In 2007, CFO magazine conducted a survey that revealed rather astounding results. It reported that of all companies large enough to justify installing an automated Incentive Compensation Management (ICM), or more specifically, Sales Compensation Management (SCM), solution, over ninety-five percent still relied on spreadsheets. Companies deploying thousands of sales representatives were still trying to track sales transaction details and calculating commissions using complicated, difficult to manage, impossible to audit spreadsheet formulas to pay incentives totaling millions of dollars.
With the passing of the Sarbanes-Oxley legislation, more companies realized that this final frontier of business process automation required action; but realizing the need and finding the right solution to address it were two very different challenges. Some companies deployed their own IT resources to build custom solutions, only to realize that they became cumbersome to manage and maintain. Others fell prey to the solutions portraying themselves as incentive management solutions only to discover that they were more focused on sales performance management rather than provide robust incentive management solutions. Most companies decided just to remain with spreadsheets because of the wake of disaster some of these solutions left behind.
While it is common for people to assume that incentive management is a “sales” responsibility, we would like to ask you, as the leader of your finance team, if anyone has thought to ask you how it could impact not only your direct responsibilities, but the profitability of your company? If they haven’t, we have provided a few items to consider. To learn more select from the links below: