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Behold the Wonder of the Spreadsheet

December 1, 1999
Related Topics: Compensation Design and Communication, Human Resources Management Systems (HRMS/HRIS), Featured Article
The most fundamental use for technology in managing company compensation programs is to record and track critical salary data. Depending on the size and complexity of an organization, the applied technology ranges from a pen and a pad of paper to elaborate mainframe database systems that store and analyze every piece of data ever associated with an employee.

In technologically savvy companies, intricate Web technology is often developed to provide internal customers direct access to critical information. But, by far, the most widely used tool for compensation and salary management is a basic spreadsheet, whether it’s downloaded from a larger system or created from scratch.

Learn a few spreadsheet basics.
If you’ve never used spreadsheets before and are intimidated by their complexity, don’t be. These programs are generally easy to learn and simple to use. The most basic, essential employee data typically recorded for pay management includes:

  • Employee Name
  • Job Title
  • Department or Department Code
  • Base Salary
  • Bonus/Commission Pay
  • Total Cash Compensation
  • Salary Grade
  • Salary Range Minimum
  • Salary Range Midpoint or Control Point
  • Salary Range Maximum
  • Amount of Last Increase
  • Employee Hire Date
  • Employment Status (Full-time or Part-time)
  • FLSA Exemption Status.

Some companies like to separate more sensitive data, such as executive compensation data (stock, perks, etc.) or sales incentives and commission earnings.

With all critical employee data in one place, you’ll easily be able to analyze it with the myriad of tools spreadsheet software provides. In order to sort, subtotal, filter, or graph the information with the least amount of problems, it’s extremely important to be consistent when entering the employee data. The more consistent the data, the easier it is to examine.

A few tips for consistency include using the same titles for the same jobs. If you abbreviate, abbreviate for all the positions. Do not use "Sr. Accountant" and "Senior Accountant" in the same worksheet. Most programs don’t recognize that these are synonymous and will sort them differently.

Also, it’s important to record salaries in the same format for each incumbent in the same job. If you enter both monthly and annual salaries for your mechanical engineers and then decide to calculate an average rate of pay, your result will be completely useless since the programs do not distinguish between the two salary formats and will group them together for your average.

Use separate columns for first name and last name, as well. These simple steps can save lots of time and ensure accuracy when it’s time to analyze salary data.

Need a spreadsheet with oomph?
As companies become larger, more sophisticated technology is required to manage compensation related information. Numerous products are available to assist in the management of compensation data, from small, off-the-shelf programs to large, companywide integrated human resources and payroll information management systems.

Companies on the cutting edge of technology in compensation are investing in and building Web-based intranets to deliver and support total compensation services online. Through Web technology, people managers and employees can easily access processes such as salary planning, budget projections, performance evaluation, incentive-plan modeling and many others.

In addition, a growing number of Internet sites are available for job pricing, job matching, data analysis and general survey data collection for market pay comparisons and salary administration. Incentive software programs are also growing in popularity. The best of these programs provide complete automation, accuracy and ease of calculating incentive awards in one economical packaged application.

The bottom line is there are numerous software packages and a variety of applications available for managing various aspects of your total compensation system. The programs and applications that work best for your company will be those that best meet the complexity of your needs in the simplest fashion.

The ways in which your organization uses and analyzes pay data will dictate the type of system that will be right for you—whether it’s a spreadsheet application or an application included in your HR information management system. In your search for effective software, keep in mind the fundamental point of using technology to manage compensation is to have accurate and timely reporting of company salary information at your fingertips, in any form, whenever you need it.

Workforce, December 1999, Vol. 78, No. 12, pp. 78-79.

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