Why Aren’t More Companies Using Compensation Planning Software?

Compensation planning is one of the most critical functions of HR, yet only 10% of organizations use dedicated compensation planning software. Instead, most companies rely on HRIS modules (47%) or spreadsheets (29%)—despite their inefficiencies.

The 2025 Compensation Planning Trends Report found that 91% of HR leaders struggle with adapting their compensation tools to meet business needs. So why aren’t more companies making the switch? Let’s explore the barriers to adoption and how organizations can successfully transition to modern compensation solutions.

The Common Barriers to Adopting Compensation Planning Software

1. The "Good Enough" Mindset

• Many HR teams believe that spreadsheets or HRIS modules are "good enough" for compensation planning.
• This mindset often stems from habit, lack of urgency, or resistance to change—until a costly error or inefficiency forces a reassessment.

2. Overreliance on Spreadsheets & HRIS Modules

• 77% of companies still rely on spreadsheets, while 47% use HRIS modules that aren’t built for compensation planning.
• HRIS tools focus on payroll, not complex compensation review processes, leading teams to create workarounds that ultimately slow them down.

3. Fear of Implementation Complexity

• Many organizations worry that adopting new compensation planning software will be time-consuming and disruptive.
• In reality, leading software solutions are designed for seamless integration with HRIS and payroll systems, making the transition easier than expected.

4. Budget Concerns & Cost Misconceptions

• HR teams often assume that compensation planning software is too expensive—but the hidden costs of spreadsheets (errors, inefficiencies, compliance risks) are often far greater.
• Companies that switch to dedicated software reduce compensation planning errors by up to 90%—saving time and money in the long run.

5. Lack of Awareness of Available Solutions

• Since compensation planning has traditionally been managed with manual processes, many HR leaders simply aren’t aware of how modern software can transform their approach.
• Many companies don't know that a dedicated solution like Aeqium exists.

How Companies Are Successfully Overcoming These Barriers

Organizations that have adopted compensation planning software are already seeing major benefits. According to the report, these companies are:

✅ 3x More Likely to Have No Compensation Planning Obstacles

• Only 10% of software users struggle with data access issues vs. 25% of spreadsheet users.
• Compensation software ensures real-time access to accurate data for HR, finance, and managers.

✅ Reducing Compensation Planning Cycles by Weeks

• Organizations using dedicated compensation planning tools cut cycle times from 5-8 weeks down to days.
• Automated workflows eliminate manual data entry, calculations, and approval bottlenecks.

✅ Improving Pay Transparency & Compliance

• Compensation planning software provides structured, auditable pay processes, helping companies stay compliant with pay transparency laws.
• HR leaders gain better visibility into pay equity and market adjustments.

✅ Enhancing Manager Collaboration & Decision-Making

• Software solutions allow managers to access compensation data securely, make informed pay decisions, and collaborate in real-time with HR teams.
• 79% of HR leaders using software report high confidence in their decision-making processes.

Conclusion: It’s Time to Break Through These Barriers

Compensation planning software adoption is still in its early days, but the organizations that have made the leap are already seeing the benefits—from reduced errors and cycle times to improved compliance and collaboration.

As compensation planning becomes more complex, sticking with spreadsheets and HRIS modules will only create more challenges. The companies that overcome these barriers and adopt compensation planning software now will be best positioned for the future.

👉 Ready to see how Aeqium can transform your compensation planning? Schedule a demo today!

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