Survey Results Validate Need for Transparency and Automation in Incentive Comp
At this year’s C3 Conference, hosted by CallidusCloud, we conducted a quick survey among some of the attendees. The results provide some interesting, yet not surprising insights to the compensation operations of various organizations. These insights are not dissimilar from what we encounter in the field working with clients assessing new ICM solutions or looking to optimize their current ICM configuration.
As it relates to operational challenges pertaining to period-to-period incentive compensation processing, the following three challenges emerged from the survey results:
- Limited reporting. Overwhelmingly, the biggest challenge for survey respondents already on an ICM (Incentive Compensation Management) technology platform was a lack of reporting by which front-line sales reps can track their own progress. The impact of lack of timely and transparent reports is often lost productivity in the sales force due to shadow accounting. This certainly supports the research that shows that sales reps spend an average of 64% of their work hours on non-selling activities such as manually calculating and validating their own commissions.
- Lack of workflow automation. The second-place finisher for survey respondents’ on an ICM technology platform was the lack of workflow automation to replace time-consuming and error prone manual processes. Though the typical reporting and dashboard capabilities of an ICM system provides this solution when built properly, workflow automation is typically the last priority for effort and spend within an organization focusing on ICM optimization.
- Absence of scalability. For survey respondents not on an ICM technology platform and instead using a homegrown solution or spreadsheets to calculate their incentive payments, there is an added challenge in terms of visibility and workflow configuration. Even more so than respondents already on ICM technology platforms, the lack of dashboards and reports for field and management visibility, as well as the lack of configured automated workflow to help handle repetitive manual tasks, there was no structure in place to generate a solution. Especially in terms of workflow, there is no functionality to automate adjustment submission and field approval prior to involving a compensation administrator. Respondents using spreadsheets for ICM typically provide a monthly snapshot to field reps rather than real-time insights that can inform decision-making.
Additionally, the survey results revealed that manual commissions adjustments are a universal problem whether using an ICM platform, homegrown solution or spreadsheets to manage incentive compensation. Forty-four percent of survey respondents indicated that the most common reason for manual incentive comp adjustments is missing or incorrect data from upstream data sources. For survey respondents using an ICM system, a secondary response emerged related to the reason for manual adjustments—manual payment requests from the field. And finally, for survey respondents using a homegrown or spreadsheet solution, managing by exceptions was indicated as a common reason for manual adjustments. This would likely reduce drastically if on an ICM system.
In short, we extracted two main themes from the survey results – the need for transparency and automation to reduce errors and save time. If these themes resonate with you or if you would like to know more about the survey, I invite you to reach out to me at firstname.lastname@example.org.