This is just a quick reminder to check out the LeapComp SPM Event Calendar once in a while, or to subscribe to my event RSS feed.
There are two exciting webinars taking place tomorrow; Best Practices for Sales Compensation Management, and Salary Incentives and Strategies in Executive Recruitment in a Challenging Economy.
Don’t miss them, and if you attend, please come back to discuss.
I recently talked about a few salary and incentive compensation surveys, but here is another one from the Alexander Group that focuses on Sales Compensation.
The 2009 Sales Compensation Trends Survey found that 40.34% of the 180 participating companies use a desktop solution such as a spread sheet or data base and that 29% use a custom in-house solution to administer their sales compensation program. Outside solutions represent 27.27% of the respondents: Custom Purchase (9.66%), ERP/Data Base Component (5.68%), Dedicated Commercial Hosted Solution (5.68%), Dedicated Commercial Enterprise Package (4.55%), and Outsourced to a Third Party (1.7%). The remaining participants selected “Other” (3.41%).
The survey included many large companies like American Express, Microsoft, General Electric, DuPont, and Kraft Foods, but it also included many smaller companies with only 20 sales personnel (or more). I think that this is why 40% of the companies surveyed still use a spreadsheet / desktop solution.
What I think is particularly interesting is to compare the on-demand and on-premise solution usage; 5.68% of the companies used an on-demand solution, while 4.55% of the companies used an on-premise solution. In other words, only about 10% of the respondents use a dedicated commercial sales performance management solution. Over the next few years, I believe we will see many of the companies moving away from spreadsheets or custom solutions to move to a commercial application.
I’m also very curious about what “Other” solutions 3.41% of the respondents are using… hand-written incentive compensation statements? I’m assuming that these companies probably use some sort of application to manage this; maybe a payroll system or a talent management application with an incentive compensation module.
The survey also provides several other interesting results:
I discussed how many organizations reacted to a recession by adjusting their sales compensation plans, but these results help back up this claim. About 50% of the respondents adjusted their compensation plan design and quota values during 2008, and more than 93% are planning to modify their plan for 2009!
As a side note, I recently contributed to the creation of OpenSymmetry’s Sales Performance Management survey, which will provide more insight about comp plan administration, SPM solutions, and challenges. Let me know if you would like to participate and I will let you know when it’s ready.
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Loading ...With the state of the economy, it is no surprise that most companies are rethinking their reward strategies. In a strong economy, one of the major arguments in favor of incentive compensation is employee retention. During a recession, the main argument is to keep employees motivated.
Many companies have different philosophies when it comes down to rewarding their employees. Some of them are currently looking at cutting costs, cutting incentive programs, cutting rewards, cutting travel, increasing quota amounts, etc. Others, on the contrary, are looking at reducing base pay, and to increase incentive compensation; they figure that if employees are only paid for performance, then they can afford to pay them. Then there are those who don’t currently pay commissions and start thinking that it could be a pretty good idea. Finally, there are many companies who are not necessarily looking at transforming their incentive compensation plans, but are looking at making them work better.
To have a better idea of how various companies are reacting to the economy, let’s look at some survey results.
Ann Bares posted about many studies conducted by Hewitt (411 organizations), Watson Wyatt (248 organizations), Mercer (190 organizations, based on yesterday’s WSJ article), WorldatWork (members only, 698 members responding to a Quick Poll) and BLR (Business & Legal Reports) (518 organizations).
Paul Hebert also posted about changes in the incentive industry, commenting on a few surveys from the Incentive Research Foundation.
I think the most interesting survey is the one from Towers Perrin. With over 450 companies participating to the survey in October, it shows how 39% of the participants were somewhat likely to very likely to reduce annual incentive/bonuses and how 18% were planning to reduce the number of participants receiving long-term incentives.
One of the big questions is, why would companies cut into their variable compensation programs in a down economy, when it is such a great tool to control payouts against actual performance.
As Ann pointed out, the only good reason to take “take a hatchet to their plans” is to get rid of discretionary plans not tied to measurable performance results, or to get rid of poorly designed compensation plans.
How should all these surveys be interespreted from technology perspective? My interpretation is that companies may have less budget for new large IT projects, but on the other hand, it could be easier to justify the need for effective sales performance tools… so while I don’t expect there will be a huge growth in the industry in 2009, I think it will maintain itself. From an implementation perspective… there should be a lot of work from implementing new plans, enhancing existing compensation plans, integrating systems from all the larger mergers that took place in 2008, etc.
I often get asked about if I think the SPM vendors will survive this economy, and I don’t see why not… if the company fundamentals are strong enough to re-assure people considering them. One thing is for sure, it will be an interesting year!
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