For the last couple of years on our Compensation Best Practices survey, we’ve asked HR and Comp professionals about the tools they use to manage their pay processes. In 2018, when it comes to comp planning and administration, we saw that more organizations are ditching the good ol’ spreadsheets.
Fewer organizations are using spreadsheets to manage base pay increase in 2018.
While spreadsheets are still the go-to tool, their usage is declining.
In 2018, 68 percent of organizations are using spreadsheets to manage their base pay increase (vs. 74 percent in orgs in 2017). Instead, more organizations are moving their process to their HRIS system, accounting system, or custom internal tools.
In 2018, 68 percent of organizations are using spreadsheets to manage their base pay increase (vs. 74 percent in orgs in 2017).Click To Tweet
In both years, we found that top-performing companies are less likely to use spreadsheets to manage their base pay increase process. In 2018, 64 percent of top performing orgs are using spreadsheets versus 68 percent of typical organizations.
Larger organizations are much less likely to use spreadsheets to manage their base pay process — because spreadsheets don’t scale and are error-prone. In our latest CBPR, we found that only 52 percent of the largest organizations — those with 5,000 or more employees — use spreadsheets, versus 65 percent for organizations with between 750 to 4,999 employees.
Once organizations reach more than 100 employees, they are much more likely to manage base pay increases through their HRIS. In the CBPR, we saw that while 11 percent of the smallest organizations use their HRIS system to manage pay, 40 percent of organizations with between 570 to 4,999 employees use an HRIS system (vs. 38 percent of organizations in the largest segment).
Similarly, orgs are using spreadsheets less to manage their incentive plans.
In 2018, we also saw that organizations are less likely to use spreadsheets to manage their bonus or incentive plans. Instead, they’re moving this process to their HRIS system (20 percent of orgs), or Payroll system (23 percent of orgs).
Meanwhile, organizations are also becoming less reliant on spreadsheets for combining, aggregating and managing their compensation data sources.
The larger the organization, the the less likely they are to still use spreadsheets to manage their compensation data sources. In 2018, only 36 percent of the largest organizations (with more 5,000 employees) still use spreadsheets. Meanwhile, a quarter of the largest organizations use PayScale MarketPay to manage work with their comp data sources.
In 2018, we asked organizations where they house their compensation data. The top three tools in order are payroll systems (46 percent), spreadsheets (43 percent) and HRIS system (31 percent).
We found that top performers — those who are number one in their industry — are more likely to use a payroll system (49 percent of top performers vs. 46 percent of typical orgs) and less likely to use spreadsheets (39 percent vs. 43 percent of typical orgs).
Why spreadsheets are bad for business
In today’s competitive talent market, smart tools can give organizations the edge they need to attract, motivate and retain the best talent. Spreadsheets simply aren’t set up for modern organizations who need their comp strategy to move at the speed of business.
1. You can’t make personalized pay decisions at scale.
Most organizations want to pay their employees equitably, that is, competitive with the market and tailored to each individual’s performance. However, personalizing pay is nearly impossible when you don’t have the right technology. Trying to personalize pay with spreadsheets is like trying to lose weight by manually counting your steps instead of buying a pedometer — the tech makes it so much easier, and so much less of a headache. By using software to automate the administration piece of compensation, you can free up time to focus on the strategic work that really propels your business forward.
2. Spreadsheets aren’t a good communication tool.
Spreadsheets aren’t a great medium for sharing information with managers. Although you might enjoy looking at rows and columns of data, most managers have a million other things on their plate and sending them massive spreadsheets will just cause confusion and/or lead to a delay in their response.
Would you rather use your energy to build massive spreadsheets, going back and forth with your managers working off of multiple versions? Or would you rather make sure your managers understand the compensation strategy the business is trying to achieve and has the right information to share with their employees?
With software like PayScale Team, HR is able to lead the compensation strategy and help managers make pay decisions and communicate them to employees, all in one location. One of our customers — Tax Analyst — said that the comp team spent 28 percent less time on the increase and raise process when they moved from spreadsheets to PayScale Team.
3. Spreadsheets hinder your ability to compete for top talent in a competitive market.
Your compensation costs are a big part of your overall expenses, and the cost of getting comp wrong can be steep. These days, employees and job candidates have plenty of access to salary information and they know their market value. To effectively compete for talent, you’ll need to use market data to price your jobs and adjust your comp plan quickly when the market shifts. Spreadsheets simply aren’t suited to handle these tasks. On the other hand, modern comp software can help you fill in the data gaps, price jobs quickly and make proactive changes to your comp plan to ensure you meet your business objectives.
Want to learn more about the expected ROI of comp software? Check out this study by Forrester on the Total Economic Impact of PayScale.
To learn more about how top performing organizations are managing comp, download our latest CBPR report.
Tell Us What You Think
How does your organization manage pay increases? We want to hear from you. Share your story in the comments.