Incentive Compensation and Sales Performance Management Survey

Monthly Archive for February, 2008

No Version Control? Now what?!

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Some of the most important aspects of any software implementation are comments/definitions, documentation, and version control. I’m sure we say those are so important because they are often overlooked - they are boring, they are an overhead, they will save your life when you need them.

Most Commercial, off the shelf (COTS) incentive management and ETL solutions will have some form of version control built-in. Sometimes this is a functionality which must be enabled, sometimes “version control” is done via effective dating, and sometimes it can only be performed by a support team. Most applications will also let you export your project files to XML or some other type of file which you can then version control using your corporate application (configuration management).

Why is configuration management so important?
Without going into all the details, configuration management will let you deploy software in a consistent way across your environments (a large implementation will require several distinct environments for different phases of testing and for production). It is important to be able to control your code because it will save you to wonder why the application is working in a test environment and not in production.

Here is something you can do if you need to compare files:
In a previous post I discussed how Textpad could be used to perform vertical selections. This tool will also let you compare two text files, whether they are some SQL DDL files or some project XML files. It is helpful to figure out the difference between two files if they were not versioned.

For this example I created two files called Test1.txt and Test2.txt. In Test2.txt I edited the ID 00005 to 00004 and added row 00077

Test1.txt

Test2.txt

Click on Tools->Compare Files or Press CTRL+F9.

A box asking you for the location of the two files will appear:

You can browse for the location of the first file and of the second file before clicking on “OK”. A result report will be displayed, outlining the differences between each of the files. The following report shows how the file test1.txt has ID 00005 which is not in Test2.txt, and file Test2.txt has IDs 00004 and 00077 which are not in Test1.txt.

I hope this helps, and now you should really consider using a configuration management system.

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The Most Important Aspect of a Compensation Plan

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When I got staffed on my first incentive compensation management system integration project, I knew virtually nothing about that industry. As any good consultant would do, I started to read as much as I could on the topic. One thing I realized is that there are so many books out there talking about how to design plans, formulas, frameworks, etc… But most of these books spend so little time actually discussing how the plan will look like.

That’s probably one of the main reason I come across so many plans that are not completely defined. When I say not “completely define”, I mean that some of its elements are left to interpretation… As a result, the implementers go with that plan, ask countless questions wasting everybody’s time during long meetings, trying to find out who the subject matter expert with a certain piece of knowledge is, only to find out that he or she is on vacation, etc. Alternatively, the consultants could “think” they understand the plan, implement it and later during testing, realize that the results are not those expected by the client… oops! And that often happens around the go-live date and, what-do-you-know, the deadlines are pushed back, the project goes over budget, people are unhappy.

Fortunately, there is one small book called Compensating the Sales Force - A Practical Guide to Designing Winning Sales Compensation Plans by David Cichelli. There is a lot of good info in this book - I will talk about some of it in the future - but in my opinion the best part is only found at the end in Appendix A: Illustrative Sales Compensation Plan. If only all comp plans could look like this!

But that’s not all… The best part of Appendix A is its last few pages; Sales Compensation Plan and Calculation Examples. And THAT’s what I call the most important aspect of a compensation plan (from an implementer’s perspective).

Having a few DETAILED examples in the plan will ensure the implementers knows exactly what the plan does. It will remove any ambiguities, it will save time and be a quick “at a glance” reference. It will also help out in the planning of unit and system tests to cover all scenarios.

A good example will include all the assumptions, sample data/rates/periods/etc and result. If a plan has any exceptions or special calculations, examples for those should be included as well.

That’s it! Please include examples for us :-)

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Harnessing the Power of Incentive Compensation Management

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Before joining my current company, I was a consultant at Accenture. Accenture is a large “global manaegment consulting, technology services and outsourcing company”. I was in their Business Intelligence practice, where I first got involved with ICM projects.

I recently came across a 3 page article about Accenture’s view and approach to incentive compensation management, and I thought it might be interesting to others.

The paper first gives a quick run-down of what effective incentive compensation can do. The main points are:

• Give companies the fl exibility to respond to rapidly changing
market demands and to quickly implement new sales
strategies and plans.
• Enhance the productivity of the sales force productivity
by increasing their confi dence in the incentive program.
• Support the most effective selling behaviors with leadingedge
technologies and tools.

They claim that their research suggests that a $1 billion business unit could boost their pre-tax profit by $13 million by using better motivational tools and incentives to increase performance of its sales people. That sounds impressive, but that’s really only a 1.3% return - not bad, but very conservative compared to other estimates.

What I like most about the article is its framework to implementing an incentive compensation plan. However, this “framework” is not discussed at all, it is just a picture used as a space filler. The illustrated steps are:

  • Sales Force Design and Objectives Setting
  • Compensation Plan Design
  • Compensation Process Re-engineering
  • Compensation Organization Model Design
  • Compensation Plan and Hierarchies Setup
  • Compensation System Design, Build and Run
  • Enterprise Data and Systems Integration
  • Business Change Management

I’m not sure I understand how Data and Systems Integration can come before the “Run” phase, but it’s a pretty graphic and it gives a good holistic view of building an incentive management system.

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ICM World This Week

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Centive
Centive expanded their executive team with two new executives; Lisa Mastrangelo will be Centive’s CFO and Carol Peo will be VP of engineering.

Xactly
Xactly were named top finalist in the 2008 Codie Awards; an award by the Software and Information Industry Association (SIIA) to recognize “outstanding achievement and vision in the software, digital information and education-technology industries”.

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It’s Varicent’s Turn to Report Record Revenues for 2007

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After finding several articles on how hot the sales performance management industry was in 2007, along with several press releases about how well some of the major SPM vendors were doing, today it is now Varicent’s turn to report triple digit growth in 2007.

2007 has been a record year for Varicent; record-breaking revenues, record growth, record number of new clients…

At the risk of repeating what I said before, 2007 has been a very good year for sales performance management and 2008 looks very promising!

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My Compensation Framework

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I received a few emails with recommendations to improve my blog - I have tried to implement them but however, I must say I ignored one of the most relevent comment I received.

It was recommended to me to try to streamline and “bucketize” my posts. There is so much to talk about, I must admit it could be hard to see the common thread between my posts. Today I finally sat down to think about what exactly I wanted talk in my blog, and came up with this high-level plan:

As you can see, the “niche” I found for this blog is for the following topics: Compensation fundamentals and theory, benefits of incentives and variable compensation, and how incentives can be correlated to performance and motivation. I also want to cover industry news and discuss success stories, write about different hurdles with respect to choosing a solution and implementing it. Finally I will write about some personal experiences and opinions, research done on these topics as well as anything else I find relevant.

I guess the target audience is probably whoever is reading this, most I think this will be most relevant to HR, Sales and Compensation pros or anyone with an interest in variable compensation. IT Pros and other employees may also find this useful…

Let me know what you think. When I get the chance I will reorganize my labels as per those categories I described.

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