Incentives are natural motivators. Remember when your parents promised you to buy a bike if you got good grades in school? That is a simple example of a performance-based incentive. It gave you a nudge to keep performing at your best. Bottom line: People respond to incentives. This is why most companies adopt something known as incentive compensation. It is the process of compensating employees financially for their exceptional performance.
Here, we’ll take a closer look at what incentive compensation means, see some common challenges that organizations face while managing incentive-based compensation, and review how Informa's Incentive Compensation Management System (ICMS) can help you combat these challenges.
Incentive compensation is a type of pay given to an employee as a reward for achieving specific goals or targets, such as increasing sales or improving productivity. Incentive compensation is often used as a motivator by the leadership to encourage their teams to perform better. Without an incentive, the employee might be less inclined to exceed expectations. There are several ways in which incentive compensation can be structured, including straight commissions, bonuses, prizes, “spiffs,” awards, and recognition.
Managing compensation is a complex and time-consuming task for administrators and sales managers. Either you’re carrying out the entire process manually or dealing with erroneous results resulting in a lack of trust. This means business enablement issues, audit and risk management, lack of detailed reporting, and too much time manually carrying out complex calculations. But it doesn’t have to be that way.
With ICMS, you can easily manage your complex high-volume calculations, such as incentive-based compensation, pricing models, or sales commissions. You’ll save valuable time spent in carrying out complex incentive calculations and get to create unlimited What-if analyses to measure the impact of different scenarios on overall performance and focus efforts accordingly.
Now that you have a fair idea of what incentive compensation management means and its importance in an organization, let’s go through the different challenges in managing incentive-based compensation and how Informa's ICMS helps solve them.
Traditional solutions lack flexibility. Many competitors require coding and technical expertise even for small changes, which can be time-consuming and require additional resources.
ICMS is a user-friendly solution that makes managing and adapting your incentive and compensation programs easy. It is a no-code, low-maintenance solution that can be easily managed, similar to managing a calculation sheet, making it ideal for Excel users. It is customizable and can be tailored to your specific needs, and it is industry and client agnostic, making it more flexible, adaptable, and user-friendly than its competitors. Furthermore, ICMS seamlessly integrates with almost any software you might have already — such as data analytics and CRM — for added flexibility and integration.
Most applications take several hours to process reports, making it difficult to rerun calculations and make adjustments in a timely manner.
ICMS allows you to run calculations in minutes and make adjustments as needed without wasting valuable time waiting for reports to be processed. In addition, ICMS is highly adaptable; it can be configured and adjusted without the need for IT support or external consulting support. This adaptability helps ensure that incentive plans remain adequate and relevant.
One of the biggest challenges in managing incentive compensation is ensuring that the system is auditable and that the calculations are accurate and reliable.
ICMS provides a full audit trail for accurate and reliable calculations, ensuring compliance and minimizing errors and fraud. It allows organizations to easily track and review calculations, identify errors and provide the necessary confidence, helping organizations to demonstrate compliance and ensure accurate, reliable, and trustworthy calculations.
Most organizations need visibility into how different scenarios and changes will impact overall performance, making it difficult to determine where to focus efforts and adjust the incentive plan.
ICMS provides a fully customizable What-If Analysis to allow users to measure the impact of different scenarios on overall performance and determine where to focus their efforts. This feature will enable managers to make projections for individuals and teams, ensuring proper compensation, preventing frustration, and retaining top talent.
Ensuring the security of sensitive data and the visibility of the generated results is vital for organizations to protect sensitive information from unauthorized access.
ICMS addresses security challenges in incentive compensation by providing advanced security features, such as controlling the visibility of results at the user level and encrypting sensitive data within Azure. This ensures that only authorized individuals have access to the results of the calculations and protects sensitive data from unauthorized access or breaches, helping organizations minimize the risk of breaches and unauthorized access.
In conclusion, managing incentive-based compensation can be a real headache for organizations. But with ICMS, it doesn't have to be. ICMS is a powerful and user-friendly solution that makes it easy to manage complex high-volume calculations like incentive-based compensation, pricing models, and sales commissions. With ICMS, you'll have access to many features that make your life easier. You'll be able to run What-If Analysis, make changes quickly with no-code functionality, and integrate with other software you already use. Plus, ICMS is built on Microsoft Azure technology and designed to be client and industry-agnostic so that it will work for you regardless of your industry or client base. So, if you're tired of dealing with the headaches of managing incentive compensation, give ICMS a try. You'll be glad you did!