A new Key to Success for Sales Performance Management

I had the opportunity to present at a Sales Performance Management seminar in London, England a couple of weeks ago.   I was joined by Kevin Pilcher from Colt, who shared his thoughts and opinions on the topic of 'Keys to Success'.  I shared the list of Keys to Success that I have been gathering from SPM project sponsors over the past couple of years.  In general he agreed with their guidance and recommendations, but he also added one of his own.   (many of these are listed under the Keys to Success tab on this blog)

Kevin suggested that in order for an organization to really take ownership of an SPM implementation they need to get involved in the configuration and implementation of the project right from the outset.  He is a big advocate of training right at the outset of the project.   His view is that every organization has unique plans and processes and that their team should be intimately involved in all aspects of the implementation.  Kevin took his team and put them on training classes right at the outset of the project.  They knew the plans at a very detailed level and with the appropriate solution training they added a lot of value immediately. This combination of detailed plan knowledge married with product knowledge were a great asset during the system configuration portion of the implementation.   

There was an added benefit, in that after the configuration, the Colt team was able to be self-sufficient right from the outset, versus having to take on a big learning curve after the system was up and running.

In general  we see projects where the both the vendor and the customer are actively involved provides these benefits:

1.  shortens implementation/configuration times
2.  compensation teams are aware of advanced features and functions in the solution by working side-by-side with vendors experts
3. allows the organization adopting SPM to be much more self-sufficient and the application is much more likely to be business user owned.

Followup on Keys to Success Post

Ritu Thakur

I previously mentioned that I have been fortunate in that I have had the opportunity to work with a number of very knowledgeable people in the SPM space.  Ritu Thakur is one of those people.   (Follow this link to see her profile -  http://www.linkedin.com/in/rituathakur). She has worked on several SPM implementations in high-tech and large financial institutions.  We had an email exchange after my last Keys to Success post  (see the Keys to Success tab)

She agreed with the idea of ensuring the the incentive compensation team is trained and put on the project early, but she talked about another huge benefit that I wanted to pass on.

In addition to all the benefits that you have listed, I wanted to add one additional benefit of your new Key to Success. While the implementers have a lot of best practice experience, they are not as close to the intricacies of the client data and processes.  Despite the synergies across industries and function, there are always unique and specific requirements that can make or break a project.  Hence, having the client participate in the implementation brings those key details to the implementation effort.  It allows for an effective implementation, helps avoid gaps in design and reworking the project.

This makes a lot of sense, and just one more reason to ensure that your team has representation from the people who run the compensation process and know how it works at a very detailed basis.

Great Executive Interview questions for Sales Performance Management

When we talk about the keys to success when implementing a new sales performance management system, the issue of executive sponsorship always comes up.  It is critical to ensure that organizations are aligned across business functions (covered in this blogpost - http://bit.ly/vHkO5P ) but also that organizations are aligned vertically throughout the organization.

This week  I was talking with Mark Coleman, Managing Partner of Compensation Analytics (www.compensationanalytics.com) about some of the great research they are doing and the topic of executive sponsorship for Sales Performance Management (SPM) projects came up. Our mutual experience has shown that spending time upfront to make sure executive sponsor's needs are well understood is critical.  These will be things like aligning sales performance management capabilities with business strategies and providing sales management with the information they need to be more effective.  Getting in to the weeds too quickly (on a topic as complex as sales compensation) can result in your sponsor missing the value of SPM – it’s best to save the discussions on error rates, dispute handling, and pipeline processing for the subject matter experts.

When talking with executives it is important to understand their priorities and perspectives.  The following is a sample set of questions that will help guide an executive meeting.  Some of these are higher level and more strategic, and some of these are more tactical, but all of them are geared towards gaining insight as to where improve sales performance is on the executive sponsor's list of priorities.  These are intended as a guideline and should be tailored to your specific organizational needs.

 

1.      What are your top priorities and what do you need your sales force to do differently in order to achieve these goals?

2.      From your perspective, what is broken with sales compensation?  Why? What do you think are the underlying root causes behind these issues?

3.      What strategic capabilities do you think you’ll need in a few years that you do not have today?

4.      On a scale of 1-10, how would you rate the performance culture of your sales organization (1- what is performance management?, 10 – high expectations, active performance management)

5.      If you had 3 wishes for capabilities that would improve your sales performance, what would they be?

6.      After being out of the office for a while, what is the first Sales report you look at upon your return?  Why?

7.      What’s the number one thing you would like to know about your current sales performance that you don’t know today?

8.      If you could enhance the information you now receive to improve its value to you – what would you change?

When should the executive meetings/interview happen?

Some people advocate that you get all of the research done, figure out potential solutions and answers to these questions before meeting with executives.  You will have to judge your own organizational dynamics and culture, but I believe that you should go in early with these questions.  It’s only once you have the executive perspective that you can really go out and research potential process, organizational and technological improvements.

 

6 New SPM Trends - Trend 6 - Integration with More Applications

Traditionally a lot of Sales Performance Management Systems have been focused on the incentive compensation process.  While there can be many (occasionally hundreds) of input sources to an SPM solution, organizations generally consider outputs to be - commission statements, a payroll feed, and few summary reports.   

As SPM systems mature, it is more often the case that the SPM system houses the highest quality information in the organization about who is selling what to whom, at what price.  As commissions are paid of this data, it is normally the most scrutinized, up-to-date and accurate information in the company.  Organizations want to leverage this asset, typically by demanding new management reports.  This quickly moves to requests for more complex and broad-based reporting, often requiring new and different source data.  The natural evolution is then to make this information available to an even broader set of recipients.  This expansion generally requires feeding data to other systems.

 Some common examples are:

•          Feed information into a corporate data warehouse or business intelligence system
•          CRM integration between commissions and customer data
•          HR systems to integrate commission data with other payroll and compensation data
•          ERP system so that this information resides in the original system-of-record

Ensuring that your SPM system can pass data to other applications through standard interfaces like ODBC, web services and star schema generation allows compensation teams to provide compensation data in any format required by the receiving application.

My perspective on CSO INSIGHTS 2011 Sales Compensation and Performance Management – Key Trends Survey

 

Jim Dickie and Barry Trailer of CSO INSIGHTS do a great job every year of taking the pulse of sales leaders and sharing their survey results and opinions.  The 2011 Sales Compensation and Performance Management – Key Trends survey is another good read from Jim and Barry, and as we have come to expect, their insights and observations add a lot of value to the raw results.  

A copy of the survey results is available at   http://bit.ly/pbvNHG

As I was preparing for a conference presentation next month, I was re-reading the results and I was struck by one chart in particular.  When the question was asked – What aspects of your comp plan would you change, and in what order?   

The top three results were

• Management’s ability to judge plan effectiveness
• Management's visibility into sales performance
• Ability to model plan revisions

The bottom three, in terms of priorities were

• Managing credits, exceptions and adjustments
• Minimize inquiries and disputes
• Support compliance requirements

The complete list is good, and I am sure that anybody reviewing it could not disagree with it as a whole.  This list however, represents the perspective of sales leaders as it relates to compensation.  I wonder, if we asked CFOs, Compensation Teams, and HR leaders how they feel, would we get the same list and the same priorities.  My hunch is that while other groups wouldn’t disagree with any of the requested changes, they believe that the fast and accurate payment of commissions, and minimizing inquiries and disputes will increase sales job satisfaction and give the sales team more time to sell by reducing their administrative effort and shadow accounting efforts.  This could be argued as one of the biggest benefits of automating the commissions management process and therefore made the top priority for the compensation team.

I have often talked about the need for cross-functional organization alignment, around goals and priorities when implementing a Sales Performance Management System.  If the cross-functional team isn’t aligned as to what the short and long term goals and objectives are, then the projects are in risk of cost and time overruns and missing expectations of some group when it is delivered.   What this chart got me thinking is that it’s not enough to make sure that the list of goals is correct, but also that they are prioritized and agreed upon by the whole team.   Getting alignment from the start will save everyone a lot of time and effort in the long run.

Conference highlights - WorldatWork Spotlight on Sales Compensation

For the second year in a row the WorldatWork’s Spotlight on Sales Compensation event was a sell-out and a great success.  Approximately 300 people congregated at the Westin in Chicago to discuss sales compensation.  Most of the people I talked to came with one of two things on their minds.  How do we improve the compensation plan design?  Or how do I better leverage information technology to improve efficiency in the compensation management processes?

The who’s who of sales compensation showed up and presented their latest thinking on managing the sales compensation and commissions processes.  Attendees got to hear from many speakers including practitioners  from organizations like Salesforce.com, Manpower Group, American Express,  and Office Depot.  We also were able to from hear thought leaders from organizations including Towers Watson, Coletti-Fiss, Sibson Consulting, BetterSalesComp and the Cynal Group.

As readers of this blog will know, I have been out collecting  ‘keys to success’ from project managers of incentive compensation systems.  I have collected a ‘top 10’ list over time and I was asked to share the findings of these interviews.   I was fortunate by be joined by Vivian Adashek of Manpower, and we jointly presented - Keys to Success in implementing a Sales Performance Management Solution on Thursday afternoon.  Manpower has been using an automated solution for a few years now and Vivian gave some great advice for new project managers.  We also had a interactive group which made the session that much more enjoyable.

Some of the Keys I have blogged about before, but a new one has hit the top 10 recently.  It’s all about understanding the policies, processes and procedures that surround the commissions management process - before you start doing things.  Vivian found, and others agree,  that when a project team first assembles on the project,  that they have a general understanding of the compensation processes but this is not enough.  The challenges that arose during software selection, implementation and roll-out were often caused by the fact  that they did not understand the commissions process at a deep enough level, and this lack of knowledge tripped them up several times.  I too have seen this on a few of the projects that we have worked on.   Managing compensation is a complex process that has often been patched, pulled and changed to meet a myriad of changing requirements over the years.  Fully understanding what truly happens along the entire process is key before you start the automation project.  Ignoring this often leads to delays in the project plan, frustration for the team members, and cost overruns that could have been avoided.

I know that there is always the desire to jump right in, and start developing with the new software, but take the time to make sure you document and fully understand how sales compensation in done today and a very detailed level.  This up front effort will save you lots of time and money over the course of the project.

If you want a copy of the presentation, or have suggestions for the top ten list, or other questions and comments about commission management software please let me know.  

New Presentation for Spotlight on Sales Compensation in Chicago

I have been asked to present on Keys to Success when implementing a Sales Performance Management System at the upcoming WorldatWork Spotlight on Sales Compensation in Chicago (August 24-26).  I have been fortunate that over the years I have met a lot of very successful people who have done just that.  I have collected a lot of their advice and rolled it into a top 10 list.   For WorldatWork’s conference this year I will be joined by Vivian Adashek who will be talking about their implementation at Manpower.  She is a joy to work with, and brings some great experiences and practical advice for any new project manager.  Anyone starting on the SPM journey will be well served by listening to what Vivian has to say.

Specifically, we’ll be covering issues such as:

• Ensuring all functional areas are aligned to the same goals
• Key considerations for reporting
• Things to consider for testing, history tracking and data integration
• Role of Information Technology groups

Please comment or share this post. If you have advice for new project managers please share them, and I will continue to add to the list and make it available.  If you have questions feel free to post them as well and we will try to help.

If you’re attending WorldatWork’s Spotlight on Sales Compensation conference, please visit us at exhibit #7 and attend our workshop (Workshop Code: C15TH4) on Thursday, August 25^that 4:15pm.

Contact Paul Peters at 647.260.1556 or ppeters@varicent.com to set up a meeting while we’re there. We value your feedback and insights.

SPM Keys to Success - Advice from Hertz

It’s always great when someone who has gone through the trials and tribulations of implementing an enterprise software application are willing to share their experiences.   I had the great pleasure of talking with, and then presenting with Lynn Ferrara, Senior Director of Global Compensation for Hertz at WorldatWork's annual TotalRewards conference in San Diego this week.  Lynn has just come through a roll-out of a new SPM solution across multiple business units for Hertz.  

Today's session  focused on providing some guidance for organizations who are just starting out on the Sales Performance Management journey.  As is often the case when I have these conversations I found her insight invaluable.  

 Lynn's advice can be summed up in four key points:

Reduce and Improve Reporting – I blogged about this earlier, but Lynn echoes the need to create mock-ups of the reports that you plan to produce and run them by your end-users.  Her advice to project managers is to do this early, at the very outset of the project.   In the end, it’s the reports that contain the value for management – you must make sure that the reports you design provide the value desired.  Lynn also advises that just automating the reports you have today, will often not meet the requirements of management.  If this is done early in the project, any mis-alignments are identified while there is time to adjust the project plan.  Agreeing on reports creates alignment, avoids disappointment, delays and cost-overruns later in the project. 

Allow Enough Time for Data Integration - different reporting systems can provide data on different time tables (i.e. Weekly versus monthly), in different currencies, converted at different rates, and from disparate manual systems.  Working to get a common, reliable set of input data often takes going back to source providers and working creating new or different extracts, schedules and formats.   This activity usually takes longer than most team allow.  

Consider Testing Requirements Early – when implementing a new system, you have to consider that a lot of things can change in the compensation system that will make testing a challenge.  One common example is that the source data has been updated since the compensation data was calculated.  This happens as people make corrections and adjustments to source data when errors are discovered downstream.  For most organizations it is nearly impossible to track all of the data changes to the source data.  This means that that data that was used to calculate sales compensation in the old system is different than the source data for the new system.   Add, manual overrides, currency fluctuation, errors in the current systems and processes and other data inconsistencies, and it is virtually impossible to come up with exact the same commission results for from the old and new system.  At the outset of the project, teams are well advised to think through a testing plan thoroughly, and setting realistic expectations.

Communicate, Communicate, Communicate – there are many interested parties when a new incentive compensation management system is implemented.  Constant communication with the payees, Information Technology groups, the executive team, Sales Management and the plan administrators are all key to ensure success in a Sales Performance Management system.  Lynn advises that project managers should allot more time to communications across the groups in order to both train them on the new system, but also sell the solution that you are building.

  

Again I want to thank Lynn for taking the time to share her thoughts with the SPM community.

SPM Keys to Success - Ensure Plan Alignment

The SPM market is maturing.   We see more and more successful projects returning real value to organizations.   I have had the opportunity to meet with many of these organizations and have tried to find some commonality across successful projects.    Many of the things I hear are good basic project management advice that could help with any project, and some of the keys are very specific to Sales Performance Management. 

Based on the level of interest that I have received on this topic,  I have decided to spend a bit of time on this topic that I am calling 'SPM - Keys to Success'.   I blogged previously on reducing the number of reports produced, while overall improving the value of reporting overall.  this next 'Key to Success' is all about making sure that all of the interested parties are on the same page at the outset of the project.

When implementing a Sales Performance Management system, one of the things that can quickly take the project off track, is to assume that all of the interested parties directly involved with the project agree on the goals.  People come into Sales Performance Managment projects with different perspectives, different needs and different priorities.  Often these goals are not aligned and at times are diametrical opposed.   Often team members believe that it is quite obvious what the burning issues are and what needs to be focused on.  They assume the broader group agrees with their priorities.

For example, there may be one camp who believes that the focus of the project must be to help drive more volume through the sales channel.  This often makes sense for sales leaders who are driven by the need to increase revenue and market share in order to take or maintain leadership in a market.   There could be an opposing view that the goal of the Sales Performance Management system is to allow the organization to implement a new set of processes and plans that helps to drive a culture of rewarding sales of high margin business.  Their view is that not all revenue is created equal and rewards should be given for ‘good’ business.  If the organization continues to sell lower margin products, increasing revenue on those product lines may actually hurt the organization’s profitability.  Their focus is not on revenue growth, but rather driving improvements to the bottom-line.  This may result in selling lower volumes of high margin products.  Neither of these is wrong, but they may be at odds with each other and cause challenges in determining what needs to be accomplished and the priorities for the project.

Regardless of who in the organization is charged with implementing a new Sales Performance Management system, it involves many people from different parts of the organization.   Gaining consensus of the specific, measurable, time-based goals is one of these most important tasks that need to be completed at the outset of the project.    

Project managers are well advised to make sure that the goals of the project are clearly defined and then well communicated in the organization.   If this isn’t done then project teams introduce a high risk of missed deadlines, project overruns and potentially even project failure.