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.

New 2012 Sales Performance Management research report from Aberdeen

Peter Ostrow of AberdeenGroup does a nice job again this year with his annual SPM research. (click here to read the research -http://bit.ly/wb9VjH

The survey results show how the market is progressing and the report provides some good advice for guiding SPM initiatives.  I wanted to call out one thing in particular.  The survey shows that the goals, in priority order, that organizations have for their SPM implementations are:

1. Higher Sales Margins
2. Increase Management Visibility into sales force and channel performance
3. Better sales hiring process
4. Universal rep understanding of compensation or performance plans
5. Balance territories to maximize revenue
6. Reduce administrative time for sales compensation or territory management
7. Reduce sales turnover

Higher Sales Margins was viewed by practitioners as the most important. It is interesting to see the quantification of a trend that we have been noticing for some time now.  That is, it’s not just the desire to grow top-line revenue, but profitable revenue that drives a lot of sales performance and sales compensation initiatives.

Higher margin business often comprises of selling back to customers, bundling products, cross-selling, multi-year and multi-product sales and/or some combination of the above.  Motivating your sales force to sell high-margin business is a challenge for most organizations. There is the obvious first problem of trying to collect and process the data in order to calculate margin by customer, product and channel so there is visibility into what is high-margin business.

Secondly, if we assume that sales people are motivated by their commission plan, then the idea would be to introduce new components to their plan that rewards this type of selling.   According to Gartner, nearly 90% of organizations are using spreadsheets and home-grown solutions to manage the sales commissions processing.  Without some SPM technology in place Commissions teams today are already hard-pressed to meet demanding deadlines, reduce errors and try and find efficiencies with today’s plans.  Adding requirements to drive Margin-based plans, versus Revenue-based plans is a daunting task.   This should not be undertaken without a review of existing processes, data flows and technology.

Lastly, there is a concern is that adding new compensation plan components that reward these higher margin activities can result in making the plans too complex and disenfranchising the sales team.  Note that the fourth priority on the list was Universal Rep Understanding of Compensation or Performance Plans.

There is a lot of data out there that suggests that sales plans are already far too complex and many sales people do not understand their current plans.  Adding more complexity can exacerbate this problem.  If you are moving to margin based plans, it must be done by considering wholesale changes to the commission plans, and specifically considering what components could come out when these new ones are introduced.

For clarification, the survey was partially underwritten by Varicent, Xactly and Callidus, but the survey itself, and the interpretation of the results were all done by AberdeenGroup.

New Michael Dunne White Paper and Webinar now available

Many organizations are working hard to improve their sales effectiveness.  Increasingly many of these organizations are turning to information technology to help improve the efficiency and effectiveness of their incentive compensation and sales performance management processes.  Many of these organizations are now in varying stages of rolling out Sales Performance Management (SPM) solutions.

During these deployments, organizations go through a number of distinct phases as they mature.  The first phase is to ensure that the processes they have in place are efficient and produce accurate results.  As organizations look 'beyond the numbers' they go through increasingly complex phases ending with business agility and overall SPM optimization. 

I asked Michael Dunne, X-Gartner analyst, and long-time veteran  of sales effectiveness and sales performance management to write a report, outlining these stages of evolution, and to provide some guidance for organizations who find themselves in different levels of  SPM maturity.


The result is a new report which provides great insight as to the evolution of SPM systems within an organization.  This is a must-read for anyone trying to educate themselves on the Sales Performance Management landscape.   I have also asked Michael to discuss this paper and answer any of your questions in a webcast. This is now scheduled for December 6th.

Click to download Michael Dunne whitepaper or to register for webinar Dec. 6th 

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.

Michael Dunne - 4 stages of Sales Performance Management

I just finished reading the draft of a whitepaper I commissioned with Michael Dunne.  Most people involved in Sales Performance Management know Michael from his years as an industry analyst with Gartner. He has a wealth of experience, and a unique perspective on this market.  

I asked Michael to write-up his thoughts on the evolution of Sales Performance Management.  He has segmented the adoption of SPM into four distinct phases and he provides guidance for organizations in each of these phases.  The full whitepaper and accompanying webinar will be announced shortly so keep an eye out for the announcement over the next few days. 

Follow @bhartlen or @varicent for regular updates and to get the details on the webinar and whitepaper when they are announced.

6 New SPM Trends: Trend 5 - Transition to the Cloud

Much has been written about the advantages of cloud based computing.  It’s not that cloud computing is new in 2011, but rather that many large organizations had thought that cloud based computing was only appropriate for small to medium sized businesses.  They were concerned that cloud solutions:

·     Would not scale to their volumes

· Would take away the ability to control upgrade timings

·   Would fail strict security and audit requirements

·  Could not offer the flexibility to meet specific and demanding requirements of large enterprises

There are compelling arguments for why cloud based solutions do provide significant benefit.  These include:

·      Reduced burden on existing, overburdened IT staff

·      Faster project start times (avoiding hardware procurement process)

·      Reduced initial investment and shared risk pricing model

·      Improved vendor support  - as they manage the entire hardware/software environment

The good news is that cloud computing has matured; the early adopters have paved the way, and software vendors have expanded their capabilities, offerings and platforms.  There are more options available to meet the specific needs of today’s complex organization.  For organizations that don’t want to co-mingle their data, there is a single-tenant cloud solution.  For those with security and firewall concerns, there is a new movement towards private cloud deployment. With this flexibility and configurability in deployment options, most organizations are now choosing cloud-based options for new Sales Performance Management implementations.

With the increasing array of options and flexibility in SPM offerings, it’s not simply an on-premise versus cloud decision facing organizations.  It’s much more complex.  Project teams are well advised to make sure that they consider both their requirements, and the specific options offered by their short-listed vendors.

 

 

6 New SPM Trends - Trend 3 - The Increasing Role of Finance

In a recent survey conducted by CFO Research[1],  CFO's were asked whether the finance function would play an increased role in sales incentive management (including plan design and administration).  While many finance departments are already heavily involved, 52% of the respondents said they will get even more involved over the the next two years.  It’s not surprising to see this interest from Finance.  In times of economic uncertainty, compounded by the concern about negligible revenue growth, many CFOs are seeking opportunities to improve margins.  They are no longer focusing just on cost reduction; rather they want to improve margins by driving sales of the most profitable products and services, not simply by selling more of the high volume offerings.

According to the survey, 61% of the Finance team wants to see ‘more sophisticated selling’ by their sales teams. Sophistication, in the minds of Finance, means encouraging team selling, bundled offerings, multi-year deals, cross selling, and increased selling of high margin products.  They also want to see a tighter link between the setting of quotas and the specific revenue goals of the organization.  It’s frustrating to see the organization make a strategic decision to try and drive business growth in one area, only to find that the sales plans drive a very different behaviour.  Reconciling the plans to the strategies can often take over a year, which results in delayed execution of strategy and missed opportunities.

From a Sales Operations/Human Resources perspective, leading ‘experts’ on incentive compensation plan design are encouraging organizations to simplify plans and make sure that incentive plans have as few measures as possible (often stating that best practice plans have no more than three measures). 

Finance’s drive for more sophistication versus Sales Operations and Human Resources drive for focus and simplification of incentive plans appear to be at odds.   The best resolution is to get ahead of the curve.  This is a great opportunity for all business interests to converge and share their perspectives on the challenges and high priority items for moving forward. 

Successful organizations work with finance to not only agree on the sales plans and drivers but to agree on time-lines, decision making processes, constraints and any potentially conflicting viewpoints on plan design, implementation priorities and targets.  The combined group needs to come to consensus and then communicate their shared goals across the organization.  Failure to do this often leads to different priorities and misaligned goals.   In turn this leads to inconsistent and often conflicting communications being delivered to the sales organization.  A coordinated effort leads to common goals, sales alignment and increased performance.

---

[1] Managing Sales Incentive Compensation Amid Uncertainty, CFO Publishing, March 2010

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.

Isn’t Sales Performance Management software just part of CRM, HR or ERP systems?

I am often asked why Sales Performance Management isn’t just a part of some other enterprise application.  Based on the background of the individual asking, ‘some other application’ is generally the organization’s CRM, ERP or HR system.    

The truth is that while SPM touches all of these areas it is not well served by any of them.  The design point of each of these applications is not Sales Incentives. Adding a few columns and a few reports doesn’t solve the problem of accurate, timely and efficient payment of variable compensation.  Nor does it start to solve the challenges around modeling, reporting and analysis of sales performance.

Let’s look at each of them.  Some would say that Salesforce.com, Microsoft Dynamics CRM or other CRM solutions are the obvious choice of where sales commissions should be handled.  For many organizations the CRM is the place to capture customer centric information and related activities.  It stores what the customers purchase, it may capture what they order, but very rarely does it capture who gets credit for the sales of those items, how commissions were handled, hire and termination dates of potential recipients of commissions, and what attainment towards Quota the credited sales rep was at in order to determine accelerators.   This is just a short list of the things that are needed in a modern sales compensation system.  Without that relevant data it is impossible to calculate commissions simply by looking at the CRM.  Loading all of the data and building the calculation logic that is required is also not possible or not in scope for most CRM solutions.

Many say Success Factors, PeopleFluent, Taleo, Workday or some other HR or Talent Management solution is the place for compensation and benefits information and therefore the place to capture information about variable pay.  The challenge is that HR systems do not track detail about what customers purchase what products.  This is critical to a sales compensation system.  HR systems do not capture the components of the plan in order to run complex calculations needed to determine specific payouts.  In fact, most HR systems are generally good at data collection and reporting, but do not have the concept of a calculator or modeling engine as part of their solution set and therefore should not be used for sales compensation.

Let’s have a look at ERP solutions.  ERPs are assumed to be the place that houses all the transaction data needed for calculating commissions.  While the transactions are a key ingredient to a compensation system, ERPs were not designed to manage commission exceptions, overrides, splits and plan adjustments that are the course of business in incentive compensation.  The concept of prior period adjustments, claw backs, holds, spifs and draws are not common to the process efficiency mindset of ERP solutions.

None of these systems were designed for sales commission’s calculations purposes, and while they all have some of the data needed, none have all the data nor  the dispute resolution, plan modeling and other necessary functionality.  These systems are not well suited for your sales performance and commission management needs. 

So how are organizations managing this critical process? According to Gartner, nearly 90% of organizations with over 100 sales people are still managing commissions with home-grown solutions, Access databases, Excel and manual effort.   Outside of North America there is even less automation.   A number of organizations have come to realize than in order to deliver timely, accurate commissions, and in order to design and implement plans that drive the sales behavior they want, they must look to specialized software for this task. Software that can accept data from a myriad  of data sources,  determine the proper crediting for all the incoming transactions,  calculate commissions, and then produce commission statements, reports and analysis.   Modern SPM systems also allow compensation teams to model different scenarios, analyze plan effectiveness, manage the territory and quota processes as well as calculating commissions.    

Organizations that implement SPM systems are more likely to drive down administrative costs significantly reduce errors and put more selling time back into the hands of the sales team

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.  

10 great links for Sales Performance Management

Spotlight on Sales Compensation
 http://www.worldatwork.org/waw/salescompspotlight/html/index.jsp

WorldatWork has done a great job of putting together the Spotlight on Sales Compensation, a conference focused specifically on helping sales compensation professionals. This year’s conference runs August 24-26th in Chicago.

Survey:  CFO Research Services
http://www.cfo.com/whitepapers/index.cfm/display

CFO Research Services does a great job of understanding the role of Finance and marries that with excellent survey, analytical and writing skills to provide some of the best research available. I sponsored research to better understand what CFOs were thinking about their changing involvement in sales compensation. “Managing Sales Incentive Compensation amid Uncertainty” provides some great data on the changing role and changing perspective of CFOs when it comes to the need to change sales compensation. This is a good read and well executed by Sam Knox and his team.

Ventana Research 2011 SPM Value Index           
http://www.ventanaresearch.com/research/overview.aspx?id=3208

Ventana compiles an authoritative look at the Sales Performance Management Market. The 2011 Value Index provides a comprehensive look at the Sales Performance Management market and vendors.

BetterSalesComp Blog                                       
bettersalescomp.com/blog

Ted Briggs and Clinton Gott share their real-world experiences in sales compensation. They are particularly knowledgeable in High Tech, Financial Services and Medical Devices.

New Sigma Blog  SalesCompInsights                     
https://salescompinsights.com  

Industry veterans Scott Barton posts regularly with valuable insights and opinions. A must read for Sales Compensation professionals. 

CSO Insights - Compensation                                      
http://www.csoinsights.com/topics/Compensation-Territory-Quota
Jim Dickie and Barry Trailer are experts in understanding senior sales executives. Over the years they have gathered fantastic survey data on key trends in improving sales performance. Combined with their personal experiences and insights they are a great resource to understand the keys trends from the Sales perspective. This link leads to some of the great findings on compensation, quotas and territories.

Ann Bares - Compensation Cafe                              
http://compforce.typepad.com/compensation_cafe

Ann writes one of the best blogs on compensation practices. It's broader than sales compensation, but her opinions and posts are very useful for compensation professionals. 

Compensation Analytics                                             
http://www.compensationanalytics.com/resources.html

There are a number of good articles and insights from Mike Chapman on his website. Mike has a long career in Sales Performance Management. He brings lots of experience from being a practitioner with a couple of insurance companies, and also from the consulting side as a Accenture partner. This link takes you to some of the articles he has posted.

Sales Management Association                               
http://salesmanagement.org/

Bob Kelly has put together some impressive resources and experts all focused on helping sales and sales operations leaders. They provide tools and training for individuals who manage, coach or lead sales organizations. There is a membership fee for this site, but Bob does provide a lot of webinars and replays on slideshare.

The Alexander Group                                    

www.alexandergroup.com/blog

David Cichelli is Alexander Group’s principal thought leader regarding sales effectiveness challenges and solutions facing sales organizations during different stages of growth. He has written two books on Compensating the Sales Force, and speaks a lot of conferences. The Alexander Group blog has some information on driving sales force effectiveness

Life, Liberty and the Pursuit of Sound Plan Design

 

At INSIGHT11 in Boston this week, Brandon Kulik from Deloitte’s Sales Effectiveness/Human Capital Management practice presented his thoughts on integrating administrative and technology functions into the sales compensation plan design process. 

He suggests that the plan design process is multi-functional, highly visible, business impacting, and yet for a lot of organizations it leaves out critical players who can ensure its success.  Two of the most critical and sometimes overlooked players include those who are responsible for administering the plans and those who provide the data and upstream systems which are part of the overall commissions management process.  

All too often sales teams design plans with the best of intentions, but without input from compensation administration and information technology groups.  Without their involvement in the design process it’s hard to determine the practicality, cost and time involved in implementing their ideas. For example, if the data required to calculate commissions for a new plan doesn’t exist then the plan needs to be reconsidered, or the time to implement extended so that the data can be sourced from new or different systems.  It is much better to know this early when there is time to adjust, rather than figure it out after the new plans have been communicated to the sales team.

Another key point of Brandon’s talk was that the compensation administration and information technology groups bring a detailed understanding of the way things work today.   Many new plan concepts are designed and work at a general level, but confusion and mis-interpretation creep in where there are exceptions, unique cases and the like.  There is a need for absolute clarity on how the rules should be interpreted and managed in every scenario.  Making sure everyone understands this, can significantly reduce delays, errors and significant cost and wasted effort further down the road. 

Two other key considerations to ensure a more effective plan design process are to ensure that there is a governance process that formalizes the involvement of the compensation administration and information technology groups to ensure that this involvement is not ad hoc or convenient, but rather part of the standard processes by which the organization operates.  The other was to leverage modern sales performance management solutions to aid in the analysis, implementation, communication, roll-out and eventual success of the new plans.  Relying on legacy systems, manual processes and spreadsheet based systems will not allow organizations to efficiently and effectively design, implement and roll-out new plans at the speed of business today.

If you have any comments or follow–up questions please post them here or contact Brandon directly at bkulik@deloitte.com

Look for more than improved efficiency when implementing a Sales Performance Management System

I am often asked about the drivers of Sales Performance Management projects.  What specifically are organizations looking to accomplish?    How do they determine the Return on Investment (ROI) on their Sales Performance Management initiative?  What are the first priorities?

While every organization is unique and they each have their own challenges, perspectives and priorities there are three categories of benefits that are common across Sales Performance Management projects. 

They are:

·      Efficiency gains

·      Business enablement

·      Reduced risk

One of these goals normally takes precedence over the others and tends to get most of the focus from project teams.  Organizations are well-advised to look at the opportunity for business gains across all three drivers.  

Efficiency Gains

Organizations often start projects with the goal of looking for efficiency gains.  The pains associated with high commission error rates, delays in processing times, and significant effort and administrative burden are tangible and it is relatively easy to quantify the benefit of gaining improvements in this area.

Improved efficiency is about doing more with less.  The expected gains are in area of reducing the time and effort it takes to process and manage commissions, quotas, roster and territories.  Reducing effort to maintain the current systems, reducing the number of days to process month ends, reducing errors rates in commissions are all common themes.  This makes a lot of sense as industry analysts cite that organizations implementing a Sales Performance Management System (SPM) can reduce the administrative and IT staffing effort by more than fifty percent.  They can also expect to reduce incentive compensation calculation errors by over ninety percent.   Organizations looking for a hard ROI can generally find find ample evidence of organizations than have had major successes in processing efficiency.

Business Enablement

The second area of benefit that most organizations find is in enabling the business to do something that was previously too impractical if not impossible to do.  Many organizations are unable to implement certain types of components in their plans as their current systems, processes and technology preclude them from doing what they want.  Common examples include implementing margin-based versus revenue-based plans, introducing quarterly SPIFs, and incentives to drive certain packages or bundled offerings.   Being able to adjust to market shifts and implement changes quickly can help organizations take advantage of new market opportunities and react to other market shfts quickly.  The overall result is that incentive compensation plans drive the desired sales behavior and help with organizational alignment.   The inability to do this has long been the frustration of many sales leaders.   Modern SPM systems provide sales leaders with the speed and flexibility to drive the sales organization the way they want, ultimately driving increased revenue, increased margins, and increased organizational alignment.

 

Risk Reduction

The third driver of interest in Sales Performance Management software is risk reduction.  According to the respected analyst firm Gartner, approximately ninety percent of organizations with over one hundred sales reps are using home-grown or spreadsheet based solutions to manage incentive compensation.   While these 'systems' lead to many of the inefficiencies and create roadblocks to improved effectiveness that I referred to earlier, it is often the case that there is a compliance or audit driver that is behind putting in a new Sales Performance Management software solution. 

From a compliance viewpoint the challenge is to provide a holistic view of commissions from an overall view down to individual performance.  Increased checks and balances, multiple approval levels, tracking down exceptions and other compliance requirements tend to put a burden on home-grown and spreadsheet based systems that slow them down and create more rigidity - exactly the opposite of what is required.     Modern Sales Performance Management solutions provide built-in complete audit trails, plan approvals, dispute resolution and compressive reporting on exactly how and when territories, quotas, plans and commissions were changed.   For many organizations this increased visibility replaces error prone and time consuming email chains and voice mails.  Payees appreciate the clear and consistent view of their commissions, administrators save significant time and effort tracking down reasons for adjustments, and sales compensation administrators are much better prepared for both external and internal audit and compliance requirements.