Building a compensation team is something every company can benefit from. Unfortunately, for various reasons, such as a lack of internal resources or cost, it often gets deprioritized by the HR team. In today’s competitive workplace, where everyone is fighting for top talent, this can’t happen. Having a trained compensation team that can decipher market-rate data and oversee your pay system to ensure you’re making the most intelligent hiring decisions is key. That said, creating one can’t (and shouldn’t) happen overnight. Here are three things to consider when building a compensation team.

The Learning Curve

It’s unreasonable to expect even the most seasoned compensation teams to come in and understand every nuance of your pay system. Nine times out of ten, there will be a learning curve. For example, maybe the survey data isn’t in the correct format or doesn’t show the right level of detail. If this happens, your compensation managers will have to figure out how to align it with your organizational structure. Additionally, platforms curate and aggregate data differently, which means your team will have to handle the technology before pulling any actionable insights. The learning curve becomes even steeper if your team doesn’t have analytical experience. 

Of course, the solution to this is to hire a full-time analyst, but that could cost hundreds of thousands of dollars. There’s nothing wrong with this, but there are more efficient ways. 

The Time Commitment

Learning the data platform is only half the battle. What happens after your team understands it? They’re going to have to start running numbers, performing workforce planning, departmental budget versus plan analysis, specialized compensation exercises, and more. For enterprises, this will require the compensation team to enter data manually—think typing in every job title and location combination. This isn’t efficient, and if you’re using multi-source validation, this could require nearly all of someone’s bandwidth. 

Additionally, because no compensation team should rely on just one data source, they’ll be inundated with purchasing and inputting new data. Said another way, your compensation team will spend more time inputting data than coming up with insights. Again, there’s nothing wrong with this if you have the resources, but there are better ways to get things done. 

The Price of Data

When starting a compensation team, it’s not just about hiring the team; its impact depends on the data. 

The data necessary to make intelligent market-rate recommendations are costly. A good data source starts at $50K and goes up from there. If that data source doesn’t meet your needs, i.e., doesn’t give you the intel you need, you’ll have to buy a second (or third) source. Additionally, you could buy a survey for $10K but only be able to use it once, and it’ll only be a subset of your database. See how quickly data can add up? 

Worst case scenario, you can have your team do everything themselves, but of course, that would eat into an unimaginable amount of resources. 

Arch AI: Bringing Artificial Intelligence to Compensation Teams

The learning curve, time commitment, and data price are common hurdles when building a compensation team. However, there’s a more efficient way to do things: outsource your analytical tasks to an expert with market-rate technology.

Benefits of Market-Rate Technology  

  • Cost: Outsourcing your analytical needs to a company that uses market-rate technology alleviates the need for you to buy data, saving you hundreds of thousands of dollars. You also won’t have to pay for the data platform, which will save you even more.
  • Efficiency: Say goodbye to querying job titles one by one. Market-rate technology, like ARCH AI, does this automatically—even if there are thousands of queries needed. 
  • Accuracy: Market-rate technology relies on multiple data sources to provide insights, meaning that not only will you be saving money and creating efficiency, but you’ll have access to the most comprehensive and accurate market rate data available. This ensures pay parity and compliance.

Outsourcing your compensation analytics allows you to manage the costs, efficiency, and accuracy issues related to your market-based pay system. As the business world grows and increases in complexity, having a compensation team with access to reliable market-rate data will be critical. Whether outsourcing means a third-party company working as an extension of your team (or as your entire team), it’s the only way to make sure you have the insights you need to make the smartest hiring decisions.