Why Waiting to Implement Tech System for Merit Planning is a Mistake

Before the advent of HR technology, it was almost as if one merit planning cycle was yet to end when the other was on the horizon. Compensation & Benefits professionals spent significant time in merit planning using spreadsheet software almost as old as the dinosaurs (but not yet extinct).

The Limitations of Spreadsheets

Spreadsheets are familiar. They are easy to learn and accessible. But does that necessarily mean they are an ideal solution for planning your merit cycle?

They are inefficient and error-prone: Manual data entry is a time-taking process, very susceptible to human error. Minor mistakes may get amplified and create huge issues, leading to an impact on employee morale and company finances.

They lack real-time updates: Spreadsheets can quickly become outdated, especially if people work on multiple versions. This lag can impair your ability to make timely and informed decisions, especially in a fast-paced environment where time is money.

They don’t scale well: As your company grows, the volume of data increases exponentially. Spreadsheets struggle to handle large datasets efficiently, leading to slow performance and a cumbersome user experience.

They don’t integrate with other software: Spreadsheets lack seamless integration with other HR systems, resulting in isolated views of employee performance, compensation, and other critical metrics.

Overall, the advantages spreadsheets offer largely get negated by their disadvantages. They may appear to be low cost or even no-cost, but the long-term cost can be huge due to inherent risks and the administrative time investment needed.

The Advantages of Tech Systems

Adopting tech systems for merit planning offers numerous benefits that far outweigh the comfort of sticking with spreadsheets:

1. Automated systems reduce the risk of errors and significantly speed up the merit planning process. They enable HR teams to focus on strategic decision-making rather than getting bogged down in manual tasks.
2. Modern HR tech systems provide real-time data and analytics, allowing for more accurate and timely merit planning. They automatically flag outliers and variations beyond a tolerable limit. This ensures that decisions are based on the most current information available.
3. Tech systems are designed to scale with your business. Whether you have 50 employees or 5,000, these systems can handle increasing amounts of data without compromising performance.
4. Advanced HR systems integrate seamlessly with other tools such as payroll, performance management, and employee engagement platforms. This integration fosters a holistic approach to HR management, enhancing overall efficiency and effectiveness.

When is a good time to invest in HR tech?

There is a common misconception that tech systems are only beneficial for large companies. However, irrespective of the number of people you have, you can benefit from an HR tech implementation.

1-50 Employees: Start with simple, user-friendly HR software that includes basic functionalities such as payroll, employee records, and performance management. Some of the smaller players offer per licence cost, which can keep your investment low till you scale up.

51-200 Employees: As your company grows, consider integrating more comprehensive HR systems that offer advanced merit planning features and benefits administration such as real-time analytics, automated workflows, and integration capabilities.

201-500 Employees: At this level, a more robust HR suite is necessary. Look for systems that offer in-depth reporting, customizable merit planning modules for various departments, and enhanced security features.

500+ Employees: Large organizations require enterprise-level HR solutions with extensive customization, scalability, and integration options. Some of the HR tech solutions for companies of this size are also part of larger enterprise data suites.

About the Author

Sumit Singla

Founder of eleventHR Consulting.

Sumit has been working in HR & HR consulting roles for 16+ years across sectors and verticals and specializes in organization design, wellbeing, storytelling & design thinking, and performance management. In his career with consulting firms such as Aon, Deloitte, and Accenture, he has successfully led programs aimed at total HR transformation for clients. Recently, as Associate Director for India Consulting at Deloitte, he worked with clients on cultural transformation and HR process and policy design. He also organized and spoke at conferences and events about a variety of topics relevant to HR today. Now self-employed, he works with clients across the globe on a variety of HR solution areas.

Howard Nizewitz 

Howard’s extensive expertise in compensation management comes with a 25-year track record of implementing strategic and successful compensation programs in the financial services and technology industries with a global and regional focus. His tenure includes positions at Barclays, Citigroup, and JPMorgan. Other areas of expertise include HR consulting, Deferred compensation, incentive plan design, and talent management. If you want to learn more, please contact Howard at [email protected] or schedule a free consultation on the compteam.net website.