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Team Performance Poll

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I am in the process of studying for the ASQ Six Sigma Black Belt exam.  For those not familiar with Six Sigma, it is a framework and tool set to improve the quality of process outputs by identifying and removing the causes of defects and variability in business processes - which is also relevant to incentive compensation related processes.

One of the study book I am using had the question from yesterday’s poll.  When I read it, I was thinking exactly what Paul pointed out in his comment; it doesn’t seem like there’s a best answer here.  On one hand I want to reward everyone on the team for their work, but at the same time I want to reward individuals for their performance.

In the sales world, this situation is usually resolved with a ’split’, where everyone involved in a sale gets a certain percentage of the total commission…  and this is either a rule that is predetermined, or that can be decided on a per transaction basis by the employees involved or by the manager.  But when individual contribution is not as easily measurable, allocating commission to individual team members for their contribution can become really tricky!

As of today, 6 people voted ‘Give money to each member in proportion to their share of the work’ our of 8.  It’s still a small sample to make any statistical inference, but I have a feeling that most people might pick that first answer choice.  That’s the one I picked.

The official guide book answer was: “Reward everyone the same”.  Fair enough, when learning these frameworks, not all answers and author perspectives always make sense…  I’ll just have to remember which answer they are looking for, for the exam next week.

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New Callidus Logo Poll - Which one do you prefer?

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When Rewarding a Team, it is best to...

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I went to see Donald Trump and I left remembering Brett Wilson

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The Eastern Ontario Economic Showcase on September 24th had several outstanding speakers including Donald Trump, Terry Matthews (our own Ottawa technology billionaire enthusiast, and Brett Wilson, another successful Canadian entrepreneur.

I went to the event, not because I expected them to ‘teach’ me to become rich and more successful; I went because I wanted to see them in person, and Trump in particular. So here are some of my first impressions. Donald tries to pretend he’s a jerk on TV, but he actually seems to be a nice and funny guy (I’d like to say that I won’t tell your secret Mr. Trump, but too late!). This was my second time seeing Terry and he was as energetic and enthusiastic as before. Finally I was a bit surprised that Brett seems to be as ‘nice’ as people say he is!

The message from Terry Matthews and Donald was similar. Success requires persistence, the ability to handle pressure, some luck, more sweat, some risk taking, etc. That’s what I expected to hear.

However, Brett took me by surprise by sharing his touching story, and many things he said really resonated with me. His early success came from the investment banking advisory firm he co-founded, Wilson Mackie & Co. He then co-founded FirstEnergy Capital Corp, a Canadian brokerage firm that provides investment-banking services to Canada’s oil and gas sectors. He is now involved with many startup companies, the CBC Dragons’ Den TV series, writing a book, but he is especially involved with a large number of nonprofit initiatives.

Success comes from hard work, and the problem is that there are only so many hours in a day. To achieve his tremendous success, Brett often put work before many other things – a mistake he only realized later in life. Work came before spending time with his family, resulting in a divorce. He neglected his kids. He suffered from depression, developed a an alcohol dependency, and gained a lot of weight. He also blames stress for contributing to his prostate cancer which he survived and which was a big wake up call.

Now that his life is in order after seeking professional help and realigning his priorities - spending more time with his kids and girlfriend, losing the weight, and living a healthier life style - Brett is in a good position to say that it’s important to get the priorities straight: focusing on physical and mental health and to be there for family and friends. This is a key to success, and it’s by being successful that it is possible to have the greatest impact in the community and in the world.

I finally found a new role model.

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What’s new at OpenSymmetry - Business Transformation Consulting and Sales Compensation Design Services

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It’s hard to break some news about your own company without sounding maybe a bit opportunistic, and not completely ‘independent’.  However, I thought it was still worth mentioning that OpenSymmetry - which is one of the major consulting company in the SPM space - is adding to its arsenal of services and departing from being primarily focused on system integration.

OpenSymmetry has been offering strategy services for a while - mostly activities leading to an implementation.  Some of these services included evaluating the compensation system’s current state, helping out developing a business case, documenting requirements, writing RFPs, performing readiness assessments, evaluating proposals, etc.  A few months ago they also created a small ‘Business Transformation’ unit responsible for everything process related (process optimization, process reengineering, process reviews, change management, etc).  This seems like a reasonable offering considering that most compensation problems arise from process issues more than technology issues!  Coincidentally, my next challenge at OpenSymmetry is to lead and grow this new strategy business unit (anyone needs any help?).

What is really a departure from OpenSymmetry’s system integration focused model however, is the introduction of Sales Compensation Design Services. OpenSymmetry is no longer only focused on system integration and related strategic services - it now offers services for the entire SPM spectrum from plan design to system delivery to support and managed services. Some of the new compensation design services include:

  • Business priority clarification and compensation philosophy
  • Sales role definition
  • Program eligibility
  • Compensation levels and base salary/incentive mix
  • Performance measures, weights and mechanics
  • Crediting and support programs
  • Modeling and costing
  • Plan documentation and communication

As we are quickly approaching this time of the year where major changes are required for the 2010 compensation plans, OpenSymmetry is organizing a free webinar discussing current trends and findings from our research on compensation management practices, as well as sharing lessons learned and examples of how leading companies have been dealing with the current economic climate.  The webinar will be held on September 22, 2009 at 1:00 pm Central Daylight Time.  If you can’t make it, we will record the event and I will be pleased to provide the link to the recording.  I will also post the key recommendations on this blog.

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A small sovereign city-state located in South Western Europe on the northern central coast of the Mediterranean Sea

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What is Monaco?

Bingo!

But Monaco is also the name of Callidus’ latest on-demand offering. The only problem is that they haven’t done a very good job at advertising it – which is one of the reasons why I’m receiving many questions on this topic.

The press release about Monaco came out a few months ago but faded quickly. It describes Callidus Monaco as:

A robust, SaaS offering that delivers the most modern-looking and rich user interface experience available in the sales performance management marketplace today. The Callidus Monaco Suite is the only unified SPM software solution that provides complete alignment of the entire business with corporate objectives to optimize performance, streamline profitability and deliver a rapid ROI.

…Yet another “only unified SPM software solution”. That press release also mentions that the solution is a multi-tenant SPM offering which streamlines:
• Objective Management
• Quota Management
• Reporting and Analytics
• Compensation Calculation
• Embedded Workflow
• Plan Distribution

After reading this, I was wondering if Callidus Monaco was only a rebranding of the Callidus On-Demand SPM, a new solution that would be replacing it eventually, another offering that would be available in parallel, the same solution but ‘multi-tenant’…?

What I found out is that Monaco is a combination of many existing on-demand offerings, focused on SMBs. For example, the Objective Management and Quota Management features are offered through TrueMBO and TrueQuota which I reviewed here. TrueMBO and TrueQuota can be purchased as standalone applications, but they are also unified with the core ‘Monaco’ product which is similar to TrueComp with a Web 2.0 facelift and more basic templates available out of the box.

Callidus Monaco will be offered in parallel to Callidus SPM On-Demand.  Callidus On-Demand will be  limited to customers in specific industries such as Insurance.  All other customers wanting to use an On-Demand solution from Callidus will be offered Monaco.

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Incentive Compensation Screw Up at Hewlett Packard

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An Article in the Wall Street Journal talks about the recent challenges HP is having with their in-house incentive compensation system.

HP’s compensation system, named Omega, is having problems calculating accurate commissions for 2000 out of the 23,000 HP salesreps according to current and former H-P employees and recent company emails reviewed by The Wall Street Journal. The problem persists since November, and some salespeople have waited as long as seven months to get their correct commissions. To mitigate this problem, HP is giving some salespeople monthly payments equal to 60% or 70% of what they would earn for meeting sales quotas.

According to the article, one of the major reasons for these problems is that the solution did not scale up very well to HP’s growth.

Problems similar to this are frequent in the world of enterprise software. Many large companies decide to build their own software thinking that they will save money in the long run. This is often a short sighted view which does not consider the cost of fixing those systems, keeping them in production, keeping them up to date with the new technologies, etc (what is often called the total cost of ownership). Also, usually, homegrown systems are built for a specific purpose, not offering enough flexibility to easily handle emerging needs. As we can see with HP, this can even be a problem for companies in the software and computer hardware business.

In my opinion, an in-house solution can only be justified when there are no commercially available solution that can meet the business requirements; and if it looks like the business requirements are too complex to be handled by such a solution, it might be a good time to reassess those requirements and processes.

Ten or more years ago when the HP incentive compensation system was created, there were virtually no commercial SPM applications available. Times have changed, and with dozens of viable options, now might be a good time for HP to consider an investment that will benefit them in the long term instead of sinking money in a system that is not working properly. They might even find out that the products on the market today offer many features that could help take their sales performance to the next level.



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