Compensation Becoming More Personalized, ISG Report Says

New insights from ISG Software Research say software and AI are allowing companies to compensate employees based on skill sets and other factors, not just roles

Enterprises are utilizing advanced software and artificial intelligence (AI)-driven tools to streamline compensation processes, enhance wage equity and personalize employee rewards, a new research report from leading global technology research and advisory firm Information Services Group (ISG) (Nasdaq: III) says.

The ISG Buyers Guide™ for Total Compensation Management, produced by ISG Software Research (formerly Ventana Research), says strategic oversight of compensation plays a crucial role in how businesses attract, retain and motivate talent within a competitive marketplace. It notes the rise of remote work and the gig economy has prompted a re-evaluation of compensation strategies to accommodate diverse work arrangements and expectations.

ISG Software Research projects that compensation market pricing processes will include the benchmarking of skills, not just jobs, in half of enterprises by 2027.

“Today’s digital tools supporting enterprise compensation aren’t just personalizing employee rewards, they’re evaluating each employee’s value according to their skill set, personal situations and geographic locations,” said Matthew Brown, director of research, Human Capital Management, ISG Software Research. “Enterprises are looking beyond just employees job titles; they’re assessing payment and benefits based on their skills and competencies, regardless of where a position resides in the corporate hierarchy.”

ISG Software Research defines compensation planning as determining and managing an enterprise’s overall remuneration strategy, including salary structures, bonuses and benefits, to ensure competitive and equitable compensation for employees. Through strategic planning, organizations can maintain their competitive advantages in the labor market, while adapting to the needs and expectations of their employees.

Staying competitive means addressing employees’ requirements for personalized, tailored compensation and benefits. An organization’s compensation management tools must be able to reassess employee working conditions in real-time, taking into account not just its own workplace culture, but the current conditions of the broader job market — including for jobs that may not appear to align with employees’ current skill sets.

Employees need to feel that they’re advancing, not just in the corporate hierarchy but in their personal lives as well. Investment in their professional development becomes a critical factor in evaluating the value of compensation management plans.

For its 2024 Compensation Software Buyers Guides, ISG evaluated software providers across three platform categories – Compensation Management, Compensation Planning, and Total Compensation Management – and produced a separate Buyers Guide for each.

A total of 24 providers were assessed. Thirteen providers were assessed across all three service categories: ADP, beqom, Cornerstone, Dayforce, HRSoft, Infor, Oracle, PeopleFluent, salary.com, SAP, UKG, Unit4 and Workday. Five additional providers were assessed exclusively in the Compensation Planning category – 15Five, Anaplan, Lattice, Pave and Payscale – while six were assessed exclusively for the Compensation Management category: Darwinbox, HiBob, isolved, Paycom, Paycor and Paylocity.

ISG Software Research designates the top three software providers as Leaders in each category. For the 2024 study, the leading providers overall are, in ranked order:

Total Compensation Management: Oracle, Salary.com and ADP

Compensation Planning: Oracle, Salary.com and ADP

Compensation Management: Oracle, Salary.com and ADP

“Managing and planning compensation is essential for organizations that want to be effective at recruiting and retaining their workforce and operating effectively across HR and finance,” said Mark Smith, partner of Software Research at ISG. “Our Buyers Guides establish the framework for software provider evaluations that go beyond providers’ ‘market execution’ or ‘vision of the future’ to ensure a comprehensive evaluation for any enterprise.”

The ISG Buyers Guides™ for Compensation Software are a distillation of more than a year of market and product research efforts. The research is not sponsored nor influenced by software providers and is conducted solely to help enterprises optimize their business and IT software investments.

Visit this webpage to learn more about the ISG Buyers Guides for Compensation Software and read executive summaries of each of the three reports. The complete reports, including provider rankings across seven product and customer experience dimensions and detailed research findings on each provider, are available by contacting ISG Software Research.

About ISG Software Research

ISG Software Research, previously Ventana Research, provides authoritative market research and coverage of the business and IT software industry. It distributes research and insights daily through its user community, and provides a portfolio of consulting, advisory, research and education services for enterprises, software and service providers, and investment firms. Its on-demand service provides structured education and advisory support through subject-matter experts. ISG Buyers Guides™ support the RFI/RFP process and help enterprises evaluate and select software providers through tailored assessment services and the ISG Software Research Value Index methodology. Visit www.ventanaresearch.com for more information and to sign up for free community membership.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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