Written By: Julie Roberts, CCP, CoE Leader – Compensation & Variable Pay
Like the weather, forecasting staffing and human resource requirements is an unpredictable job. However, when the weather forecast is wrong, we can simply grab an umbrella and go. As Human Resources and Compensation professionals who are responsible for managing the company’s largest expense, employee compensation, it is not that simple. Inaccuracy in forecasting employee compensation plans and related costs can result in very costly mistakes to the tune of millions of dollars.
While on a recent vacation, I recall thinking “if my job performance was as unreliable as the local weather forecast, I might not have my job for very long.”
Unlike the weather, which can be managed by grabbing an umbrella for coverage, the office is a different environment. Organizations put forth an enormous amount of time, effort, and resources into planning to meet business needs. For example, compensation professionals help drive strategic value to the organization by performing various modeling and forecasting of compensation plan scenarios in order to help determine how best to spend limited budgets while maximizing company performance and achievement. Their modeling and forecasting results impact the initial plan design decisions, provide summarized costs upon which budgets are built. When performed throughout the plan year, forecasting can provide valuable insights into potential risks and course corrections, as well as provide finance with more accurate cost projections and accrual information.
Appropriate planning and forecasting requires a number of key factors be considered in the context of historical levels and expected results. This may include company and individual pay and performance, current and desired range and market positioning, goal attainment, population distribution and geographies, and the organization’s ability to pay. This can be an arduous process without adequate systems and tools to easily turn the data into actionable analysis.
To ease the burden and increase accuracy, ‘SuccessFactors Variable Pay’ has recently advanced its ability to further support your organization’s planning process with enhanced Bonus Forecasting functionality. This enhanced functionality delivers greater efficiency and simplifies an otherwise cumbersome planning process. In three easy steps, a Compensation Administrator can:
- Simulate directly within the Admin Center the expected business, team and individual goal achievements providing valuable insights into the overall effect on current plans and bonus payouts.
- Aggregate simulated results using standard grouping filters of Division, Department and Location or using custom filters.
- Compare simulation results with previously run simulations.
Export the information to prepare reports and presentations providing accurate details of costs of the programs.
- Supply Finance with more accurate budget planning and accrual information.
Compensation forecasting, much like the weather, is not simply a one and done. It is an ongoing, continuous process that adjusts to varying conditions and factors. When performed on a regular basis, forecasting adds value to an organization by providing insight to anticipated outcomes and enabling better control, predictability and management of an organization’s largest expense.
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