How to Perform Compensation Analytics - Assignment Example

How to Perform Compensation Analytics?Compensation program has been defined in Webinar as an established measure of success relation to rewarding of 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 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 compa-ratio (CP) before allocating the budget for 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). In fact, companies need to be aware of their ranges especially the high growth companies in booming industries such as hi-tech or energy who tap into external equities. For instance, it is not advisable to run a budget that caters for a 4-5% range when the market is moving at an average rate of 3%.

Organizations have always ended up in dilemma when they realize that they are paying their employees above the market range. This is why it is advisable that the management should conduct analysis of all the positions in the organization, positions within every pay grade and those of incumbents within each pay grade in relation to market ratio. After conducting an analysis, the company should be in a position to understand which market range is good for them that is low, medium, or high range (Carroll, n.d). This will enable organization to eliminate unnecessary costs incurred with the organization with respect to overpaying employees.

Managers should not be disillusioned that paying their employees higher wages or moving the range above market ratio will help them achieve compensation program objective. Companies should spend their money where they need it especially when they have constraint budgets rather than across the board increases as this would hurt the company financial strength (Carroll, n.d). It is notable that the information presented in the Webinar is high-connected taking into consideration that the representative covered a large amount of information covered in the text.

The information covered in Webinar includes but not limited to reward system strategic objectives, performance recognition, internal and external equity, as well as salary range. The Webinar video was so conclusive about different compensation approaches, which include both monetary and non-monetary compensations used to entice employees for positions. The most interesting piece of information in the Webinar video involves paying high wages above the market range. This is because an organization cannot achieve its compensation program objectives by paying high wages only as this only leads to unnecessary cost burden.

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