What is compensation management?

Those familiar with compensation management are hearing two terms that are often used to describe similar business objectives. The term most software vendors, and experts alike, are adopting is Sales Performance Management (SPM). Less in vogue, but a term that has been used for some time, is Incentive Compensation Management (ICM). Although both describe approaches for managing sales activities, their objectives and benefits are very different.

SPM orients its focus around managing a sales team’s performance. Most company executives expect that the inclusion of sales objectives in corporate strategies, and setting minimum performance standards or quotas for meeting those objectives, will have a direct impact on a company’s success. An SPM application is designed to track a sales person’s performance against those standards or objectives. Many SPM vendors advertise that their products help align sales performance with corporate strategy. Interestingly, the carrot they dangle to attract prospective customers is the claim that by tracking general sales performance, they can also solve the underlying challenge of managing compensation incentives. In reality, however, this is a very different and far more challenging task.

ICM is based on the premise that true sales performance management, and effectively aligning sales objectives with corporate strategies, are only possible if the complex process of incentive management is correctly accomplished and leveraged. Its primary focus is the accurate collection and management of detailed revenue and sales data needed to correctly calculate and evaluate incentive compensation. Where SPM tends to address the tracking aspect of the compensation management process, ICM is designed to address compensation at its most critical point: accurate and cost-effective payouts. Glocent is the solution to accurate and effective compensation management.
What are SPM and ICM?, (pdf, 26.26kb)