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Pay is personal, but is your compensation strategy?

from  May 4, 2023 | 4 min read

Most successful organizations invest heavily to ensure their compensation is competitive within the market, designed to reward high performance, and fairly allocated. Despite this, research consistently shows that employees leave due to pay levels, lack of confidence in opportunities to advance, and a feeling that they are disrespected by their employer. Even in a period of economic uncertainty, undesired attrition continues to rise. 

A key driver of this disconnect is the lack of a personalized connection between pay and the individual employee. Employees expect more. They want to know they’re not just a cog in the wheel, and they’re more than a number or a data point. They want to feel like their unique contributions and trajectory are being considered by those deciding their compensation.

The role of compensation planning

For many organizations, the focus of compensation professionals is on benchmarking job codes and fine-tuning the job architecture – salary ranges and levels. This is, of course, necessary but not sufficient.  The upside opportunity exists for improving compensation planning – the budgeting, allocating and communicating changes to compensation elements such as base pay, bonuses, and shares. There are many pitfalls in the planning process – limited input and participation by first-level managers, use of manual spreadsheets, and lack of visibility and understanding of compensation principles throughout the organization.

The consequences of suboptimal compensation planning and lack of personalization are getting more severe. Based on highly personalized experiences they are used to in their consumer life, employees don’t accept a formulaic approach to anything at work, especially how they are paid. Pay transparency legislation and a greater willingness for younger workers to share pay details with each other pull back the curtain on what used to be a process cloaked in secrecy. Organizations that don’t adapt will find it harder to drive trust, which in turn reduces engagement and, ultimately, productivity.

Many organizations are held back from creating more personalized compensation plans due to limited resources, the complexity of compensation structures, lack of data, and general resistance to change. For HR professionals, the key is to assess where your organization is today and identify concrete steps you can take to move forward.

Developing a more personalized approach

Personalizing compensation can seem like a daunting proposition, especially with hundreds or thousands of workers. Many growing organizations have recently gone through a standardization effort with the goal of removing personal bias. Eliminating bias is essential, and comp decisions should always be driven by data, but ultimately each employee should feel as if their contribution is considered uniquely in terms of pay.  Depending on where your organization is at today, there are three levels of maturity you may target.


Even if you are unable to modify the budget, communication around compensation must be clear, and all managers and employees must understand the compensation strategy. It is not enough to inform employees of what their new pay level is; they must understand why. When the drivers of compensation elements are clearly explained​, people understand how their unique circumstances contribute to current and future pay​ and, therefore, how they can get ahead.


An additional opportunity to personalize pay comes in the allocation process – how much of a budget for merit, short-term incentive (e.g., bonus or variable pay), or long-term incentive (e.g., shares or deferred cash) is allocated to each individual. Ideally, direct managers at all levels can participate in this process since they know their employees best. Recommendations should be based on multiple factors, including performance, market range, internal range, scope, skills, results, potential, and employee history. HR can set clear guidelines and monitor the process to ensure consistency and senior management maintains the ultimate approval. Driving richer data into the process and increased collaboration between managers, senior leaders, and HR will create outcomes that yield higher levels of trust.


The most difficult area to personalize is the composition of the compensation plan itself. Adding a long-term incentive program, individualizing a bonus structure, or allowing for fungibility between budgets requires significant change management. Most organizations have moved to some kind of flexible benefits package. Areas that organizations can look at for flexibility and personalization include base pay, incentives or bonuses, shares, retirement programs, and other benefits such as wellness initiatives. Moving to a more personalized approach is a journey; it won’t happen overnight.

Ultimately, the right level of personalization varies among and even within organizations. All organizations need to communicate pay decisions effectively, most can improve the process of allocating, and many may need to review their compensation structure. 

What are the benefits of using compensation planning software?

Technology has provided many avenues for companies to be more creative with their employee reward systems. Everyone has different needs, values, aspirations, and drives. Compensation planning software provides the tools needed to tailor reward programs based on personalized data collected about employees. The data allows companies to recognize contributions, promote internal equity, and create an environment of recognition and motivation. It also allows employers to compare the value of employee skillsets against the rest of the organization. Tools such as Unit4 Compensation Planning help to facilitate the personalization process. It requires a lot more than just tools, but without these tools, it becomes extremely difficult.

With technology-driven pay decisions, organizations can create individualized compensation plans that include flexible hours, performance bonuses, shares, and other rewards. With personalized compensation planning, employers can make better decisions on how to reward their top talent while also ensuring overall team morale remains high. This approach creates a more equitable system where everyone feels appreciated and rewarded for their individual contributions.

Because compensation planning software simplifies the process, you will have more time to focus on developing a personalized compensation outcome for each individual. This means you can assess their strengths and weaknesses more accurately so that their pay always reflects their current contributions. When a personalized approach is taken with salary structures, employees tend to have greater job satisfaction, leading to higher loyalty and productivity.

When dealing with multiple employees at once, tracking everyone’s data and changes over time can become difficult. However, the right software will enable you to automate this task and keep detailed records of any changes or updates within an easy-to-use interface. With an automated system, errors such as miscalculations or typos can quickly be rectified without worrying about manual inputs.

Having all the required information stored in one centralized platform makes it much easier to compare salaries across teams or departments, identify trends or patterns over time, and quickly address any issues that arise when managing large teams. Investing in compensation planning software is key to creating an efficient and personalized approach when developing your company’s compensation strategies.

Software solutions also allow companies to be more reactive to market and economic changes, so they can easily adjust to ensure their compensation plans remain competitive.

How can Unit4 help with compensation planning?

Unit4 Compensation Planning solutions allow you to plan, make, and communicate pay decisions in a single, simple-to-use, and easy-to-implement solution. It has unique modern architecture that is easily modified to suit your needs as your organization grows. You will be able to deliver clear, accessible information that your workforce now expects around pay decisions and opportunities. You can define your unique programs, policies, and compliance requirements, gain insight into your organization, identify trends and issues, and create a single source of truth for all compensation planning data.

  • Manages the entire end-to-end process, from budgeting to allocating to communicating to analytics​.
  • Can handle every variation and complexity in compensation plans.​
  • Designed for mid-market companies and is used today in 40+ countries​.
  • Only software that is completely composable and configurable with drag-and-drop elements​
  • Easy to use and fast to deploy.​
  • Built to integrate data – our intelligent data loader relieves you from ​the burden of matching columns to rigid data templates.​
  • Integrated with Unit4 HCM solutions such as talent and core HR, ​enabling a fully-integrated suite of HR capabilities. ​

You can watch this recent webinar to learn how Unit4 Compensation Planning software can help you deliver pay personalization at scale, including a live demo. Read more on the topic in this eBook “Is your compensation planning strategy losing you talent” to understand the 5 key practices organizations can leverage to ensure compensation strategies contribute to attracting and retaining top talent, and much more. Visit this page for more information about Unit4 Compensation Planning solutions or to book a demo.

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