Why Compensation Professionals Still Love Excel

by David Creelman

It’s popular and easy to criticize Excel. Spreadsheets are prone to human errors, labor intensive, and difficult to use collaboratively. So why do so many compensation professionals love Excel?

Excel enables compensation professionals to say yes. When business leaders come to the compensation department asking them to implement a particular incentive scheme, the dedicated compensation professional doesn’t want to say, “Sorry, our compensation module can’t support that scenario.”

Instead, they want to say, “We will find a way to support your requirements.” Then they usually quietly go off and set up a manual Excel-enabled process. But saying “Yes” creates expectations, so the number of Excel-enabled incentive structures tend to grow over time.

You can’t blame ERPs for not having enough flexibility built into their compensation modules. ERPs do many things, but compensation is tricky because each industry has its own set of metrics and calculations, and they evolve over time. If all your compensation tactics are straightforward, then there’s a good chance that your ERP’s compensation module can handle it; otherwise, you may find yourself using a lot of Excel. A challenging economic environment with a tight talent market makes flexibility in compensation especially important.

Spreadsheets are often the first choice of compensation professionals because they are extremely powerful and flexible. Almost any calculation you can imagine, you can do in Excel. It’s also the case that most compensation professionals are very good at Excel — they can make it do amazing things, but that takes time. It’s like the adage, “you can do anything, but you can’t do everything.

Suppose your compensation department is using Excel extensively. In that case, it is prudent to consider the best practices that can help you eliminate errors and achieve some level of efficiency even in a manual process.

For example:

  • Eliminate manual manipulation of data files. Instead, configure your reports to produce exactly the output you want in the format you need.
  • Make extensive use of cell protection so that the columns containing formulas are locked against user editing.
  • Utilize data validation rules to limit the time and effort required for inspecting workbooks once the recommendations have been returned.
  • Use conditional formatting to quickly identify values that are out of range or require special attention.
  • Place look-up tables on a separate sheet and hide Keep in mind that hiding and locking are convenience features, not security features. Savvy users may be able to find what you have hidden.

The other option is, of course, to get specialized compensation software like CompXL that has all the Excel formula support you need and the SaaS capabilities you’ve come to expect from best-of-breed Incentive Compensation Software.

While Excel has its detractors and limitations, it remains the most powerful and popular formula engine around. Those who wield its power to support their business’s needs should not be shamed for being technology laggards — they should be applauded for their can-do spirit and “freak in the sheets” Excel skills.

Excel is with us for a good reason — in the right hands, it gets the job done.