If you are managing sales compensation, then you know there are several key challenges involved. Companies of every size want to reduce payment errors, ensure faster and more accurate compensation, improve control and increase transparency. However, as volume increases and sales teams grow globally, achieving these goals becomes more and more complicated.
At NICE, we have seen up close how large sales organizations handle that complexity. The many sales performance management RFPs we have received from Fortune 500 and Fortune 1000 companies provide valuable insight into what they expect from an effective compensation system.
While the RFPs are long and detailed documents, we have managed to distill the essential requirements that appear repeatedly across industries. The following are five examples of requirement categories, summarized from a much more detailed NICE report released in 2020.
Compensation adjustments must be automated
For larger sales organizations, automation is critical to accurately making revenue and payment adjustments, especially retroactive changes to transactions that affect sales credits and balances. Therefore, typical SPM system capability requirements include:
- Prior period and in-period adjustments to transaction amounts and corresponding balances.
- True-ups - calculating the delta between what was paid and what should have been paid, and carrying it forward to the current period.
- Retroactive transaction loading.
- Support for any type of relationship structure (such as rollup, matrix, dotted line).
- Support for manual adjustments.
- Applying adjustments to any level in the sales hierarchy.
- Adjustment calculations with several attributes (such as billing account number, customer name, order number, on-top incentive, new logo, etc.)
Data integration brings it all together
In large sales organizations - with multiple HR, sales and financial systems - an SPM solution should automate data flow between systems, with customized integration models that fit organizational needs. Some typical requirements we’ve seen in this context include:
- Direct integration with business applications (CRM, ERP, legacy systems, etc.).
- Support for inbound feeds from multiple financial systems.
- Direct and scheduled data imports.
- Automated data scrubbing inside the SPM system.
- Support for smart field mapping.
- Intelligent handling of import failures.
Crediting flexibility is essential
Large-scale, global companies tend to have several requirements for applying highly unique and complex sales crediting rules across large numbers of sales transactions:
- Easily load and maintain crediting rules.
- Rollups - assign transactions and roll crediting up a hierarchy from any level.
- Assign credit to all members of a team at the transaction level.
- Treat the same transactions in multiple ways, in accordance with business rules.
- Split credit for a single transaction.
- Automatically reassign transactions to sales reps when territory assignments change.
- Handle overlays by sharing transactions across multiple payees.
- Schedule full or partial crediting runs, limited by period or specific date ranges, including incremental or delta processing.
- Update credits retroactively or within a given period.
Streamlined workflows for better results
In large organizations, workflows for the creation, distribution and approval of compensation plans, as well as payments, inquiries and changes, involve multiple steps and decision-making personnel. Here are some of the most common requirements for streamlining those workflows:
- Multi-level workflow approval and dispute resolution capabilities.
- Inquiry submission within the system, such as through a link embedded in pay statements that automatically opens a ticket.
- Compensation plan and goal sheet routing, approval, and acceptance.
- Reduced turnaround time (response, resolution, closure) for inquiries, approvals, dispute resolution, and other employee interactions.
- System notifications and reminders regarding aging requests.
- Auditable review and tracking of the approval and inquiry processes.
Customizable reports for cross-functional teams
Sales compensation management reporting options are wide ranging, including “standard out-of-the-box” or customized commission statements and quota attainments, team performance and ranking reports, and operational reviews such as compensation effectiveness assessments. The following are some of the top requirements of such reporting:
- Provide payees with frequent updates on their earned compensation.
- Allow payees to easily view, understand and drill down into their compensation payouts.
- Report on compensation processing issues such as exceptions, adjustments, manual overrides, etc.
- Track and report on employee, team and organizational performance (attainment versus goals).
- Export compensation information to external reporting systems.
- Produce reports for accruals and finance needs, as well as year-over-year trends in growth, revenue, etc.
- Include validation reporting to track changes in operational effectiveness.
- Display both preliminary and final compensation statements.
- Append reports with supplementary or more detailed information.
- Use templates or customized examples to streamline report development.
- Easily add and customize reports and dashboards.
If too many of the requirements from any of those five categories are not reflected in some way in your own sales compensation management system, then we strongly suggest you add them. However, they are by no means the only popular requirements among large-scale companies.
A far more exhaustive and detailed list of features and services sought by sales performance managers, based on the NICE survey of RFPs, is available here.