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May - 2015 - issue > CXO INSIGHT
Fixing Your Compensation Program Is Yours a Socialist Program in a Capitalist Economy?
Srinivasa Ogireddy
Chief Cloud Officer and Senior VP of Engineering and Operations-Saba Software
Saturday, May 2, 2015
In most companies, compensation programs fail - or in the best cases, fall short of their purpose of truly incentivizing great performance.

There are many reasons for this: outdated strategies, complex processes, and reliance on the wrong technology-namely, the spreadsheet. Even the best-intended programs that attempt to "be fair" to the broader employee base miss the mark, when the impact of "peanut butter" spreading of a compensation budget gets diluted by distributing itevenly to everyone. Even those that try to create formulas to better incent higher performers tend to be too slow to get funds to the right people before they get a foot out the door.

The biggest challenge: visibility. Even in smaller organizations, companies lose track of the details that attest to the performance and the potential of each of their people. And, sadly, there is precious little to track performance beyond the job description, like the knowledge sharing and connections someone makes in your organization that create better innovation through collaboration.

This is a problem that has been plaguing organizations for ages. And with the unemployment rate in the U.S. alone at its lowest since 1977, and more than 36 percent of global employees looking for their next job, it's a problem with much higher stakes. So how do we fix this? How do we make sure that businesses of any size can get a true picture of each employee's individual achievements, potential impacts and motivation to prescribe a personalized, competitive and appropriate wage increase?

Predictive and Prescriptive Compensation Technology

While there is no substitute to great managers and mentors, there is a great supplement to the people that hire, train, engage and advance your teams: analytics technologies that help your business get to know-and remember-the evolving contributions and aspirations of each team member. Just like Amazon recommends consumer purchases and Netflix suggests movies specific to your tastes, so too, can talent management solutions learn the skills and contributions and then recommend personalized compensation plans for each person in your organization.

Modern talentanalytics technologies can-and should - provide real-time insight on every employee, while offering suggestions as to whether or not a specific person should be given a greater wage increase - or even none at all. The best technologies should look at the intersection of three key compensation variables to determine and prescribe the right compensation to the right people at the right time for your business:

1. Value: The true value of an employee is largely dependent upon a specific business' goals. Technologies can look at an employee's achievements internally and externally to ascertain what sort of compensation this person deserves. Advanced algorithms can connect the dots on everything from specific skillsets and performance to how an employee interacts with co-workers to how those co-workers, in turn, view that employee.
2. Risk: Key players vary in every business by role, level and expertise. But the impact of losing an actuary in an insurance business or a data scientist in a fast-growth tech start-up can be devastating. Good compensation technology can look at data like high turnover geographies and bosses, regional or national scarcity of qualified talent, as well as personal attributes like length of time in the role, status on vesting for stock options, and even history of job changes to see who may be at higher risk of leaving your business. Looking at several layers of data (internal data, economic data, etc.) will help determine a much better and more up to date risk barometer than just a manager's "gut check" on their team's happiness.

3. Pay: Good technology should also compare both industry benchmarks and internal benchmarks to ascertain what the overall standard range for every employee (by role, region and experience) should be. By doing this, employers can have access to dependable data when deciding what kind of wage increase employees really deserve (even if it's a little more than the finance department would like).

Great compensation technology (such as Saba's Compensation@Work) should be able to pinpoint BOTH personalized recommendations for your business superstars AND look at the power and potential of the overall compensation pool to meet the growth needs of your business. With this perspective, companies can evolve from a "blanket" comp program (+/-3 percent for everyone) that is more socialist that scintillating to a progressive and personalized incentive program that optimizes your budget to drive meaningful performance.

Can your business afford to guess about compensation any longer?

SrinivasaOgireddy leads Saba's global engineering and operations organizations and is responsible for development and delivery of the highly innovative, scalable, and extensible Saba Cloud platform and applications that power the Saba Cloud. Srini brings 20 years of software development expertise on building distributed teams in high-growth environments for rapid delivery of robust applications built on high-performing cloud platforms.

Prior to Saba, in Srini's role as vice president of product development and delivery at Coremetrics (an IBM Company), he designed and developed the data tier that maintained billions of real-time customer LIVE profiles and provided the technical foundation for big data analytics and digital marketing applications. Srini has also worked as a software architect at Engineers India Ltd. (EIL), a leading provider of engineering and related technical services for petroleum refineries and industrial products. Srini earned a Bachelor of Engineering with honors in Mechanical Engineering from BITS, Pilani and a Masters in Computer Applications from Indian Institute of Technology (IIT), Delhi.

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