How to Create a Workday Compensation Review Checklist

Compensation management is a fundamental aspect of human resources (HR) and organizational leadership. It directly influences employee satisfaction, motivation, and retention. One of the most critical tasks for HR professionals is conducting regular compensation reviews to ensure that employees are fairly compensated for their work, in alignment with market standards and internal equity. Workday, a comprehensive HR and finance platform, provides tools that facilitate compensation management and review, helping organizations streamline the process and make data-driven decisions.

Creating a compensation review checklist is an essential part of ensuring that these reviews are conducted effectively and efficiently. In this article, we will explore the steps to create a Workday compensation review checklist, how to prepare for compensation reviews, and how to ensure that your compensation strategy aligns with both internal goals and external market trends.

Understanding the Importance of Compensation Reviews

Before delving into how to create a compensation review checklist, it's important to first understand why compensation reviews matter. These reviews serve multiple purposes:

1.1 Ensuring Fairness and Equity

Regular compensation reviews ensure that employees are paid fairly for the work they perform. They allow HR professionals and managers to assess whether an employee's compensation aligns with their skills, experience, and the responsibilities they hold. Regular checks prevent compensation disparities that could lead to dissatisfaction or even legal issues.

1.2 Attracting and Retaining Talent

Competitive compensation packages are essential for attracting top talent and retaining current employees. Companies that provide fair and market-aligned compensation are more likely to have satisfied employees who are motivated to stay longer with the organization.

1.3 Aligning with Organizational Goals

Compensation reviews help ensure that the pay structure supports the organization's broader goals. For example, if a company is emphasizing innovation, it might want to ensure that roles involving product development or research and development are compensated at a higher level compared to administrative roles.

1.4 Managing Budget Constraints

A structured approach to compensation reviews allows organizations to manage their budgets effectively. By reviewing employee pay regularly, companies can make adjustments as necessary without exceeding their compensation budgets, ensuring that the organization remains financially viable while also rewarding employees appropriately.

Key Elements of a Compensation Review Checklist

To create an effective Workday compensation review checklist, several key elements need to be included. This checklist will help ensure that all relevant information is gathered, reviewed, and analyzed before making compensation decisions.

2.1 Gather Employee Data

Compensation reviews cannot be conducted effectively without accurate employee data. Workday offers a comprehensive database where employee details are stored, including their job titles, compensation history, performance evaluations, and other relevant data points.

Some of the essential employee data that should be reviewed include:

• Employee Role and Job Description: Ensure that the employee's role and job description are up-to-date and aligned with current compensation.
• Performance Review Data: Review the employee's recent performance evaluations. High-performing employees may be eligible for merit-based pay increases.
• Skills and Qualifications: Consider the employee's skills and educational qualifications in relation to the role they perform.
• Tenure and Experience: Consider how long the employee has been with the organization and whether they've grown within their role.
• Internal Equity: Ensure that the employee's compensation is aligned with others in similar roles within the organization to maintain equity.

2.2 Review Market Compensation Data

The next step in the checklist involves reviewing market compensation data. Market compensation refers to the prevailing pay for specific roles in the broader industry or region. This data helps ensure that your organization's compensation is competitive and aligned with market trends.

In Workday, organizations can integrate external salary data from third-party sources to help benchmark compensation. Be sure to:

• Review Industry-Specific Compensation Trends: Determine the going rates for roles within your industry. Compensation can vary widely between sectors, and staying aligned with industry standards is crucial.
• Assess Regional Compensation Data: Depending on where your business operates, compensation may vary by region. For example, compensation for the same role may differ between cities or countries due to cost-of-living adjustments.
• Examine Salary Growth Trends: Look at salary growth trends within the industry to determine if your organization is keeping pace with inflation or overall market salary increases.

2.3 Review Internal Salary Structure

Workday's compensation module allows you to maintain and review an internal salary structure, which provides a foundation for fair pay. This includes job levels, pay bands, and other internal salary guidelines that dictate compensation decisions.

As part of the checklist, review:

• Salary Bands: Ensure that the employee's compensation falls within the appropriate salary band for their job level and experience. If an employee is being paid significantly below the minimum or above the maximum for their role, it may be time to make adjustments.
• Pay Equity: Review compensation across different demographic groups (gender, ethnicity, etc.) to ensure that there are no pay disparities that could indicate unconscious bias or discrimination.
• Compensation History: Look at how the employee's compensation has changed over time. Have there been regular increases, or is the employee being left behind relative to their peers?

2.4 Consider Employee Development and Career Progression

Another important element of the compensation review is considering the employee's career trajectory and development. This includes evaluating:

• Promotions and Role Changes: If an employee has received a promotion or taken on additional responsibilities, their compensation should reflect that.
• Learning and Development: Employees who have gained new skills or certifications may be eligible for compensation increases to reflect their growth.
• Succession Planning: Consider whether the employee is a candidate for future leadership roles or if they have the potential to contribute to the company's long-term success.

2.5 Employee Feedback

It's also valuable to incorporate employee feedback into the compensation review process. In Workday, employees can have input on their compensation through surveys, feedback tools, and self-assessments. Collecting this data can help you understand how employees feel about their compensation packages and provide insight into areas that may require adjustment.

As part of the checklist, ensure that:

• Employee Satisfaction is Assessed: Use employee surveys or direct feedback to gauge their satisfaction with their current compensation and benefits.
• Address Any Concerns: If employees have expressed concerns or dissatisfaction with their compensation, take note of these issues and address them during the review.

Steps to Implement the Workday Compensation Review Checklist

Now that we have identified the key elements to include in the compensation review checklist, let's explore the steps to implement the checklist in Workday effectively.

3.1 Set Clear Objectives for the Review Process

Before beginning the compensation review, set clear objectives for the review process. These objectives should align with the organization's compensation strategy, business goals, and employee needs. Having clear goals ensures that the review process is focused and productive.

3.2 Use Workday to Collect and Analyze Data

Workday's compensation management tools allow you to collect and analyze employee compensation data efficiently. Start by running reports to pull the necessary employee data, market compensation information, and internal salary structure details.

Use Workday's built-in analytics to:

• Compare employee compensation to market data.
• Identify salary discrepancies or potential issues with internal equity.
• Track changes in compensation history.

3.3 Review Compensation Against Benchmark Data

Once all the necessary data has been collected, compare your employees' compensation to the industry benchmarks. If your organization's compensation falls below industry standards, you may need to adjust salaries to remain competitive. On the other hand, if your organization offers higher-than-average compensation, you may want to ensure that employees meet performance expectations and contribute to the company's goals.

3.4 Consult with Relevant Stakeholders

Work with managers, department heads, and other relevant stakeholders to assess whether any adjustments need to be made based on employee performance, market trends, or budget constraints. Collaboration ensures that all perspectives are taken into account when making compensation decisions.

3.5 Make Recommendations for Adjustments

Based on the review and analysis, make recommendations for compensation adjustments. This might include salary increases, bonuses, or other forms of compensation, such as stock options or benefits enhancements. Workday provides tools for simulating compensation changes to determine the financial impact on your organization.

3.6 Communicate Results to Employees

Once compensation decisions have been made, ensure that the results are communicated clearly and transparently to employees. Use Workday's communication tools to share compensation adjustments and the rationale behind them. Clear communication helps to maintain trust and morale among employees.

Ensuring Ongoing Compliance and Fairness

After the compensation review is complete, it's essential to ensure ongoing compliance and fairness. This involves regularly reviewing your compensation strategy and making adjustments as needed to stay aligned with market trends, legal requirements, and organizational goals.

4.1 Monitor Changes in Laws and Regulations

Ensure that your compensation practices comply with any changes in labor laws and regulations. Workday offers compliance tools that can help track changes in wage laws, tax laws, and other relevant regulations to keep your compensation practices up to date.

4.2 Conduct Regular Compensation Audits

Regular audits ensure that your compensation practices remain fair and competitive. Use Workday's reporting tools to regularly audit compensation practices and identify any discrepancies or areas for improvement.

Conclusion

Creating a Workday compensation review checklist is an essential step in ensuring that compensation decisions are made fairly, efficiently, and in alignment with both market standards and organizational goals. By following the checklist outlined above, HR professionals can ensure that compensation reviews are thorough, data-driven, and transparent. This will not only help to maintain fairness and equity in compensation but also contribute to the overall success of the organization by fostering employee satisfaction and retention. Regular compensation reviews, powered by tools like Workday, are key to creating a competitive, motivating, and rewarding work environment.

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