Firms Tackle Compensation with Software

BOSTON (05/15/2000) - As companies increasingly offer stock options and other nonsalary incentives to attract and retain skilled employees, they're faced with the complex task of distributing the options and effectively managing diverse benefits packages. Some companies are finding that software can help manage the process.

Marc Ketzel, vice president of global human resources at @Home Corp. in Redwood City, California, recently began using software to manage employee salary and stock plans. Managers at @Home now use TotalComp Manager from Kadiri Inc. in Burlingame, California, under an application service provider model.

Because it is acquiring five to 10 firms per year, @Home - which provides broadband online services to consumers and businesses under the brand name Excite@Home - decided it needed an application more sophisticated than a spreadsheet to manage compensation for new and existing employees, said Ketzel.

When it used spreadsheets, @Home had to send compensation reports via diskettes or e-mail to geographically dispersed managers, making it difficult to maintain a consistent report format, Ketzel said. He added that using a Web-based application will make it easier for managers to make salary or stock recommendations.

Software Features

By receiving data feeds from Pleasanton, California-based PeopleSoft Inc.'s human resources application and the company's stock administration database, TotalComp Manager allows managers to determine which stock options have been granted and at what price and to ascertain what portion has been vested.

The software also graphically depicts how a pay increase would affect a manager's budget and compare, say, an engineer's salary with those of his peers within the company or elsewhere within the industry, said Ketzel.

In the past, companies offering stock options have typically made them available to executives who could afford the services of a tax or financial adviser, said Jerry Inglert, vice president of human resources at E.spire Communications Inc., an information technology services firm in Herndon, Virginia, that offers stock options to every employee. As more companies distribute options to employees universally, managers are being left with the task of explaining to employees when their options are vested and what the tax implications are, said Inglert.

E.spire will be a beta-test site for OptionWealth, an application from Rockville, Maryland-based OptionWealth Inc. The application will save managers time by answering basic questions about the company's stock option plan, Inglert said.

Rising Numbers

According to the American Compensation Association in Scottsdale, Arizona, 47 percent of employers offered stock programs to salaried employees last year, compared with 39 percent in 1998.

In addition to salary and stock options, companies are offering such incentives as bonuses, performance-based merit awards and extra vacation time.

"Having been a manager of upwards of 50 people, I know it's difficult to model compensation," said John Hagerty, a vice president at Boston-based AMR Research Inc.

Most companies manage between 50 and 70 compensation plans, but some manage hundreds of plans, said Katherine Jones, a research director at Boston-based Aberdeen Group Inc.

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