Variable compensation is one of the most effective levers for aligning employee performance with business goals, says a report released today by the Aberdeen Group, a leading business technology market analysis and consulting firm.

The report, Enterprise Incentive Compensation 2003: Buyer's Guide for Variable and Total Compensation, states that the goals that enterprises can achieve with enterprise incentive management (EIM) software are broadening. "Businesses want compensation plans that drive results while reducing compensation maintenance and administration," says Dr. Katherine Jones, managing director of Aberdeen's Enterprise Business Applications practice and author of the report. "They are beginning to look at the use of EIM as they move to a pay-for-performance model." Successfully executed incentive-driven enterprises deliver definite benefits, such as the following:

  • They keep employee activity and behavior focused.
  • The increase productivity potential.
  • They deliver profitable sales and channel operations.
  • They increase the likelihood of shareholder value.

In addition to the growth of EIM solutions, there is an expanded use of total compensation management systems. A total compensation management system helps executives model and understand the implications of the compensation they provide to their entire workforce.
"Companies used to see 'sales comp' as a unique, difficult-to-manage area," indicated Jones. "Now, they are recognizing that it might be trusted to third-party software suppliers. Tying EIM with total enterprise compensation oversight creates the potential to determine and manage many complex variable plans and look at the ramifications of those plans across the entire enterprise." The report, which takes an in-depth look at the technologies that help manage compensation strategies, is intended to help compensation directors and managers select the EIM solutions most appropriate for their company.

To obtain a copy of the report, please visit www.aberdeen.com.

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