How Spreadsheets Threaten your Compensation Strategy and how to Render Them Harmless

Spreadsheets are inexpensive (or free). They are easy to learn.

That should be sufficient cause for them to be used as tools for compensation management. But, data shows that 90% of spreadsheets that have more than 150 rows have at least one major error. And as the police of Northern Ireland recently found out, confidential employee data can be leaked through spreadsheets with the click of a button.

Despite the obvious risks, many companies continue to use spreadsheets to administer payroll and compensation. However, the risks far outweigh the benefits and may cause costly payroll errors that could cost millions of dollars to fix.

Some of the challenges that spreadsheets pose to your compensation strategy are:

Lack of version control: There is a possibility of an older version of spreadsheet data being shared, leading to errors in updating and maintaining information. For example, an employee working offline on a spreadsheet may accidentally overwrite changes made by a colleague on a ‘live’ document.
Non-compliance with privacy laws: Masking demographic data or controlling access to certain protected fields can be tough with spreadsheets. For example, a list of employee benefits may have information pertaining to disability, medical treatments such as IVF, and other non-public details. The accidental release of this data into the wrong hands could pose huge financial and reputational risk, especially in regions with stringent policies, like Europe.
Errors: Incorrect formulas, typos, and an overall lack of checks and balances could create massive risk. For example, an accidental extra zero or incorrect currency conversion in the paycheck of an employee based in say Asia could be catastrophic.
Lack of an organized workflow: Approval matrixes and permissions are tough to implement in spreadsheets. You may need to switch back and forth between emails and spreadsheets to figure out the workflow. In addition, it can be tough to keep track of changes and who owns them.
Integration challenges with other enterprise apps: Unlike sophisticated compensation tools that can integrate with HR systems and Enterprise Resource Planning (ERP) tools, spreadsheet data may need to be entered manually into systems, leading to time delays and inaccuracies.
Poor analytical capabilities: Spreadsheets rely on manual reporting and lack the ability to perform cutting edge statistical analyses that can support your decision-making processes.

While the initial cost of spreadsheet programs may seem minimal, but the time cost incurred for administration and potential risk of errors can be prohibitive. Spreadsheets can certainly get the job done, but only as long as you work extra hard to avoid the challenges.

Instead, consider choosing from a host of cloud-based, highly secure compensation tools that can turbocharge your compensation strategy and save you time as well as money.

To talk about some of the tools you can deploy for effective and effective compensation management, reach out to us at [email protected].

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.