There is an increased need for oversight in the world of Sales Performance Management. There is a growing desire to scrutinize the inner workings of the compensation system and the related processes. There are two main drivers of this change. First, some organizations are cracking down on the internal audit processes. They are driven by concern of new industry regulations. Many are making sure that they can comply with the changes to incentive compensation brought on by the Dodd Frank Act. In particular, they must comply with section 956 of that Act which states that covered organizations must disclose to the regulators (and there may be more than one in some cases) the structures of all incentive-based compensation arrangements. The intent is that organizations should have plans that appropriately balance risks and rewards, are compatible with effective controls and risk management and are backed up by strong corporate governance and oversight.
The second driver for increased audit and compliance comes from organizations who want to better understand how the sales operations, HR and Finance processes are working with respect to SPM. They are trying to evaluate the effectiveness and service levels for their key operational processes. How long does it take to process all commissions? How many disputes are filed with every commission run? How long does it take to resolve these disputes? Are commissions tracking towards the agreed targets? Which management reports are being viewed? These are just a few of the questions that organizations are looking for better answers for.
While many organizations have solid incentive compensation plans, documented processes and workflow surrounding compensation they cannot efficiently and effectively respond these new demands for reporting and audit. Data from emails, conversations and sales-driven exceptions often fail to make their way into the system of record. Hiring more administrative staff, or taking a long time to respond to audit requests, is not acceptable so many organizations are implementing new incentive compensation management systems to help. As the majority of organizations also use spreadsheets and homegrown systems to manage incentive compensation the ability to provide the necessary insight also diminishes. These tools do not provide the robust audit trail, embedded security, role based access and other key features required to pass an audit. With changing and more stringent requirements for increased visibility on the horizon it is critical to have flexible reporting capabilities in the hands of those who need to provide data to all the oversight groups.
Potential buyers of SPM technology should survey the finance and internal audit groups within their organization to survey their existing needs, and anticipate their needs going forward. This establishes a foundational baseline of requirements when looking for a new system.
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