More than anywhere else, it is on the front lines of sales where performance and compensation are most immediately and quantitatively related. While this comes as news to no one, not everyone understands the unwieldy processes involved in managing multiple variable compensation (VC) plans, and the difficulties that arise when trying to optimize the sales force for performance, self-service and satisfaction.
It's not surprising that large, distributed organizations would want to centralize management of variable compensation across the enterprise to streamline data entry and payments, and to gain insight that can boost revenues and margins. Over the last decade or so, this combination of process efficiency, analysis and reporting has come to be known as Enterprise Incentive Management (EIM), a category that is maturing with its own set of tools and applications. "Establishing quotas and managing commissions for sales teams was traditionally a side task done in spreadsheets," says Mark Smith, SVP of research at Ventana Research. "This activity ran in parallel to traditional sales force automation (SFA) systems, which are about putting opportunities in front of people and managing contacts." The result was unconnected sets of forecasts, compensation plans, pending and closed deals with different people managing incentives and quotas. Not only was the unmanaged process clumsy, it was non-compliant, too slow for more than annual adjustment and even more difficult for expanding organizations seeking to merge and align sale forces.
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