The best compensation management software

Published

Jul 29, 2024

Author

Good compensation packages keep employees engaged. And if stellar employees notice their hard work literally pays off in the form of higher compensation, your best talent is more likely to stick around.

That said, managing employee compensation—including salary, equity, and bonuses—across your entire workforce can get tricky. Recruiters, hiring managers, department heads, and finance teams struggle aligning on approved compensation bands. Teams want to offer competitive pay without over budgeting. And without the right data, it’s difficult to tie performance to pay raises.

But there’s a solution: compensation management software. Stay tuned for everything you need to know about what it is, how it helps, and the best systems available.

What is compensation management software?

Compensation management software helps companies plan, process, and manage employee pay. This includes salaries, bonuses, and commission in addition to other forms of compensation—like equity and stock options.

By automatically calculating an employee’s total take-home pay, this software allows companies to accurately run payroll, reward standout performance by aligning it with compensation, and even design equitable pay packages that are both market competitive and geographically appropriate. With the right features, the software also helps companies set (and stick to) realistic budgets and simplify the headcount planning process.

The 8 best compensation management software solutions

While there’s no shortage of compensation management solutions available, here’s a look at your best options.

1. Rippling

Rippling is an all-in-one workforce management platform that unifies HR, IT, and finance processes into a single system. With employee data as the single source of truth that powers a bevy of interconnected solutions, Rippling helps companies of all sizes hire, manage, and pay their team members with time-saving automations that ease administrative burdens.

Rippling’s Compensation Bands tool lets you set and enforce different pay ranges for employees across different roles. From a single dashboard, recruiters, managers, executives, and finance teams can see an employee’s job family, seniority level, and all their different forms of compensation, including salary, equity compensation, and bonuses, ensuring everyone is aligned on how much they can pay new hires.

Rippling also automatically maps employees to the right compensation bands based on their role, enforces the bands during onboarding, and flags out-of-band adjustments so you can stick to headcount plans. You can also run detailed compensation reports across different employee attributes to ensure equitable pay practices.

And thanks to integrations with Carta, Rippling gives users access to the world’s largest private-market database of salary and equity benchmarks across more than 40,000 startups, helping companies set competitive and equitable pay bands no matter the job.

As an all-in-one platform, you can use multiple Rippling features to take full control of compensation management. You could, for instance, combine pay bands with headcount planning to set approved budgets, performance management to trigger merit increases, and, of course, payroll to automatically calculate deductions and stay compliant.

Standout features: Full-service HCM, IT, payroll, and spend suite with compensation management capabilities across recruiting, time and attendance, headcount planning, performance management, pay bands, and more.
Pros: Align pay increases with performance, view salary and equity compensation in one place, automatically set and enforce compensation bands, easily update pay based on employee lifecycle changes.
Cons: Per-employee pricing can add up as you expand your feature set and grow your workforce.

2. ADP

ADP provides HR and payroll software solutions to more than one million companies. Users can add on the ADP Workforce Now Compensation Management app to align compensation offers to total budgets and sync merit pay to employee performance. You can also use the solution’s pre-built templates to gauge pay ranges based on market rates and simplify bonus cycles.

Standout features: Payroll and HR support, performance management, pre-built reports, budget planning capabilities.
Pros: Manual or automated payroll capabilities with other HR management features as needed, pre-built templates to assess pay bands and performance-based merit increases.
Cons: Inability to trigger automated comp adjustments based on employee life cycle changes and lower support satisfaction scores than some competitors.

3. Deel

Deel is a full-service payroll provider and HR platform that helps companies manage employees and contractors across the US and internationally. Its compensation tools let users look at salary ranges for different roles in different jurisdictions and can provide payroll and compliance support through its PEO or EOR.

Standout features: International salary data, EOR, PEO, global payroll services, compliance support.
Pros: Helps companies manage compensation across distributed teams and provides expert payroll and tax support across borders.
Cons: Limited ancillary features (including no time and attendance, performance management, or applicant tracking), no automated compliance alerts about potential violations.

4. Workday

Founded in 2005, Workday provides HR, payroll, and enterprise resource planning (ERP) services to businesses across industries. Among its suite of offerings, users can purchase Workday’s compensation management tool, which lets teams oversee merit increases, track bonuses and stock offerings, and set market-appropriate pay benchmarks.

Standout features: Pay equity dashboards, compensation analysis tools, total rewards statements, integrations with its HCM and payroll.
Pros: Collaboration tools for compensation reviews, benchmarking tools, pay equity discovery boards to monitor pay gaps.
Cons: Solutions are not natively built which can impact the user experience, long implementation times.

5. UKG Pro

UKG Pro is an HCM that offers payroll solutions and a suite of HR functions including talent management, compliance, time and attendance, and scheduling. The UKG Pro Compensation tool helps teams set configurable salary plans based on performance reviews, all while aligning employees and managers on pay structures.

Standout features: Time and attendance, salary structures, performance management.
Pros: Rewards structuring, compensation data management, adjust pay based on performance cycles.
Cons: Inconsistent user experience across modules, limited automations, pricey compared to competitors.

6. Paycom

Paycom builds payroll software designed to reduce compensation errors and help teams cut down on manual work. The company also offers HR tools like benefits administration, talent management, and a global HCM. Paycom has a Compensation Budgeting tool that allows teams to view an employee’s compensation history and set salary grades.

Standout features: HCM, Compensation Budgeting, payroll
Pros: Build merit matrices that account for budget and compa-ratios, reduce errors during pay runs, peg performance reviews to merit increases.
Cons: Lacks of out-of-the-box integrations, incomplete reporting, limited automated workflows.

7. Papaya Global

Papaya Global is a global payroll provider that offers compliance support in 160 countries, an EOR, contractor payments, and more. The system has an Equity Management feature that handles equity strategy for both domestic and international employees, helping teams navigate offering cross-border compensation packages.

Standout features: Global payroll, international compliance expertise, EOR, global benefits, equity management.
Pros: Manage equity compensation and benefits for a global workforce, leverage international compliance expertise, pay in local currency of 160 countries.
Cons: Uses third-party payroll providers in most countries, which can slow down payments, limited integrations with other workforce management tools.

8. Lattice

Lattice is an HR platform specializing in tools that help companies manage performance, engagement, career development, and compensation strategy. The company’s compensation management features allow HR teams to tie pay to performance and set guidelines and benchmarks to inform raises for their employees and create and maintain fair and equitable compensation structures.

Features: Performance review management, goal setting and tracking, compensation benchmarking tools, cycle management, budget tracking.
Pros: Track and view compensation data over time, get pay benchmarks based on role, level, and geography, connect performance review cycles to compensation decisions, raise guidance.
Cons: Requires a minimum $4,000 contract, clunky interface

5 essential compensation management features

When determining the best compensation management solution for your company, look out for the following features.

Compensation bands and benchmarking tools

Standout compensation management software helps recruiters, hiring managers, finance teams, and department heads align on competitive pay packages. It helps users set up pay ranges dependent on an employee’s location, seniority level, department and more—notifying teams whenever comp offers either exceed or fall short of the pay band.

And since the right compensation package often depends on market data, look for tools that give you a glimpse of how much similar roles across other companies pay.

Budgeting and forecasting capabilities

While you want to provide competitive compensation packages that help attract and retain top talent, you need to make sure pay scales jibe with your budget—both now and in the future.

With that in mind, the best compensation management solutions are linked to headcount planning capabilities that align team members across departments on approved job openings, compensation bands, and costs of new joiners. Look for solutions that let you track how newly filled jobs affect cash flow, and automatically block unapproved compensation bands before they dismantle your budget.

Compliance and pay equity support

Compensation is more than an annual salary figure. It also encompasses state and federal benefits entitlements and needs to be compliant with employment laws. Look for solutions that proactively catch noncompliant compensation packages and help administer required benefits across jurisdictions.

You should also have safeguards to ensure equitable pay across your workforce. Look for solutions that let you cut data across different employee attributes to ensure every team member gets a fair package.

Reporting capabilities

Compensation management software works best when it can access a deep well of employee data to create customizable, high-visibility reports. This helps teams control spend, view the total cost of hiring new employees (factoring in salary alongside equity compensation) across departments, and forecast future headcount needs, and stay within budget.

Integrations with other HR systems

Compensation management works best when it’s connected to other HR solutions and finance processes. For instance, aligning your comp strategy with performance reviews ensures you’re rewarding stellar work by offering merit increases. And connecting payroll to compensation—along with other spend management features—helps you calculate the true cost of employment. Look for systems that smoothly integrate with other workforce management processes.

Streamline your compensation management with Rippling

In addition to having powerful functionality across so many other workforce management systems, Rippling empowers teams to set strategic, competitive, and equitable compensation packages.

With Rippling, you can:

View and manage compensation bands in a single place that’s tied to the rest of your employee data.
Automatically map bands to new hires based on level and location.
Assign role-based permissions to securely give different team members proper access levels to different compensation bands.
Automate approval chains to ensure compensation offers and adjustments stay within budget.
Run compensation reports across different employee attributes to ensure equitable practices.

When you use Rippling compensation bands alongside our headcount planning software, approved compensation amounts are automatically reflected in your budget, helping your teams track approved and forecasted cash and equity.

You can also ensure compensation plans are reflected in actual pay runs with Rippling Payroll. Designed for a high degree of flexibility, Rippling also allows you to customize your payroll workflows, approvals, and reporting at a granular level. Because Rippling processes your payroll internally rather than relying on local vendors and aggregating their data, you receive real-time updates on the up-to-date internal data. Role-based approvals and reporting also protect the confidentiality of your data internally and externally.

To see how you can combine effective compensation management with so many other HR and finance processes, schedule a Rippling demo today.

Schedule a demo with Rippling today

See Rippling

Frequently asked questions

How does compensation management software improve payroll accuracy?

Compensation management software ensures you’re not just paying out salaries, but also accounting for compensation related to benefits administration, leave entitlements, bonuses, commissions, and merit increases based on performance review cycles. When you integrate compensation management and payroll, you don’t need to manually add in non-salary pay adjustments—helping you automatically pay employees accurately.

What is a compa-ratio?

Also known as a comparison ratio, a compa-ratio compares an employee’s compensation to the median compensation for salaries of similar positions. It’s a way to benchmark compensation packages, ensuring you’re offering market-competitive rates.

What is included in an employee’s total compensation package

An employee’s total compensation can include:

Wages
Base pay
Statutory benefits (social security and healthcare benefits)
Overtime pay
On-call pay
Profit sharing
Bonuses
Stock options
Retirement plans
Management incentives
Health insurance
Tuition reimbursement
Childcare

All forms of total compensation should be reflected in every team member’s employee agreement.