Compensation systems: the basics

In order to round out an effective HRIS, you will need one more crucial component: a compensation system.

A sophisticated compensation system will save you hours of number crunching using excel spreadsheets. Many of these systems are sold as a component of Performance Management systems, but there are a few stand alone ones as well. It is always best to integrate where possible because you save yourself the time and effort involved in paying someone to write the integration software for you and the headaches that come with integrating two systems that were not designed to work together.

The capabilities you want to look for in your Compensation Systems are:


Ensure that your performance management system and your compensation system are fully integrated so that all the performance scores from the manager’s appraisal, employees’ self-appraisals and any 360 reviews you have, flow over to your compensation system. This will make is significantly easier for your managers to be able to rank employees and doll out the appropriate performance based merit increases.

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