New insights from ISG Software Research reveal that software and AI are revolutionizing compensation strategies by enabling companies to assess employees based on their skill sets and other factors, rather than just traditional roles.
The Paradigm Shift
Enterprises are harnessing cutting-edge software and AI-driven technologies to modernize compensation processes, drive wage equity, and customize employee rewards, according to a recent research report from Information Services Group (ISG).
The ISG Buyers Guide™ for Total Compensation Management highlights the pivotal role strategic compensation oversight plays in attracting, retaining, and motivating talent in today’s fiercely competitive marketplace. It emphasizes how the surge in remote work and the gig economy necessitates a rethinking of compensation strategies to cater to diverse work arrangements and evolving expectations.
The Future of Compensation
By 2027, ISG Software Research projects that half of enterprises will incorporate skills-based benchmarking into their compensation market pricing processes. Matthew Brown, Director of Research in Human Capital Management at ISG Software Research, notes that digital tools now go beyond merely tailoring employee rewards; they also evaluate each employee’s worth based on skills, personal circumstances, and geographical location.
The focus is shifting from job titles to the assessment of payments and benefits based on skills and competencies, irrespective of an employee’s position in the organizational hierarchy.
Embracing Personalization
To stay competitive, organizations must address employees’ desires for personalized compensation and benefits. This requires compensation management tools that can swiftly adapt to changing employee conditions, considering both internal culture and external market dynamics.
Investing in employees’ professional growth has become key to assessing the effectiveness of compensation management plans, as individuals seek advancement not only within the corporate ladder but also in their personal development.
Industry Evaluation
In its 2024 Compensation Software Buyers Guides, ISG reviewed 24 providers, classifying them across three platform categories. The top three software providers named Leaders in each category for 2024 were Oracle, Salary.com, and ADP.
A Plan for Success
Mark Smith, Partner of Software Research at ISG, emphasizes the crucial role compensation management and planning play in recruiting, retaining talent, and ensuring operational efficiency across HR and finance departments. ISG’s Buyers Guides offer a comprehensive evaluation framework for software providers, going beyond market strategies to provide a holistic assessment for enterprises.
About ISG Software Research
ISG Software Research, formerly Ventana Research, delivers authoritative market insights in the business and IT software domain. Their research aims to assist enterprises in optimizing their software investments and is independent of software provider influence.
About ISG
ISG (Information Services Group) is a leading global technology research and advisory firm, partnering with over 900 clients worldwide to achieve operational excellence and accelerated growth through digital transformation services and strategic advisory solutions.
All information provided is sourced exclusively through ISG Software Research, offering unbiased market insights for industry professionals and investors.
