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Managing Sales Incentives

Human Resources Management

Managing Sales Incentives

When it comes to automating specific business processes, such as payroll, compensating sales reps has long been overlooked. But that trend is rapidly changing as an increasing number of companies turn to sales-incentive compensation-management applications to synchronize selling strategies and boost corporate performance.

It's about time. For years, companies have been relying on dog-eared spreadsheets to calculate salary raises and bonuses - an error-prone, inconsistent approach that can easily alienate employees.

From Spreadsheets to Solutions

"It's still true today that the vast majority of companies of all sizes are using spreadsheet-based incentive systems," said Judy Hodges, research manager at IDC and author of the report "Worldwide Sales Incentive Compensation Management Applications 2007". "These are very inflexible types of homegrown applications, and they're highly underpowered because they don't allow a company to change their sales processes easily," Hodges said. What's worse, she added, "Without an automated system, companies aren't able to make timely decisions to achieve their overall business objectives, which is a huge hindrance in terms of their overall corporate performance."


Fortunately, sales-incentive compensation-management solutions can help ensure that the right sales reps receive the right rewards by electronically tracking accomplishments and calculating compensation using built-in algorithms. The result, said Hodges, is "a more consistent, accurate and equitable payout of compensation."

The Importance of Integration

The way to make the most of a sales-incentive compensation-management solution, however, is to integrate it with a company's overall HR system. For starters, integrating sales-compensation data with CRM solutions can drive sales productivity by enabling reps to estimate their compensation payouts on specific deals and deal structures. What's more, pointed out Hodges, "It's really important that companies integrate these solutions with an HR system, because it's through an HR system that they can gather activity data relative to a salesperson." And by integrating data - such as the number of days spent in the field or training days used - with a sales-incentive system, a company can develop an easily accessible snapshot of an employee's overall sales performance.

A sales-incentive compensation-management system can also help HR professionals better recruit and retain sales reps by identifying top performers and rewarding them accordingly.

The Players and Their Offerings

The good news is that sales-incentive compensation-management solutions need not be a burden on an already overworked HR team. For starters, on-demand, SaaS (software as a service) applications are an increasingly popular choice over on-premise solutions for both cost and ease-of-deployment reasons. Also, there is an ever-evolving selection of solutions for companies to choose from; here are just a handful of options.

Xactly Corp.'s Sales Performance Management: This application automates all aspects of administering, tracking, reporting and analyzing sales performance. Sales Performance Management systems include functionality for incentive-compensation management, quota and territory management, modeling and analysis, noncash rewards, price management, and forecasting and planning.

Callidus Software Inc.'s TrueComp: TrueComp automates the day-to-day activities of incentive-compensation management through a flexible system that includes robust moreling and forecasting capabilities, support for multiple business units, and out-of-the-box support for compensating direct and indirect sales channels.

Centive's Compel: This program provides secure, real-time visibility into attainment, ranking and commission-earnings data. Compel integrates with and other CRM systems to enable sales representatives and their managers to forecast commission earnings based on opportunities in their pipeline.

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