Compensation program has been defined in Webinar as an established measure of success related to rewarding of the organizational workforce (Carroll, n.d). Performing analytics, on the other hand, involves establishing whether the organization is in the right track in undertaking its reward programs. Compensation analytics acts an important evaluation tool for measuring whether the organization is achieving its objectives relating to compensation program. It would be somewhat absurd for a company to spend the large sum of money on their workforce in terms of remuneration without reviewing it. Every compensation programs must have a philosophy which indicates what the company intends to achieve through its reward process (Carroll, n.d).
A number of valuable reasons have always forced companies to perform analytics of their compensation programs. The first reason for conducting analytics is to establish whether the compensation programs are achieving their set objectives as per the compensation philosophy. Companies require analytics to check for any irregularities in the reward process that are likely to bring about unjustified cost burden on the organization. Final analytics may be carried out to check for irregularities that would lead the company into litigation taking into consideration that several laws and regulations have been instituted to govern remuneration.
It is vital for the company to be smart on how they issue money to employees. First, it is important to establish whether your top performers are compensated according to the company’s established philosophy in case the company is rewarding employees based on performance. A comparison must be made based on top performers to the comparator (CP) before allocating the budget for the salary increase. Additionally, companies have to decide whether to move ranges for jobs as per the market rates (external equity), keep jobs in the same pay grade (internal equity), or utilize a market premium above the pay range (combo) (Carroll, n.d).
ReferenceCarroll, S. (n.d). How to Perform Compensation Data Analysis. Video. Retrieved November 12, 2011 from: http://www.payscale.com/hr/resources/compensation-analysis-webinars01-post
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