved customer service and retention.


All of this sounds great, but how do you create a compensation strategy that provides the right incentivization and is fair to everyone? Start with technology, and dive deeper into the factors and metrics that affect compensation using tools and data.


This is a change from historical compensation processes. Instead of relying on subjective opinions from managers regarding who gets what merit increase, use data to inform your decisions about rewarding employees.


Here are three questions to ask to make your data work for you when it comes to compensation.


1. Do managers have the right data to make good decisions?

To create a compensation strategy that works and is unique to your organization, you need the right data. And it must also be served up in a way that managers can understand and digest it. Why is this important? Managers areoften constrained to a limited budget, so it’s important that they are making wise decisions based on strategic insights, not bias, preferential treatment, or subjective opinion.


So, your data needs to go the extra mile to provide these insights. Compensation decisions should not be made by looking at data in isolation, but rather looking at trends over time, and making comparisons on a number of factors. Empower your managers by providing them with the tools to make the best decisions about their team.


A benefit of having a single source of data is that managers can cross-reference employee information, trends and comparisons without having to navigate between platforms.


This visibility is key to making informed decisions. With a full view of their employees, managers can then pull up a particular employee’s performance review, and look at, for example, performance trends over time, pay history, pay equity, or how that employee compares to their peers or the market.


2. Are we rewarding the right people?

Visibility into employee data can also highlight which employees are, for example, high performers, and which might be flight risks. This information becomes important when managers are deciding how to spend their budgets. For example, managers can incentivize high-performers who may be flight risks with a bigger merit increase.


Managers can also understand factors that contributed to that employee becoming a flight risk, by looking at their compensation history to see when they got their last raise, where they are in their pay grade, or whether or not they have always been a top-performer, Not only does this have an impact from a talent management perspective, but it has an impact from an ops and finance perspective as well.


See Dayforce’s flight risk indicator tool in action


3. Are we incentivizing the right behaviors?

How do you know if your compensation strategy is working for you? There’s no such thing as “one compensation plan fits all.” Not every job has a direct line to company growth or increased satisfaction rates, and the key to addressing that is creating different compensation plans based on the different employee groups in their workforce. The sales team would have metrics to meet against growing the business whereas the customer service team may have a compensation plan that focuses on retaining and making customers happy.


It’s also important to understand what motivates your employees, particularly in today’s world of work. While some employees are purely motivated by monetary rewards, others are motivated by having time away from work, flexible hours, or other benefits. Understanding your team and their needs, and making sure that you are rewarding employees in a way that resonates with them is key to retaining them.


Compensation needs to be a formal, on-going strategy, not simply an administrative process that is performed once a year to give people salary increases. The strategy needs to incentivize behaviors to drive business outcomes, reward employees based on what is important to them, and using technology, provide the data and tools to help managers make informed decisions.


Learn more about Dayforce’s compensation management feature

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