Compensation planning software design equitable and merit-based salary structures for employees. These products help companies develop compensation strategies that support their overall business plans, operating objectives, and employee needs. Compensation plans developed by these tools explain information on salaries, benefits, incentives, budgets, development levels, and employee eligibility for raises and bonuses.
HR departments use compensation planning software in collaboration with team managers to track employee compensation over time and provide insights into pay trends. Additionally, the software allows forecasting prospective business needs, including budget management for hiring across departments and potential expansion plans.
Compensation planning tools also track whether pay equity discrepancies exist amongst different groups across the organization. These solutions enable businesses to be more pay transparent to their employees, helping them to retain top performers.
Compensation planning software often shares functionalities with other HR software. Compensation management software, for instance, offers similar capabilities but goes further by including bonus structures. It also offers reporting for compensation across the company, specifically by analyzing data and providing compensation dashboards. This software is distinct from compensation planning as planning looks at pay from a high level and forecasts for the future. Meanwhile, management analyzes the pay data in the organization's current state.
Another category with similar features is Salary and Benchmarking software, which uses external data sources to determine pay bands and what employees should be paid. Pay equity software analyzes pay equity across an organization to ensure employees are being paid fairly.
To qualify for inclusion in the Compensation Planning category, a product must:
Create compensation budgets, including the logic and pay rules to facilitate planning
Adjust compensation plans for merit increases and company-wide bonuses
Organize pay data to communicate the reasoning of salary decisions to key stakeholders transparently
Integrate with compensation management, salary and benchmarking, pay equity, or other HR solutions
