Aligning Compensation Data for HR and Payroll

Marlo Hertling

Employee compensation data can mean different things for different teams.

Continuing our series, compensation is the third item that HR and Payroll share responsibility for.

Aligning Compensation Data for HR and Canadian Payroll Professionals

When implementing a people management solution that integrates Payroll and HR, both departments need to work hand in hand to align compensation and benefits to meet the following organizational goals:

  1. Recruit the best talentDo you offer competitive pay for your industry?
  2. Maintain employee job satisfaction and reduce turnover: Do you ensure employees are being awarded fairly in comparison to other employees with similar responsibilities?
  3. Improve employee motivation and loyalty: Are you providing your employees opportunities for growth and promotion?
  4. Recognize and reward good employees: Do you have incentive plans in place to recognize the above-average efforts made by your employees?

Let’s review the different types of compensation that impact both HR and Payroll

  • Regular Pay
  • Commissions
  • Overtime Pay
  • Bonuses, Profit Sharing, Merit Pay
  • Stock Options
  • Travel/Meal/Housing Allowance
  • Benefits including: dental, insurance, medical, vacation, leaves, retirement, taxes...
Even though both departments need access to compensation data, it is applied very differently by both teams.

Both HR and Payroll need to be involved in the design of the compensation set-up to ensure that neither ends up relying on manual processes or third party spreadsheets for day to day people management and reporting.

7 compensation components that are important to HR

1. Job Descriptions
Define in writing the responsibilities, requirements, and other aspects of jobs which help determine what job classification a position resides in.

2. Job Valuation
As defined by a job evaluation is a system for comparing jobs for the purpose of determining appropriate compensation levels based on job responsibilities.

3. Rate Schedules
The tracking of minimum, mid and maximum pay for a job and the calculation of the compa-ratios by employee.

4. Reporting for Trend Analysis
Easy to run reports to analyze compensation trends impacting things like employee turnover, benefits as a percent of wage expenses, cost of retirees and more.

5. Compensation Statements
The ability to easily produce compensation statements for employees outlining their full compensation value – including all employer paid costs to present how much the company is investing in the employee.

6. Salary Survey Review
Access to salary and benefit information for comparison to current market or industry standards to assure competitive hiring advantage.

7. Tracking of Non-Financial Compensation
The ability to easily identify career development and advancement opportunities and opportunities for employee recognition.

4 compensation components for Payroll & Finance

1. Accurate Pay
To have all pay components and benefits calculate correctly each pay each period, inclusive of automatic pay increases when a specified threshold is made or automated increases when a future dated rate increase applies.

2. Payroll Accounting
To automatically produce a Payroll journal for all wages and benefits and provide accrual and liability balances that also populate the Payroll GL.

3. Reporting for Planning and Decision Making
To have easy access to your information so you can design the reports your team requires for compensation analysis, such as year over year wage expense increases.

4. Automation of Complex Rules
For things like statutory holidays, overtime and shift premiums you can automate how these are calculated and make the rules of when they apply.

Better Together

Through integrated compensation and benefits your people management team will be able to work together to build a better, more engaged workforce by having access to all compensation data from a single data source.

About the Author

Marlo Hertling

Marlo Hertling has worked with leading HCM organizations and has been helping Canadian companies implement HCM solutions for more than 15 years. She is the Vice President of People & Culture at Avanti Software Inc and serves as Avanti's HCM subject matter expert.

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