Visier® Smart Compensation

Introduction

Visier^® Smart Compensation is a data-driven decision-making solution that manages the workflow of an annual merit cycle or one-time market pay adjustment cycle, from setting the budget through to the communication of pay changes to employees.

Smart Compensation allows the HR Operations team to run a merit cycle without drowning in spreadsheets. It is flexible enough to encode complex pay philosophies, transforming them into simple math. Smart Compensation guides, empowers, and elevates managers' understanding to make more informed decisions around promotions and pay, so they can communicate them effectively to employees to ensure they feel rewarded and recognized.  Furthermore, Smart Compensation allows organizations to analyze the resulting pay choices before they are finalized to help identify discrepancies, such as negative impacts to equity, so organizations can address concerns.

What value is delivered?

Smart Compensation is a workflow application with features meant to automate the process of your compensation cycle.

• Automate Compensation Cycle: Smart Compensation includes progress tracking and multi-level collaboration, so various levels of the organization can review and adjust as the allocations flow up through the supervisory hierarchy.
  
  Smart Compensation can also include links to your own materials meant to educate and support managers on the topic of your organization's pay philosophy and guidance.
  
  Smart Compensation collects an auditable account of merit decisions and approvals. This is a specially designed solution for managers, helping them understand their options and impact in an easy-to-use, guided experience.
  
  Why is it important? The compensation allocation/merit review process is more cumbersome and less impactful than it should be. HR Operations teams using spreadsheets spend so much time on process, communication, and education that there is no time left to ensure fair and equitable decisions are being made.

• Optimize Compensation Dollars: The CFO or HR team sets the top-down budget for the annual compensation cycle in line with business objectives and competition in the market. Smart Compensation performs the bottom-up application of that budget for the exact employees in scope for each cycle, according to your objectives through the configuration of a pay philosophy. You can align pay to Cost-of-Living-Adjustments, align your merit matrix and estimate how many employees will likely get identified for promotion, so you can balance the available budget against objectives to arrive at the optimal budget and holdback before managers begin the allocation process.
  
  Why is it important? Many existing systems don’t balance the budget against all of the objectives, meaning managers are already over-budget when they begin the allocation process. Frustrated managers and HR Operations teams do all they can to game the system to try to get more money for their employees.
  

• Smart Merit Recommendations: A recommendation engine provides initial compensation values for employees in line with your pay philosophy, according to your prioritization. These are included as compensation presets and can be configured for adjustments, such as how much of a raise is given for promotions, as well as the configuration of merit matrices. Person-level recommendations provide an unbiased and fair anchor point for managers to start their allocation. Managers can then adjust away from this recommendation but must justify their adjustments with valid reasons. This provides the ideal mix of reducing manager subjectivity while maintaining manager discretion.
  
  Why is it important? Providing a manager with a blank sheet and a slide deck for guidance is not a best practice; rather, it is the way to ensure they prioritize pay increases for employees they care about most and is subject to biased choices. These create rework as they will be rejected by HR once they catch managers not ‘doing it the right way’.

• Smart Pay Conversations: Smart Compensation prepares managers to have healthier pay conversations that drive desired people outcomes. By exploring historic data about employees from multiple sources in a single interface, managers will come prepared to have a meaningful discussion that will optimize the impact of pay to motivate employees. Smart Compensation takes the bold approach to guide line managers with a simple user interface, crafted to allow them to work through their tasks efficiently and build their competency along the way.
  
  Why is it important? A high percentage of line managers are new in role, and have low competence with compensation practices. Less than one-third of employees feel they are paid fairly. This setup means even the best pay decisions are perceived to be inequitable and unfair if they are not communicated in a clear and transparent way.

• Proactively Address Fairness and Equity with Checks and Balances: Smart Compensation includes industry-leading analysis capability to allow stakeholders to understand the impact to equity, fairness, and the risk of exit throughout the process to help ensure the compensation budget is being applied in the most impactful way. This includes a unique hypothesis analysis capability to create a data model of what the organization looks like, including the proposed changes, in real-time, before the decisions are finalized and sent to pay.
  
  Note: Smart Compensation does not perform pay equity regression testing typically done through a third party under legal privilege; although, it helps manage fairness and equity to reduce the need for this type of testing.
  
  Why is it important? Time-crunched HR teams don’t have time to build analyses to assess fairness and equity during the process, leading to corrective action after the compensation cycle, where employees have been presented with poor pay decisions. Only employees who speak out receive corrective action, further increasing bias.

• Greater Pay Consistency to Support Pay Transparency: Smart Compensation provides managers with the breakdown of factors for individual employees to support a constructive and impactful pay conversation. It also prepares managers by allowing them to see pay and job change history, which is essential to understanding employee expectations. 
  
  Why is it important? Pay transparency increases the burden on managers to explain pay to employees. Managers are inexperienced at compensation, typically only influencing it once per year. They need the deep expertise and guidance of the HR team to support them.

What do I get with Visier^® Smart Compensation and what do I need to provide?

Functional Capabilities

Smart Compensation allows for unlimited compensation cycles to be run in parallel.

Smart Compensation provides recommendations for employee compensation increases and automatically organizes employees into task groups and creates approval chains according to a hierarchy. This is typically based on your supervisory structure but Smart Compensation can utilize any hierarchy based on employee IDs.

Security and permissions are also typically set up to align with these hierarchies, and capabilities are assigned to users so that they are able to see the data they need to perform tasks assigned to them. The base configuration allows managers to see all relevant data about their employees with managers of managers able to see all relevant data for the population within their portfolio. Support users will be able to see relevant data about the population they are assigned to support. HR Operations users are typically granted access to the entire population. Smart Compensation supports detailed permission definitions, which will be modified to your requirements during onboarding so you can ensure users only see what they need to.

The following data elements are required to enable functional capabilities:

• Employee Profiles: Employee IDs, full name, job name, career level, start date, and manager ID are examples of relevant data fields.

• Hierarchies: Supervisory, location, and organizational hierarchies are used to assign tasks and segment employee populations.

• Compensation: Current compensation data is required depending on the type of compensation cycle you are planning. Smart compensation supports base pay, bonus, and long-term incentive pay types.

• Pay Levels: An employee’s position in a pay band is an important driver of recommended increases and drives visualizations that help managers make decisions to ensure equity.

During onboarding, a full list of required and optional data elements will be provided. 

Talent Assessment Capabilities
Smart Compensation is able to gather data from managers within the compensation cycle by asking them to choose employees to be promoted and perform a talent assessment prior to viewing Smart Compensation’s recommendations for individual employees. This data is dependent on the pay philosophy chosen and is used when choosing proficiency. In the talent review, managers will identify the proficiency of the employee, which will contribute to the math for the recommendation.

Analytic Capabilities
Smart Compensation assists with decision-making by surfacing analytic content at critical moments of the workflow for both the HR Operations user as well as managers. This analytic content requires data about your employees and organization in order to function. The following is a brief outline of the types of data that drive analytic content. Note the following are not required but add richness and context to the decision-making process:

• Employee History: This is important for managers to gain a deep understanding of an employee’s expectations with visualizations of career history, compensation history, and potential career paths learned from all historic movements within your organization.

Please note you do not need to onboard additional data to access the following functionalities:

• Visier Benchmarks*: Promotion rate benchmarks are surfaced in Smart Compensation to inform the HR Operations user when budgeting for expected promotions within a compensation cycle.

*To get access to Visier Benchmarks, free of charge, your organization must participate in our Benchmarking program. 

• Standardization: Standardized occupations and locations are valuable additions to your data that align benchmarks and provide the ability to explore potential career paths for employees based on Visier’s extensive community data. This is helpful when managers are preparing to determine who to promote and what roles to move them to.

Pay Philosophy Elements
Smart Compensation includes a set of pay philosophy elements that allow you to encode strategic guidance into actionable pay recommendations. These utilize data to drive pay recommendations and require some data to be loaded to function. If the required data is not loaded, these pay philosophy elements will not be available in the user experience. 

Merit

• A one, two, or three-dimensional merit matrix using performance ratings, position in range or compa-ratio, and/or proficiency.

• Requires performance ratings and pay band information.

• If choosing to include proficiency, an included manager talent evaluation informs the recommendations.

Promotions

• Allows the HR Operations user to define the typical increase associated with a promotion.

• Requires data about internal placement (promotion events) to provide analytic guidance to HR on historic promotion rates to help budget, and to managers on who to consider for promotion.

Flat Increases

• A broad percentage increase applied to a population by location.

• Ideal for cost-of-living increases.

• Requires location information.

Bonus

• Flat modifier or a one-dimensional matrix using performance.

• Requires an annual bonus target amount or percentage per employee.

• Requires performance ratings.

Long-term Incentive

• Flat modifier or a one-dimensional matrix using potential.

• Requires an annual LTI target amount or percentage per employee.

• Requires performance or potential ratings.

Pay Letter Generation
Visier® Smart Compensation includes automated generation of pay letters to inform employees about their compensation changes. These pay letters can be customized by uploading a pay letter template to include each customer’s logo using a simple common DOCX format. Dynamic variables and text blocks can be used to personalize letters with the relevant information for each employee. 

Pay letters will be available for managers to download in PDF format for their employees. Administrators may also download these in DOCX format if they need further editing.

Data Export Options
Smart Compensation includes a library of file formats to make it easy to configure your target export options. During onboarding and configuration, we will work with you to clarify file formats needed to get the data back into the HRIS and payroll systems once the decisions have been made, reviewed, and finalized in the compensation cycle.

For more information, please refer to the following documents:

• Data Dictionary: Provides comprehensive information about the data elements.

• Application Definitions: Provides an extensive list of metrics, dimensions, and content that will be lit up once we have loaded these data elements.