7 Strategies for

Large-Scale ICM
Data
Accuracy

Complex

Introduction
Compensation
Logic

Elaborate
Crediting Large sales organizations face unique
Rules challenges in their sales compensation
structure and processes. This is due to an
array of intersecting factors, including intricate
and, at times, shifting compensation formulas,
Commission frequent changes in sales territories and
Payments account allocations, and large volume of sales
Over Time
transactions -to name just a few issues.

In this whitepaper, we examine how to

address those issues and challenges unique
Visibility to large sales organizations. And we’ll offer
and Reporting some concrete recommendations, based on
our extensive experience at NICE with large-
scale institutions.

Compensation
Modeling

Multiple
Sales
Groups
Data
Accuracy
WHAT’S NEEDED
Data Straight through processing of Automated workflows, in order
Complex
Compensation
Logic
Accuracy transaction data from the source
application to the ICM system.
Combining filtering, calculations
to quickly and easily capture
data needed for compensation
calculations. An automated workflow
and data feeds, an incentive process would pull transactional data
compensation management system from various source systems, only
THE CHALLENGE should scale back the need for allow for limited manual additions,
Elaborate human intervention, and accelerate and then submit the payment request
Crediting compensation and commission directly. By pre-populating as many
Rules Large companies are often hindered by the use
processing. fields as possible, based on the
of multiple legacy IT systems, which are difficult
nature of the transaction, the need for
to integrate. This significantly impacts incentive
Identification of outliers should be manual validation and corrections is
compensation processes, which use data from
automated to reflect your business reduced dramatically.
Commission multiple HR, finance and sales systems. The result
rules regarding those transaction
Payments is data inconsistencies or lack of data, manual
types or volumes that mandate
Over Time verification processes and extremely long timelines to
further validation. For instance,
launch and update new compensation plans.
the system could automatically
alert administrators of transactions
Often, companies also depend on self-reporting and
above a designated value, in order
manual data entry of sales transactions by sales
Visibility to obtain their manual verification.
agents or administrators – a process that is time
and Reporting
consuming and error prone.
FOR EXAMPLE…
This setup typically results in commission
overpayments, clawbacks, disputes, distrust among By automating processes related to
sales reps regarding their pay statements, and sales transactions reporting, a large
Compensation
Modeling extensive “shadow accounting”. Gartner estimates Canadian bank has drastically improved
that up to 8% of all sales compensation expenditures data accuracy and business process
are overpayments. efficiency, thus reducing commission
overpayments.

Multiple Read the case study

Sales
Groups
Data
Accuracy

Complex
Complex
Compensation
Compensation WHAT’S NEEDED
Logic
Logic Fast processing and adjustments. Your
compensation system must be able to quickly
and precisely process complex compensation
payment formulas and logic, and automatically
Elaborate make necessary adjustments before
Crediting
Rules THE CHALLENGE compensation is paid.

Large organizations have a very wide array of variables and rules that
need to be taken into account for sales compensation payments,
Commission beyond the amount of the sale. These can include the type of fund
Payments sold, the customer’s profile, duration of investment, payment flow, date
Over Time of transaction, multi-dimension rates and more.
Commission capping. Automatic capping
applied in real-time can help you comply with
regulatory requirement and prevent mis-selling
of products that are not suitable for specific
end customers.

Teaming agreements and compensation splits are also quite common
in large sales groups, with compensation and volumes divided
amongst multiple payees. This adds yet another level of complexity.
Visibility
and Reporting
For example, in large financial organizations, one of the trickier issues
is time. Commission calculations quite often depend on accrued
customer payments over time and, in some cases, may also be tied to
a sales rep’s quarter-to-date (QTD) earnings. When a payee is allowed
Compensation to drop on and off a plan over a given period of time, pro-rating on a
Modeling daily level is also required.
Clawback calculations. Your system should
be able to continuously track cancelations or
terminations of sales over a multiple-year term.
Verification of payments should be based on
actual payments, rather than compensation
logic. So, for example, if a transaction was
capped, then only the capped amount should
be recovered.

Multiple
Sales
Groups
Data
Accuracy

Complex Elaborate
Crediting Rules
Compensation
Logic

Elaborate
Crediting THE CHALLENGE WHAT’S NEEDED FOR EXAMPLE…
Rules
Team incentives and compensation splits IT-free crediting mechanism. Your A leading consumer electronics
among multiple payees, based on their crediting mechanism should be easy company was struggling to process
hierarchy or location, are the norm in large enough for sales operations staff to 140 million sales transactions on
Commission
Payments sales organizations. For example, several independently adjust the rules without the a daily basis, involving elaborate
Over Time payees may split all compensation earned need for IT involvement. crediting. The company was able
by any team member for the lifetime of to cut down processing time from
their agreement. Smart data management. Including a week to three hours and provide
loading, auto-validation and manipulation detailed daily reports to sales reps
Some companies, like financial services on load ensures that the ICM system and managers.
Visibility assigns commissions for transactions
and banks, often only pay commission
and Reporting
on a limited number of products. based on a specific set of rules and Read the case study.
Therefore, the crediting matrix includes parameters.
particular products and specific terms for
investment, alongside a lot of transactions Performance. Your ICM system should
Compensation for which agent compensation is not paid. be able to process large volumes of sales
Modeling These rules and parameters are generally transactions involving complex crediting,
updated on a regular basis. supporting fast payments and distribution
of commission earning reports to payees
and management.
Multiple
Sales
Groups
Data
Accuracy

WHAT’S NEEDED
Complex
Compensation
Logic Plan creation. Compensation administrators
should be able to easily define rules to handle
different clawbacks and sales redemption
scenarios.
Elaborate
Crediting
Commission Simple maintenance. By maintaining rules in a
Rules
Payments single repository, with full audit capabilities and a
comprehensive view of all data, sales recoveries

Commission
Payments
Over Time and redemptions can be efficiently handled in real-
time.

Strong analytics capabilities are needed to spot

Over Time outliers, trends and exceptions, as well as to fine
THE CHALLENGE tune compensation dynamics over time.

In some cases, the long-term nature of specific

Visibility products such as mortgages, mutual funds and
and Reporting other investment instruments impacts the dynamics
of sales commissions. Organizations must control
payment of incentives over time using clawback rules
and other deferred compensation methods, in order
to ensure that sales personnel keep an eye on long-
Compensation term outcomes, rather than only short-term profits.
Modeling
For example, if a booked loan has deteriorated,
you must have a process in place to reduce the
associated compensation.
Multiple
Sales
Groups
Data
Accuracy

Complex
Compensation
Logic
WHAT’S NEEDED

Visibility and
Elaborate Direct line of insight. Payees should have a
Crediting direct line of sight into how they’ll be paid,

Reporting
Rules with frequent statements that cover period-
to-period payments, year-to-date payments,
and clawback data so that the balance reflects
retrospective changes.
Commission
Payments Simple design. The design and presentation of
Over Time THE CHALLENGE reports should be simple and clear, saving time
and reducing complexity.
With the recognized complexity of
commissions and the large number of payees, Team results. Managerial statements should
it is essential that sales reps understand allow focusing on team results, with top-down
Visibility
and Reporting what they’re being paid and can clearly track summary values and the ability to drill down
their compensation statements. A lack of into individual transactions, based on hierarchy
transparency negatively impacts motivation authorization.
and trust, as well as leading to time wasted on
unnecessary queries.
Compensation
Modeling In this regard, it is vital that payees be able to
tally their compensation easily, even when the
duration of transaction payments extends over
months or years.
Multiple
Sales
Groups
Data
Accuracy

Compensation
Complex
Compensation
Logic Modeling
Elaborate THE CHALLENGE WHAT’S NEEDED
Crediting
Rules Strategic planning of variable compensation is a Automated modeling. A mechanism allowing
yearly activity, aiming to optimize commissions to organizations to modify compensation
drive more top-line revenue, while reducing the risk variables should automatically recalculate ICM
of change. data to model how such changes affect total
Commission compensation and payee performance. This
Payments Those responsible for drafting such plans want would typically involve reporting the difference
Over Time answers to questions such as: How much between a system baseline of compensation
commission will be paid next year? What would and the modelled values for up to a year’s
be the impact of a short-term incentive or SPIF? worth of data.
How much compensation can be recovered
Visibility by changing the duration of clawbacks? How A quick to market approach allows
and Reporting would changes to the capping amounts impact organizations to create new incentive plans
top-performing payees and overall commission and SPIFS, which can be measured and
payouts? promoted to a live state without requiring
months of rework for different iterations.
Typically, manual modeling is done to calculate This would be most effective for introducing
Compensation the impact of such compensation plan changes. compensation plans in connection with new
Modeling However, this is time consuming and error prone - products that become available on short
making it difficult to plan strategic changes with the notice.
desired confidence.

Multiple
Sales
Groups
Data
Accuracy

Complex
Compensation
Logic

Elaborate
Crediting
Multiple WHAT’S NEEDED
A single compensation
Rules
Sales Groups platform that lets you manage
compensation data for all divisions
and groups will reduce overhead
and simplify administration.
Commission THE CHALLENGE
Payments Analytical insight across
Over Time divisions, including the ability
Large sales organizations have multiple
sales divisions and lines of business, each to view, drill-down and analyze
with its own variable compensation plans, compensation and sales
rules, sales hierarchies, schedules and performance data from all lines
Visibility reports. Investment consultants selling of business, will allow you to
and Reporting mortgages or lines of credit, for example, gain a deeper understanding,
will have different sales compensation identify program strengths and
requirements than a banking group selling weaknesses, and drive the right
checking and savings accounts. behavior among different teams.
Compensation
Modeling While each such group or division can
have its own incentive compensation
management system, this increases IT
effort and prevents organization-wide
management of compensation.
Multiple
Sales
Groups
About
NICE Sales Performance
Management
NICE Sales Performance Management (SPM) helps
large organizations manage sales compensation to
improve sales performance.

NICE SPM handles complex incentive compensation

management (ICM) needs, automates sales
operation processes, manages territories and
quotas, and delivers sales performance analytics.

For more information, see:

http://www.nice.com/icm