Why Hasn’t Compensation Tech Caught Up?

The HR technology landscape has evolved rapidly, with AI-powered tools, automation, and real-time data analytics transforming payroll, performance management, and hiring. Yet, compensation planning has lagged behind—with 77% of companies still relying on spreadsheets to manage pay cycles, according to the 2025 Compensation Planning Trends Report.

Despite the availability of compensation management software, many organizations still find themselves trapped in inefficient, error-prone spreadsheet workflows. Why is compensation planning tech behind the curve, and how can companies get ahead? Let’s explore the current state of the industry and why forward-thinking organizations are making the shift.

Why Are Some Companies Still Using Spreadsheets for Compensation Planning?

1. Legacy Processes & Resistance to Change

• Compensation planning has long been managed manually, and many HR teams stick to what they know rather than adopting new software.
• Leadership often assumes spreadsheets are “good enough” without realizing the risks of manual errors and inefficiency.

2. HRIS Tools Aren’t Designed for Compensation Planning

• 47% of companies use HRIS modules for compensation planning, but these tools are built for payroll management, not strategic compensation cycles.
• HR teams end up exporting data into spreadsheets, creating extra work and increasing error risks.

3. Concerns About Implementation Complexity

• Many organizations hesitate to adopt compensation software due to fears of a long, complex implementation process.
• However, modern compensation solutions are built for seamless integration with HRIS and payroll platforms.

4. Budget Constraints & Perceived Costs

• Some HR teams assume that compensation planning software is too expensive, but they fail to consider the hidden costs of spreadsheets—including lost time, errors, and compliance risks.
• Companies that switch to dedicated software reduce compensation planning errors by up to 90%.

Why Leading Companies Are Moving Beyond Spreadsheets

Forward-thinking organizations are already making the shift to compensation planning software, and they’re seeing major benefits. According to the 2025 report, companies using dedicated compensation planning tools are:

3x More Likely to Have No Compensation Planning Obstacles

• Only 10% of software users struggle with data access issues, compared to 25% of spreadsheet users.
• Real-time access to compensation data eliminates errors, inconsistencies, and version control issues.

Cutting Compensation Planning Cycles from Weeks to Days

• Companies using compensation planning software complete merit cycles significantly faster than those relying on spreadsheets.
• Automated workflows remove the need for manual data entry and approvals.

Improving Pay Equity & Compliance

• Compensation software ensures structured, transparent pay decisions, reducing pay equity gaps and compliance risks.
• HR leaders gain better visibility into salary structures, bonuses, and market adjustments.

The Future of Compensation Tech: What to Expect

As compensation planning becomes more data-driven and strategic, expect to see:

🔹 More AI & Automation: Tools that predict compensation trends and optimize pay structures.
🔹 Greater Integration: Seamless connectivity with HRIS, payroll, and performance management platforms.
🔹 Stronger Compliance Tools: Automated pay equity tracking to ensure fairness and regulatory compliance.
🔹 A Shift Away from Spreadsheets: Companies moving toward purpose-built compensation software to improve efficiency and accuracy.

Conclusion: The Time to Upgrade Compensation Tech is Now

While many companies still use spreadsheets for compensation planning, leading organizations are embracing dedicated compensation software to stay competitive. By modernizing their compensation processes, businesses will enjoy greater accuracy, efficiency, and strategic decision-making.

The companies that invest in compensation technology today will lead the future of pay transparency, retention, and workforce satisfaction.

👉 See how Aeqium can help you move beyond spreadsheets and optimize your compensation planning. Schedule a demo today!

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