Spreadsheets Don't Make the Grade for Compensation Management

6 min read

The holidays are mere weeks away and for students everywhere that also means the school semester is coming to a close and ushering in that week of dreaded “finals.” For companies, this time of year also means end-of-year analyses and a look back at how their compensation initiatives faired. Did they pass with flying colors … or barely eek through with a passing grade? If they are still managing compensation on spreadsheets, the answer is likely the latter. Not only are spreadsheets known to contain costly errors, they also hoard critical information from analysis, limit visibility, and erode trust in the numbers. All of which cause a bevy of headaches for comp administrators and demotivate sales staff. Simply put, all causes for a failing grade in compensation management. Still not convinced? Here are five reasons spreadsheets wear the dunce cap when it comes to effectively managing compensation:

  1. They Don’t Play Nice with Others: One of the major limiting factors of spreadsheets is their inability to easily integrate with business-changing data from other key applications such as CRM, financial systems and payroll. This limits a rep’s ability to get a complete 360 view of customers (from initial lead to the final sale), and leaves compensation administrators and finance with the extra step of manually inputting or uploading data back into key financial systems. Not only is this error prone, but companies also have no way of tracking costly compensation spend vs. forecast.
  2. They Don’t Encourage Sharing: A manager’s job is to inspire the team, build confidence, increase productivity and provide timely feedback. But no matter how inspirational a manager is, delayed feedback about sales results and rewards can send the subtle—and very wrong—message that the team isn’t highly valued. Employees who don't have transparency in the sales process can’t instantly see the rewards earned from closing deals, and aren’t able to modify behavior to reach specific goals until it’s too late.
  3. They Cause Fighting: If you have ever managed compensation on spreadsheets, you are no doubt familiar with the dreaded “compensation dispute” that occurs after each pay period. That’s because information residing on error-prone spreadsheets is often inaccurate and subjective. Unreliable spreadsheets cause sales reps to doubt calculations and question their commission checks, leading to shadow accounting (reps keeping their own set of books). Not only is this a poor use of everyone’s time, but it erodes employee trust and loyalty.
  4. They’re Constantly Falling Behind: As a rule, the larger your organization, the more products you have, and the more complex your sales compensation plan is. Many things factor into the incentive equation: discounts, product bundles, and divvying up commissions/SPIFs (special product incentive funds) fairly, just to name a few. Being able to quickly adjust these and other factors to move with the changing dynamics of your business, both before and during a compensation cycle, are essential to gaining an edge on the competition.
  5. They Never Raise Their Hand to Answer Questions: With spreadsheets, data goes in, but it’s like pulling teeth to get it back out in a timely manner and with any level of intelligence. Compensation administrators struggle to pull reports, sales teams have no visibility into their performance until after the fact, and finance has no clear view into where the company is in terms of revenue goals. And forget about the ability to leverage analytics to derive real-time intelligence that can be used to alter plans, enhance coaching opportunities and more.

When managed correctly, compensation spend can be a powerful motivator that helps companies sell more strategically. Automating plans with compensation software can unlock the potential of your compensation programs and provide executives, sales and finance the visibility and insight they need to inspire better performance. With all this in mind, isn’t it time to send your spreadsheets to the principal’s office and start the next quarter off right by automating your sales compensation initiatives?