Sales Commission

 Issues
 

Sales Commission problems

EIM plans are complex in nature and require sophisticated systems to faithfully provide the results of these plans. Automating EIM business processes is a challenging issue for most companies. Robust, flexible, easy-to-use software has been a long time coming to this field. The difficulty in this business area and the lack of mature software is due to many reasons


Uniqueness of Companies

EIM Compensation plans tend to be unique by industry. The Banking Industry's compensations plans are based on business features such as Financial Accounts, Deposits and Loans, whereas the Retail Industry plans are based on Stores and Product Sales. Every industry tends to have its own set of requirements for this business process. But there are no rules or regulations governing how these plans should work even within an industry. This results in each company literally creating their own compensation plan that in many cases are very dissimilar to other companies in their industry. This requires a very broad based system to cover all the different kinds of compensation plans that may be built.

Complexity
In addition to the variation between different companies, there maybe a lot of variation within a company as well. EIM covers a lot of different compensation plans, typically segregated into Sales Compensation, Variable Pay Plans, Executive Compensation, Channel Incentive Compensation, etc. These types of compensation affect different participants, pays for different kinds of performance, using different methods of payments. Even within a particular area such as Sales, compensation plans maybe very different from employee to employee, incenting for different performances in many different ways. There are also different sub processes within the administration process of EIM plans, such as Territory management, Goal Setting, Allocation and crediting, Calculation and Payout determination. Given all these varying needs the product to solve them will necessarily need to be very complex.

Change
Most EIM plans are designed to address only a single fiscal year. Almost every year, there is an initiative to readdress the EIM plans for the next fiscal year. This makes for a lot of change in the business process and in the systems every year. In addition, due to business conditions the business may revise various aspects of the EIM plans such as Quotas, Incentives, etc; the organization itself maybe realigned and affect the incentive plans. This area typically has more than the usual impact of change every year.

Integration 
EIM software may calculate payouts based on many different kinds of performance such as Revenue, Gross Profit, Contracts signing, Project Mile Stones, Customer Satisfaction, Invoicing, Bill Payments, etc. The data for this performance may come from many different systems from Supply Chain, Order Management, AR, AP, etc. Participants may come from HR systems, CRM systems or from external firms, as in the case for channel salespeople. The output of the compensation data may be updated to Payroll, GL, Accounts Payable, etc. Data may need to be converted and evaluated for processing on a daily basis and may need to be retained for a number of years. The process of moving data in and out EIM system and the setup and testing required to verify the quality, could be a significant undertaking.

Volume 
Some EIM plans can be paying incentives by individual order lines, because of product-based commissions. Larger firms can have hundreds of thousands of order lines per day. These individual order lines may affect the payout of many participants. By the time all the credits for these order lines are provided and the compensation has been calculated, the volume of transactions handled by the system could have exploded to millions of transactions. Global firms may need to be able to process their plans separately by global regions. Software needs to be very robust to be able to handle these volumes in a reasonable time period.

State of Software 
To address all the issues listed above requires a very robust, flexible and stable software system. The system has to be a rule-based system, such that any customer requirement can be easily be setup in the system without having to reengineer it. Most software is still not at a level where they fully meet these needs. Cellarstone is very aware of the kind of problems the typical company will face as they try to automate this business area.

Cellarstone is also familiar with the capabilities of various vendors in this area and can help you navigate through the implementation of the products. 

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