incentive compensation

Recession Coming to a Close

Friday, May 29th, 2009 | Compensation Plans, SPM | 1 Comment

Going into the weekend, I wanted to share some bright news I noticed this week. Evidently a team of leading economists from the National Association of Business Economists (NABE) have predicted an end of the recession to come in 2009. Yes, that’s this year!

The NABE panel does temper the enthusiasm of the report saying that the predicted recovery will be “more moderate than is typical following a severe downturn”. Still, to those of us in the sales performance industry that have consistently seen companies’ attainment versus quota numbers way down, it’s refreshing to see a (somewhat) bright forecast.

A late 2009 recovery is definitely something to keep in mind when considering your 2010 plan changes and quotas. Of course, depending on your industry and its tendency to lead or lag, your mileage may vary. Hopefully upward activity will be contagious in the same way that things snowballed on the way down.

-Michael Stus

What’s in a name?

Tuesday, February 17th, 2009 | EIM, Project Direction, SPM, humor, large projects | 1 Comment

As humans, and if you’re reading this you most certainly are a human, we have a biological need to name everything around us. Whether it’s insects, rocks, cloud formations or psychological disorders… it needs to have a name. In fact, upon encountering a new object such as a star, the first thing we humans do is name it.

Manmade creations such as software systems are not immune to this. When we burn long hours putting in a new HRMS, CRM or SPM system we need to put a moniker on it so that we can communicate. The interesting thing is all systems get a name whether we force them to or not; they take on a name in one of three ways:

1. We can’t think of anything.

Most times there isn’t much thought put into naming a system but it takes one anyway. In this case, probably due to the enormous amount of marketing done before and during the project, the overall system takes on the name of the major software vendor involved. We see many SPM clients refer to their system as the Callidus or the Oracle tool. The problem with this naming method is it is often the case that the calculation engine is but a small part of the overall system. Subsequently, the brand either suffers or benefits from elements it can’t control. Basically anytime anything goes haywire all you hear in the hallways is… “It’s Callidus again; that thing never works.” Who cares if the problem was due to bad data from SAP or a botched network upgrade rather than the vendor software product itself? The name gets the blame and the brand suffers. Many front line reps hate their SPM software vendor and have no idea why. This also hurts the IT department in the long run when they need to make decisions about upgrades and future applications. If you choose the same old vendor who everybody hates, you don’t look very smart.

2. We can’t think of anything but we know what NOT to call it.

I’ve been a part of some real initiatives with clients where they really and truly want to come up with the perfect system moniker… but couldn’t. Either they couldn’t agree or they just didn’t get any great ideas. All they know is they don’t want the words Callidus, Oracle or Varicent being spoken in the halls. This noble effort still produces a name, just not a very creative one. Constituents begin calling it what it is, the system that calculates their paycheck. Usually something like: The Commission System or the Bonus Calculator. In some cases the tool takes on the name of one of its creators. This is how you get enterprise level systems with names like: The Jared Tool or The Tom Report. I personally love it when reps refer to the entire SPM system as a “report”. Another de-facto name origin can be the database where your application’s data resides. That’s how you get names such as MRDB (Management Report Database) and ICDB (Incentive Compensation Database). Usually this kind of name would be relegated to the IT department. Then you might have the unfortunate multi-name situation where IT refers to the system as ICDB, the reps call it The Tom Report and HR calls it The Bonus Calculator.

On a side note, I once worked on a project where two months in we put together a nice big workflow diagram with 21 steps represented as boxes. The boxes were numbered 1 to 21. Two of those boxes ended up becoming user interfaces that were developed roughly 18 months later. What were the names of those new applications? The Number 7 Tool and The Number 13 Tool. We hadn’t bothered to come up with better names and by the time we decided to try it was too late. The original names stuck even though very few people on the team had any clue as to what those names originally meant. I bet there are plenty of similar stories out there.

3. Let’s name this thing properly.

Occasionally companies want to name the system and they do it successfully. The “perfect” name apparently is an acronym that cleverly describes the system and also serves to be a decent name for a compensation system. Here are some good ones.

These are the best I’ve seen.
COINS – Commission and Incentive System. I’ve seen this one at least three times.
CECS (pronounced checks) – Commission Earnings Calculation System

Here are a couple I’ve seen that are at least real acronyms.
CABS – Commission And Bonus System
SCARAB – Sales Commission And Reporting And Bonuses.

On the lighter side, here are some names that didn’t pass either because they’re border line vulgar or downright mean spirited.

CRABS – Commission, Reporting, And Bonus System
CRAPS – Commission, Reporting, And Payment System
MAGIC – Mostly Accurate General Incentive Comp
CLOSE – Commissions and Liabilities Operations System for Employees
ALMOST – Automated Liability Management Of Sales Transactions
ENOUGH – Employee Operational Unit Gage Heuristics
GUESS – Genuine Underwriting Employee System
SCARI – Sales Compensation And Reporting Infrastructure
ACE – Almost Calculates Exactly
CRASI – Commission, Reporting And Sales Incentives
OPTIC – Over Pays Their Incentive Compensation
UPTIC – Under Pays Their Incentive Compensation

No doubt there are many more out there and we’d love to hear them. We’re fascinated by the genealogy of system names.

-Jason Kearns

Analytics: You absolutely must have it, now tell me what it is

Friday, January 9th, 2009 | Compensation Plans, EIM, SPM, analytics | No Comments

Analytics can save the world. More specifically it can revolutionize the way you do business, which could at least save your world. Analytics is the Holy Grail of Sales Performance Management. If you work with SPM you already know that because the term “analytics” has been a buzzword within SPM solutions since I can remember. It’s amazing how the latest and greatest concept can stay “latest and greatest” for a decade or more. The sad fact is analytics is re-revealed as a new milestone every couple of years. I suppose that means nobody is ever getting there. It’s right up there with El Dorado and Atlantis.

So what is “Analytics”?

Analytics

An`a*lyt”ics\, n. The science of analysis.

Does that clear it up? I doubt it. It turns out that the term analytics is more a guide post than a destination. It’s like saying you are going to “the city”. If you live in Long Island “the city” is Manhattan. But if you live in Pullman, WA, New York probably never enters the brain. In my opinion the reason we never seem to get to this mythical land of analytics is simple. Nobody knows where it is. Or to put a different way, we don’t all necessarily agree on what it looks like and what it does for us.

It makes sense to say that analytics are going to depend on the organization. What’s less obvious is something that I’ve seen many times at different clients. Definitions of analytics within the organization will vary depending on the role of the individual doing the defining

Macro-Analytics vs. Micro-Analytics

The most common divide is a concept I like to call macro vs. micro. When putting together an analytics tool the most important element is the data and how it’s structured. Often times you need to tweak your source systems in order to produce data at the level desired for your analyzers. Here’s where the conflict occurs.

Let’s take a Global Compensation Director. She would like to look at her data at a summary level based on role, country, etc. She wants to reconcile compensation data from the SPM system with data from the accounting system and the sales reporting system. Global Directors want to view metrics like a captain of a cruise ship. Cruise ships can drift a few feet off course as long as the captain can avoid the ice burgs.

Now let’s take the Compensation Analyst assigned to the Northeast New Jersey territory in the retail business unit. He wants account level and product level metrics. Analysts need to know the specific rate paid on specific orders. They are looking to find deviations at a micro-level. They need to answer questions related to the setting of quotas and the effect of vacation time. Analysts deal with individuals and their paychecks, there is no place for estimations, averages and summaries when it comes to paychecks.

So where is the “analytics” City of Gold? Every company needs to draw their own map. Certainly there are many ideas out there that can be reused as starting points or templates. However, when it comes down to it every stake holder needs to identify what they want to see. This isn’t a case where you buy a tool and it triggers a wave of game changing analytical analysis that you’ve never heard of. What a nice analytics tool gives you is built-in adaptability. You might start with one vision and change it later after a period of use.

However, if you don’t start with some sort of a vision and/or goal you will probably be dissatisfied with the results conversely, a common mistake is to try and have too many goals. As the saying goes, “a tool that does everything does nothing well.” Then three years from now you will learn again about this latest and greatest concept named “Analytics” and get all excited yet again.

Later we can create a roadmap to successfully building an analytics tool. Stay tuned…

-Jason Kearns

Alpha Comp

EIM and SPM system and related commentary presented by Canidium