Better Ways To Pay Sales StaffBetter Ways To Pay Sales Staff

Acompany's sales force is among its primary assets, but developing manageable compensation plans that motivate salespeople and boost productivity is a complex challenge. An emerging category of software and services is making it easier for managers to develop such plans.

Enterprise incentive-management software helps managers create incentive plans, then calculate and track commissions, bonuses, and other rewards. Employees can access plans from their desktops and track how they're performing. The software is going mainstream as companies devise more-complex incentive plans for salespeople and look to change plans more frequently. Also, more companies want to boost productivity and motivation by tying compensation to performance for all types of workers, creating the need for sophisticated management systems.

"As we move out of this rather unique economic time and into more normalized IT spending, this will be an area where organizations will look to make investments," Gartner analyst Joe Galvin says. "Enterprise incentive management solves problems for the IT department, sales, and finance."

In sales departments, enterprise incentive-management applications are replacing homegrown compensation-tracking programs that were cobbled together with spreadsheets and financial data reports that IT generates. The new systems integrate with most enterprise resource planning systems and perform all calculations related to variable-pay plans, reducing the risk of mathematical errors. Managers who use enterprise incentive management expect it will curtail productivity-draining "shadow accounting," a practice in which salespeople keep their own records of what they're owed because they don't trust the accountants' calculations. "I can see the potential for accuracy and time savings," says Gwynn Durham, accounts-receivable manager for Group 1 Software Inc. in Lanham, Md., which last month finished implementing Again Technologies Inc.'s CompEnterprise application. The system also generates commission statements via E-mail to Group One salespeople. "Our salespeople are very happy with it," Durham says. "They feel better with an automated system."

Gartner's Galvin says most enterprise incentive-management systems show a solid return on investment, usually within six months, by reducing overpayment errors and boosting productivity of sales, finance, and IT departments.

Vendors are pushing their offerings beyond the commissioned sales force with modules designed for nonsales workers. Health-food chain Jamba Juice Co., for example, is using software from Incentive Systems Inc. to calculate pay rewards for store managers based on the results of customer-service surveys. Some vendors, such as Again Technologies, have developed offerings that can be used to reward channel partners that meet certain performance goals.

Enterprise incentive management's potential helped Again Technologies raise $15 million in a third round of venture-capital funding last month. Rival Synygy Inc., which CEO and president Mark Stiffler says has grown 60% this year and has an estimated $30 million in revenue, secured $12.8 million in funding earlier this month.

Big ERP vendors are also getting into the game: Oracle and Siebel Systems Inc. recently won sizable deals for their enterprise incentive-management modules, Galvin says. PeopleSoft Inc. has partnered with Incentive Systems and Callidus Software Inc., another pure-play vendor, to integrate their software into PeopleSoft 8.0.

Joel Soemo, manger of sales and marketing systems in IS for Siemens Building Technologies Inc., a developer of building-control systems in Buffalo Grove, Ill., sees huge potential for money and time savings with the recent implementation of Synygy Compensation for its salespeople. Siemens' homegrown applications had grown too complex and required the participation of IT every time business managers wanted to change plans, Soemo says. "The businesspeople are saying, 'We don't want to have to come to you anymore.' And

I agree with them. When managers want to make a change, why should they have to come to a developer?" Soemo adds that the reports are easier to read, printed in color, and represented with graphs. "It's much better than stuff cranked out of a mainframe."

Incentive Compensation does require some training on the part of the managers who'll use it, Soemo notes. And Durham says she can't change figures in CompEnterprise as easily as on a spreadsheet. But she doesn't consider that a big stumbling block. Compared with the spreadsheet method, Durham says, "I'm already saving so much time."