Whitepaper: Adding Strategic Value to Your Organization with Incentive Compensation Management
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As an Executive, you need to understand how ICM adds strategic value to your organization to support business objectives. This White Paper answers your questions and demonstrates potential benefits.
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Whitepaper: Adding Strategic Value to Your Organization with Incentive Compensation Management
- 1. The ROI of Incentive Compensation Management – Making the Business Case Incent Perform Grow Adding Strategic Value to Your Organization with Incentive Compensation Management
- 2. Adding Strategic Value to Your Organization with Incentive Compensation Management Any process designed to drive meaningful business results must provide efficiency, scalability and ease of use. Incentive Compensation Management (ICM) solutions successfully deliver those features while offering better insight into incentive remuneration. But how do you make the business case? Organizations have difficulty justifying the ‘spend’ without a clear understanding of the ROI delivered by these solutions. This paper helps business leaders understand how ICM solutions add value to their organizations. It allows executives and their teams to embrace the technology with the confidence that it supports their business objectives. To take full advantage of an ICM system and better understand the ROI, organizations should consider the potential benefits outlined in this report. Overview ICM solutions can reduce costs by eliminating errors and overpayments, enhancing audit trails and streamlining administrative processes. Incentive compensation can be costly and may account for a considerable portion of an organization’s budget. Most of the costs come from payments, but the administrative costs are also significant. When you also understand that managing incentive-based payouts requires organizations to do the following tasks, then it is clear that the expenditure can be dramatic. Auditing payment accuracy Adjudicating appeals Integrating plan changes Lower Costs: How ICM Drives Cost Reduction Integ
- 3. Adding Strategic Value to Your Organization with Incentive Compensation Management Furthermore, older, homegrown systems demand ongoing upgrades and enhancements that can create an unhealthy dependence on IT support, which also consumes ICM dollars. Organizations that have not adopted an ICM tool regularly incur significant costs from errors and overpayments. Overpayments are rarely reported to the company, meaning those funds are lost forever. Companies can lose a significant amount of money from the overpayment errors. Newer ICM solutions automate and streamline processes so companies spend less on staff to keep the system running. New solutions also reduce the costs of outside auditors as improved accuracy and clearer trails reduce audit-driven inquiries into payment practices. ICM offers greater accuracy. This advantage is arguably the low-hanging fruit of ICM benefits – the savings are realized almost immediately through the elimination of errors and overpayments. Manual Solution ICM Solution ACCURACY RELIABILITY REDUCED ADMINISTRATIVE COST ERRORS OVERPAYMENTS ADMINISTRATIVE BURDEN
- 4. Adding Strategic Value to Your Organization with Incentive Compensation Management Increased Productivity: How ICM Improves Employee Performance Greater Alignment: How ICM Aligns Incentives with Business Goals Homegrown, manual and spreadsheet-based tools are inaccessible and can result in lengthy payout cycles, errors and miscalculations. These challenges generally translate into employee dissatisfaction and frustration as staff receive less immediate reward for their efforts, and have limited access to real- time data on how their accounts are performing. Furthermore, when employees spend their time trying to understand their performance and compensation, it detracts from the time spent on more meaningful work. A quality ICM solution ensures that: Calculation cycles are shortened, speeding up the time between employee performance success and payment Frequent plan changes are accommodated and integrated quickly and seamlessly Employees have easier and real-time access to data to understand their plans and performance expectations In a spreadsheet environment, administration is cumbersome, time consuming, and lacks the ability to effectiently communicate performance with employees. Automation allows visibility for employees to be more motivated and excited to perform, bringing considerable return on the ICM investment. When employees cannot see the link between pay and performance, the incentive structure is lost. When earning calculations are difficult to interpret, employees will struggle to understand how incentives are earned, causing a disconnect between the plan’s effectiveness and business goals.
- 5. Adding Strategic Value to Your Organization with Incentive Compensation Management User-friendly, easy-to- access dashboards with goals Clear, timely earning statements & calculators GOAL ATTAINMENT Pure alignment drives the desired behavior. A robust ICM solution can help ensure that business goals are well aligned with compensation goals and everyone in the organization can understand and buy into plans. It also allows employees to conduct “What If” analysis to project their potential payouts on various projects, accounts or transactions. When plans are more transparent – resulting from user-friendly dashboards, clear earning statements and earning calculators – employees are more invested. Employees perform better when they are motivated, and that performance drives business growth. This level of ROI cannot be overstated. A robust ICM also maintains alignment with business goals as the company grows. Industries and markets change quickly, so ICM solutions offer companies the flexibility to revise their compensation plans and ensure they maintain alignment with company goals. Companies can respond to changing circumstances by revising their ICM according changes in staff, product lines, customers or territories. Similarly, ICM solutions are scalable to accommodate company growth, including the growth from acquisition. + = Better Insight: How ICM Enhances Management Functions When reports are unreliable, delayed and difficult to generate, management can struggle to make thoughtful and strategic business decisions. Without a robust reporting tool, it’s challenging to understand the full impact of ICM plans and to determine how they should be adjusted or changed. Manual systems tend to lack sophisticated reporting capability, and often the reports generated are unreliable, outdated and irrelevant by the time they reach management’s hands. Newer ICM tools offer real-time analytics and reporting that provide real-time insight into plan performance and impact. Executives can immediately get key performance indicators on individual accounts, territories or sales teams. ICM solutions also allow management to forecast model plans to make strategic business decisions going forward.
- 6. Adding Strategic Value to Your Organization with Incentive Compensation Management Another key piece of ROI comes from the enhanced management insight achieved through “What If” analysis. This benefit is considerable as it arms key decision makers with meaningful, 360-degree data to anticipate future performance and productivity by modeling compensation plan, quota or deployment changes with reliable and accurate metrics. REAL-TIME INSIGHT FORECASTING & MODELING CAPABILITY SPEED TO MARKET ADVANTAGES RELIABLE AND ACCURATE DATA ENHANCED ICM REPORTING
- 7. Adding Strategic Value to Your Organization with Incentive Compensation Management 3420 Executive Center Drive, STE 250 Austin, TX 78731 877-ICONIXX www.iconixx.com There should be no doubt that a robust, flexible and scalable ICM solution empowers companies to: LOWER COSTS INCREASE PERFORMANCE ALIGN BUSINESS GOALS WITH COMPENSATION PLANS GAIN MEANINGFUL INSIGHT Together these benefits translate into tangible business benefits that drive meaningful results and support corporate growth. Summary About Iconixx Iconixx is a total solution provider for compensation management. The Iconixx product suite – Iconixx Sales, Iconixx Incentive and Iconixx Merit –makes the company a one-stop resource for sales, bonus and salary compensation solutions. Our cost-effective, Cloud-based solutions deliver incentives to the entire workforce for businesses of all sizes. Drawing on over 15 years of experience, Iconixx also partners with clients to accelerate their business growth through actionable intelligence. Whether it’s using Iconixx technology or leveraging a client’s current investment, Iconixx’s expertise can drive efficiencies for their compensation environment. For more information visit www.iconixx.com.