3 Benefits of Compensation Software for Recruiters

Recruiters at high-growth companies are expected to deliver strategic, comprehensive, and dynamic recruiting experiences to candidates and internal stakeholders alike. They are tasked with identifying and securing the best talent—all at the right price and in highly competitive markets.

The best recruiters know that attracting rockstar employees is easier when you have the necessary and accurate information to optimize your talent acquisition strategy. A critical piece of that puzzle is getting compensation right, as 49% of job seekers say that compensation is the most important factor when making a decision about a new job. Doing so can help recruiters build better offers, develop smart recommendations for the business, and become stewards of DE&I. But how can recruiters, who often and understandably don’t have expertise in compensation best practices, ultimately acquire the data they need to thrive in their roles? 

Compensation intelligence is the practice of making the absolute best decisions for a business—anywhere compensation is concerned. Compensation software demystifies the black box of compensation, and is an infallible tool for recruiters to have at their disposal day-to-day. 

Working alongside the thousands of recruiters in our network, we’ve seen all the ways compensation software works for them. Many have raised their profiles as strategic partners for leadership, streamlined their hiring processes, built a world-class candidate experience, and secured top talent. Here, we discuss the top three benefits recruiters see using compensation software.

1. Build offers that are accurate, competitive, and fair with compensation intelligence

HOW TO BUILD MORE ACCURATE OFFERS WITH COMPENSATION SOFTWARE

Today, many recruiting teams rely on traditional compensation surveys, online sources, or peer advice when cobbling together a compensation strategy. This method often leads to inaccurate offers, where either the candidate or company suffers. Offers that are too high have the potential to dilute the option pool, while offers that are too low cause top talent to turn down the opportunity. 

A true compensation strategy includes collecting, analyzing, and acting on market-led salary data. Recruiters need accurate data, normalization, and benchmarking that directly reflects their peers in similar industries and funding size. Compensation software gives you that expertise and allows you to make smart, data-driven decisions. It shows you exactly how your company ranks against its peers, giving insight into the relevant benchmarks by department, role, and experience level — by where employees live, as well as by ethnicity and gender.

Many recruiters, especially at pre-IPO companies, are expected to have all the answers surrounding all things “people,” including matters related to compensation. Some are even expected to be able to help draft job descriptions (JDs) that require deep knowledge of departments and jobs that can be very technical and nuanced. 

Compensation intelligence has the distinct ability to standardize the most important competencies required for a particular job at your company. Having this sort of structure can take the guesswork out of the JD creation process, and helps everyone get on the same page regarding what skills are needed to fill a role at a particular level.

All of these factors have the power to generate exceptionally accurate offers, so at the very least, you’ll know you came to the table knowing you took careful consideration. 

HOW TO CRAFT MORE COMPETITIVE OFFERS WITH COMPENSATION SOFTWARE

In a job market where candidates rule, offering higher and higher salaries to win talent will financially backfire, and ultimately lead to inequitable outcomes for tenured employees. In order to hire effectively, recruiters must deliver competitive offers while staying within budget. 

To accomplish this, understanding what your peers are paying is vital. Once an analysis is complete, recruiters can even show these benchmarks to candidates during the interview or negotiation process. Shedding light on how these decisions are made, where these figures come from, and the philosophy behind it all is a great way to demonstrate to candidates how thoughtfully and transparently your company operates. 

Studies have found that transparency is the most significant predictor of employee happiness. Not only is transparency a competitive advantage for recruiting and retention, but it costs $0 to implement. Many companies don’t typically share the type of information that allows potential employees to calculate how much their equity could be worth down the line. Compensation software can easily translate the potential cash value of the equity offered, which can be the thing that pushes a candidate further in your direction. 

Candidates may also be curious how raises and promotions are calculated, and on what basis are they rewarded. Luckily, compensation intelligence goes beyond offer generation and recruiting. You can easily share salary and equity bands for unique roles, as well as what the requirements are for moving from one level to another. That way, candidates know the future value and conditions of potential promotions, and that the process is objective and standardized. 

HOW TO BUILD MORE FAIR OFFERS WITH COMPENSATION SOFTWARE

Startups who are interested in systematically driving their DE&I goals forward must consider compensation a critical piece of that puzzle. Not only does a culture of pay equity breed higher levels of employee trust and morale and lower retention rates, but according to a 2016 study by the National Bureau of Economic Research, it also boosts levels of performance and attendance. Ultimately, if you show up for your employees, then they show up for you. 

Harnessing the power of compensation intelligence allows recruiting teams to ensure equitable offers are made across the board. Having insight into what a company like yours ought to be paying individuals at particular career levels, regardless of gender or ethnicity, will allow your team to remove potential bias from creeping into the process. 

2. Make smart recommendations and hiring plans using intelligent compensation software

As mentioned, staying true to your budget is a top priority for recruiters. Many times, roles and salary ranges need to be approved by the CEO, or even the board. As a people professional, these stakeholders look to you to make the initial recommendations. But how can you know, with certainty, that your job description and salary bands are appropriate, given your size and industry? 

Compensation software provides access to the timely and accurate data you need to benchmark like a pro. Once benchmarks are established, generating JD’s and the appropriate compensation packages formulated becomes turnkey and operationalized. You can make hiring plans and business recommendations with confidence, knowing you have the data and tools you need to make them intelligently.

3. Spot imbalances and course correct with intelligent compensation software insights 

Nearly 80% of workers report that they want to work for a company that values diversity, equity and inclusion, and an employee’s perception of DE&I efforts has an impact on their overall  job satisfaction. However, most fast growing companies don’t have systematic ways to measure performance or operationalize progress on this issue. Without data, recruiters are forced to rely on their intuition when making screening or recruiting decisions, which can lead to biased decision making. 

Knowing how your team’s composition and compensation compares to organizations like yours can help hiring teams meet the company’s DE&I objectives.  Intelligent compensation software can tell you if your company currently pays above or below the industry-wide percentiles for certain demographics groups (eg: hispanic groups make 30th percentile against market ranges, and Caucasians earn in the 70th), or the makeup of your seniority levels (eg: people of color average level 2 experience, and Caucasians average level 5 and above).

Industry-leading teams need new ways to measure performance with DE&I. You can use compensation software to spot these disparities and help your company course correct. Recruiters who stop operating on “gut feel” and help their organizations systematize ways to evolve beyond best intentions will be seen as integral to their progression. 

All of these benefits are reasons why modern recruiters rely on OpenComp to confidently make the best business decisions. The Compensation Intelligence Platform by OpenComp offers the only reliable compensation data, benchmarks, and insights for high growth employers and employees, from seed to pre-IPO. 

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