New research from beqom highlights a growing gap between organisations’ confidence in pay decisions and the evidence they have that compensation spend improves business outcomes.
beqom, the market leader in compensation management, has today announced the findings of its Pay Intelligence Report, revealing a disconnect between organisations’ confidence in their compensation decisions and their ability to demonstrate whether that spending delivers measurable business results.
Based on a survey of over 200 management, HR and compensation professionals working at global organisations, the research found that 84% of executives are very or extremely confident that paying above market or internal benchmarks improves employee performance. Yet 58% evaluate fewer than half of significant pay premiums or exceptions against business outcomes.
Nearly half (48%) are highly confident that paying employees more improves performance, despite having limited evidence to show whether this is actually the case. This exposes what beqom calls the ‘pay proof gap’ – the disconnect between making compensation decisions and having the evidence to explain why they were made, what they cost, and whether they achieved their intended results.
“Compensation is one of the largest investments a company makes, but too often organisations lack the visibility to understand what that spending is delivering.”
Brad Perry, COO and CFO, beqom
Pay decisions tangled in multiple systems
The research also found that 63% consult at least three systems, spreadsheets or data sources for a typical compensation decision, while 72% of HR respondents say a typical compensation exception requires at least three approval stages. This reliance on disconnected systems and multiple layers of approval creates additional administrative work, slowing down pay decisions and making it harder for organisations to track and justify compensation spending.
AI adoption is also exposing challenges with fragmented compensation data. While 79% of respondents use AI-assisted tools for at least one compensation activity, more than half (52%) of AI users frequently encounter conflicting compensation information, compared with 32% of non-users or those unsure of their AI use. AI users are also more likely to report manual intervention in compensation decisions (60% versus 37%), highlighting the challenges of using AI effectively when underlying data and processes remain disconnected.
Making compensation budgets work harder
The research also highlights opportunities to improve compensation spending, with 95% of respondents identifying scope to allocate budgets more effectively.
Further findings highlight the challenges facing compensation teams:
- 48% frequently encounter conflicting compensation information across systems and stakeholders, despite 75% rating the accuracy of their data highly.
- 50% spend at least 11 hours per month reconciling or correcting compensation data.
- 83% express high confidence in their ability to forecast compensation spending, despite 45% reporting that they finished above budget.
Together, the findings suggest that improving compensation effectiveness requires more than increasing budgets or adopting new technology. Organisations also need to address the underlying processes and data challenges that can limit their ability to make informed pay decisions.
Download The Pay Intelligence Report.
