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What is Incentive Compensation Management?

In its most basic form, incentive compensation management is the administration of sales incentives like sales commissions and service rewards, but there is much more to it. Incentive management also involves motivating the sales team, measuring their performance and keeping accurate records of both sales and incentives. Generally, sales executives are in charge of incentive compensation management as part of a larger sales management effort. Sales managers understand that commissions, incentives, rewards, mentoring and quotas all work together to motivate sales teams. However, it can be hard to focus on non-monetary incentives like mentoring or basic motivational activities when managing sales commissions takes up a lot of time. Unfortunately, many companies use outdated methods of calculating sales incentives, forcing managers to double check reporting, calculate commission payments and deal with incentive payment disputes rather than on their sales team performance. Incentive compensation systems also affect more than just the sales department: it can affect the company’s bottom line. When the sales department takes a lot of time calculating incentives, payroll goes up. Payroll disputes over sales commission payments can also drain money away. When sales representatives are reporting their own sales for commission payments, companies also run the risk of incentive overpayments. An automated incentive compensation management system can solve all of these problems and save a company thousands of dollars. Incentive compensation software ties into actual hard numbers in sales, making sure that commission payments are 100% accurate, eliminating incentive overpayments. Software can also calculate commission payments and send reports not only to the sales team but to payroll, reducing both administrative costs and errors. With automated ICM software, the sales managers can focus on motivating their teams.  

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