Incentive Compensation Management

Incentive Compensation Management is the process of designing plans, administering the calculation and payout of variable pay, and making adjustments to improve sales motivation and performance.

What Is Incentive Compensation Management?

The main objective of the incentive compensation plan is to align the salesforce behavior with organizational strategic goals. With an effective sales compensation strategy in place, sales teams are bound to remain motivated to meet their performance and sales targets, ultimately driving towards achieving the company’s goal and increased profit. It’s all about maintaining a delicate balance of motivating your sales force while taking the necessary steps to get higher returns on your investments.   

An ideal Incentive Compensation Management solution should be able to seamlessly integrate with your current technology infrastructure, thus helping in the collaboration of Sales Ops, accounting, and finance teams to manage compensation and commission expenses better and eliminating lengthy and error-prone manual tasks.

Benefits of Incentive Compensation Management

A well-run incentive compensation program can be highly beneficial in an organization’s growth and market expansion. An efficient incentive compensation plan results in a happy workplace where the salesforce is highly engaged to go beyond their assigned sales quotas resulting in them earning higher incentives than their on-target earnings (OTE).

Improving Sales

The alignment of the company’s target with an individual’s goal and financial rewards associated with hitting their targets, keep Salesforce motivated and improves Sales.

Increasing Employee Engagement.

Providing the right incentive structure, interactive reporting and personalized performance nudges play a very important role in keeping the employees engaged, boosting their morale, and also helping in building team spirit.

Reduction in Commission Inaccuracies

A good incentive solution helps in reducing commission inaccuracies that generally arise due to manual calculations using excel or spreadsheets.

Time Efficient

An incentive solution when implemented in the right manner should be able to automatically load transactions and calculate commissions which saves a lot of time managing commissions.

Reducing Turnover Rate

Having the right levers in the incentive plans ensures that the salesforce has the potential to make significantly more money if they continue to do better. A plan that is competitive in the labor market and provides the right kind of earning opportunities significantly improves the retention of top performers. 

Key Features of Incentive Compensation Management

Design: The most crucial step is the design phase. Below are a few points to consider while designing the right plan for the salesforce:

1. KPIs – The right Key Performance Indicators which align with company goals are a must for an effective plan.

2. Plan – There are several plans which cater to different business needs and different salesforce people. The general plans are:

  • Commission Plans
  • Goal-Based Plans
  • Relative Ranking
  • MBO
  • Hybrid

3. Goals – The goals must be set keeping in mind the industry standards, salesforce capability, and target achievement. Goals should be realistic and able to motivate your salesforce to work harder

4. Territory Alignment – The alignment of the salesforce must be done in a way to optimize efficiency and maximize profit.

Commission Calculation: The primary aspect of compensation is to calculate commission based on the performance of the Reps. Based on compensation plans, the business rules are configured in the system which calculates the commission taking into consideration key attributes like Personal Target, Quotas, Credits, etc. of a Representative.

Document Management and Routing: Another important aspect of Compensation is the ability to create and route the plan document to all the Reps at the beginning of the new year or whenever the plan document changes in the middle of the year. Comp Admins often face challenges to create personal Comp plans for each individual and then manually routing them which is both time-consuming and tedious. A successful Compensation solution does this in a few steps with minimal effort from the Comp Admin.

Reporting Capabilities and Dashboard: Visibility and transparency play a key role in order to keep the Sales team motivated. Reports like Earning Statements, Incentive Details, Incentive Summary, etc., should be offered to the salesforce giving as much information about their commission as possible. Further, the reports should be refreshed within an early timeframe for the salesforce to keep track of their past sales.

Seamless Integration: The integration of data from various sources is of utmost importance which serves as the base of any calculation and is the source of truth for sales data. The integration helps to reduce human error and easily handles the transformation and cleaning of raw data.

How Delbridge Can Help

When it comes to implementing Xactly’s incentive compensation management solution, Delbridge is the expert to turn to. Our SPM team can guide you through every step of the process, ensuring a successful outcome. Here’s what we offer:

  • Assessment: We’ll start by working with you to understand your current processes and specific requirements for an incentive compensation management solution.
  • Implementation: Our experienced professionals will ensure a smooth and efficient implementation of Xactly’s incentive compensation management features, customized to meet your unique business needs.
  • Training and Onboarding: We’ll provide comprehensive training and onboarding to your team, so they can fully leverage Xactly’s capabilities and maximize results.
  • Best Practices: Delbridge will share our wealth of industry knowledge and best practices for implementing Xactly’s incentive compensation management solution.
  • Ongoing Support: Our team will be there for you after go-live, providing ongoing support and maintenance services to ensure continued success with Xactly.

Contact us to schedule your consultation.

Delbridge is a privately held global company with offices in Canada, the USA, Costa Rica, and Romania.

Delbridge Solutions specializes in providing Corporate Performance Management, Sales Performance Management, and Data & Software Engineering.


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