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Incentive Compensation Management as a Business Strategy

Most executives think of Incentive Compensation Management as a less-than important business strategy or as part of an overall Sales Performance Management strategy, but ICM has far reaching impacts to a company’s sales performance and bottom line. Incentive compensation is much more than simply calculating sales commissions and bonuses for the sales team. ICM is the force that motivates sales teams and ultimately drives business. Here are some ways that simplifying and automating incentive compensation can be an important strategic move. The main impact of a reliable automated ICM solution on a company is sales performance. Sales teams have more faith in their company and are more willing to push hard and exceed objectives if they know without a shadow of a doubt that they will be compensated fairly for their efforts. When companies have an outdated and error-prone ICM system, sales commission payments can be late or simply wrong. This makes sales representatives wonder if they even matter to the company, but an automated, error-free and transparent system can restore their faith. Another impact of an efficient ICM system is lowered administrative costs. With sales incentive calculation methods that use spreadsheets and require human calculations, companies not only have to put up with errors but they have to pay administrative staff for their time doing all those calculations. Then, when there are errors, the company has to pay for the staff to fix them. With an ICM software system that automatically calculates incentives based on real-time sales data, the administrative staff can work more efficiently. Automated ICM solutions will definitely reduce errors in sales commissions, but they can also reduce over payments. Many companies waste thousands of dollars every year overpaying their sales teams for sales that were never completed, but an automated system eliminates these over payments by calculating commissions and bonuses based on actual sales data, not reported data.

Transparency at the speed you do business!