Humans are creatures of habit. We crave routine and consistency. It goes without saying, that we also like results. I can bet most – if not all of you reading have a daily routine. Whether it’s how you make your coffee, what you choose to eat, or whether you check your work email as soon as you wake up – you know who you are.
But what happens when your routine isn’t working? Maybe you’re dragging your way to work in the morning because that cup of coffee isn’t strong enough. Whatever it is, sometimes the routine you’ve create just doesn’t work anymore. This can happen for any process – including your organization’s incentive compensation management (ICM) process. But, where do you start? Comb through your process, and find ways to change things up.
Try new things, approach it from a different angle, and watch the results come to you! Earlier this month, Xactly’s Strategic Services Leader, Maria Oczko-Canant led a webinar discussing why incentive compensation management solutions are critical for an organization. Maria’s expertise is primarily focused around optimizing the utilization of the Xactly toolset to help drive future state success of our customer’s ICM programs and processes.
Her insights were so helpful, we share her highlights below, as well as the questions she received during the Q&A section:
What is an ICM assessment?
An ICM assessment consists of analyzing how your organization holistically reviews the entire ICM program, as well as the processes in place. It also includes determining whether your program’s steps are in-line with industry expertise, benchmarks, and best practices. The goal behind an ICM assessment is to ensure you’re getting all you can out of your incentive compensation spend.
Once a Year is Not Enough
On average, 3 out of ten companies complete an ICM assessment once a year. More often, those assessments are only instigated when a situation or “driver” presents itself. Hint, hint: when something isn’t working, or when there’s a gap in your process. There are different examples of drivers that may encourage organizations to finally conduct an assessment:
- Acquisition or new business integration
- Increasing compensation plan complexity
- Unclear understanding of functionality available
- Need to eliminate manual processes
- Need to improve end-user utilization and adoption from all appropriate audiences
- Improve strategic IC reporting
Q: Are assessments like this only good for new clients, or for those who’ve used the technology for a long time?
A: We absolutely walk our new clients through this assessment before they even implement Xactly’s ICM technology. The reason being, if you put bad processes into a tool/technology, you’ll get bad results. It also helps to clear up expectations for after you’ve automated.
Incentive Compensation Lifecycle
Strategic services looks at the incentive compensation lifecycle in two main parts: Strategic and Tactical. The strategic piece consists of the compensation plan design and forecasting, and the tactical part houses the administrative and reporting part of your incentive compensation plan design – the piece where most compensation administrators spend most of their time.
To help make sure an organization’s getting the most out of their incentive compensation spend – there are 5 key metrics admins should keep in mind – known to Xactly’s strategic services experts as the “5C’s”:
Q: Why the 5C’s? Is this a known industry best practice?
A: When it comes to assessment mechanisms for sales compensation administration, you will most likely see anywhere from 4-7 metrics recommended to attain the best ROI on your incentive comp spend. These 5C’s are what Xactly has found to be tried and true.
- Collection of Data: Review inputs as well as people/revenue data integration, preparation, and outputs.
- Credit: Evaluating the crediting methodology for direct and indirect payees. Also understood as, “who gets credit for an order”.
- Calculation: Evaluating the accuracy and efficiency related to rules, formulas, and other calculation variables. The key pieces for this metric is simplification and consolidation of rules, formulas to keep plan complexities to a minimum.
- Compensation Process: Review of verification of payments, HR payroll process, and approval workflows. The compensation process allows results and payments to be approved, distributed and visible to stakeholders.
- Communication of Results: The evaluation of end-user experience as well as reporting of analytics and performance measurement.
Q: How can we use our assessment findings to engage with the team?
A: A successful assessment often leads to creating new action plans, defining roadmaps, shedding light on additional functionality, or easing configuration of your toolset. Sharing assessment findings with key stakeholders helps when you need to build a business case to express the weight of future challenges.
The webinar walked viewers through how to take the initial steps to improve your ICM process, including what should be short term, high impact goals, as well as long term, high impact examples. The expertise Maria shared was invaluable, but her biggest piece of advice was if any of her identified “drivers” emerge in your early ICM assessment approach: it’s time to reassess your program!
Here are the 6 key steps to keep in mind as you embark on an ICM assessment:
- Determine the driver for your assessment
- Use the “5C’s” to evaluate your current program and process
- Identify top initiatives based on the future state expectations
- Develop action plan with defined steps, resources, and timeline
- Evaluate impact of change 3-6 months, post-assessment
- Repeat assessment at once a year (or more if needed!)
Q: In your opinion, what is the most important piece to a successful ICM assessment?
A: The number one piece is to have executive leadership buy-in from all department areas. When we do initial assessments with new clients, we ask that at least one team member from key departments (sales, sales ops for examples) participate in the initial workshop.
For more information on your ICM assessment options, visit our Strategic Services contact page.