Leveraging Kaizen Principles for Incentive Compensation Management

Big Results come from Small Changes

Back in the day, I was required to read a book called The Goal for my operations and Supply Chain Management class. Like many of the other books read for this class, it was about a company, which manufactured widgets, was behind schedule in production, reducing profits and turnover. The manager was then tasked to identify the bottleneck and improve business processes within a short amount of time or the plant would be forced to close. Ultimately, with the help of an acquaintance, identifying and removing the bottlenecks, and testing various outcomes, the company was on an upward trend to profitability.

While the book read was fictional, many organizations can relate – there is always room for improvement, there is a “lean” way to do processes regardless of whether you are working with widgets or testing technology. Even at OpenSymmetry, we see our teams trying new methodologies to enhance the customer experience as a services organization. At OpenSymmetry we leverage the Kaizen Business Process Improvement method in our implementation approach. Although this is a well-known approach with larger organizations like General Electric, Ford Motor Company, Herman Miller, Intel Corporation, Toyota, Great Western Bank and Telstra Australia to name a few, the principles we are applying at OpenSymmetry are having major impacts for our customers. Our customers are seeing long-term success with implementing enterprise Incentive Compensation Management and Sales Performance Management solutions for their organizations.

Kaizen, or the practice of continuous improvement, has a heightened focus that big results can come from small changes. Big name companies, as mentioned above, have all used Kaizen and it has improved operations significantly. Great Western Bank was able to reduce the amount of steps to open a checking account to 24 versus the 34 previously. Most notably, Toyota, has Kaizen as one of their core business principles with each line assembler having been trained to stop the assembly at any point of time to fix a problem and/or provide suggestions to management to improve production and reduce waste.

So why Kaizen? Why is it important?

Kaizen is important because it enables organizations to improve efficiency and productivity, meaning employees are able to focus on what they are good at vs. doing something they do not see the value in or that they have limited control or desire to improve. Why is Kaizen so Important for Businesses filters out the benefits as being able to:

1. Discover the true source of the “problem” and solving it
2. Mitigate unnecessary waste
3. Improve employee production
4. Eliminate un-need procedures

This practice can be utilized no matter the size, business type, or industry your organization may be fall under.

As a professional services organization, OpenSymmetry has used Kaizen to improve the approach to the testing phases of an Incentive Compensation Management (ICM) or Sales Performance Management (SPM) implementation, leading to improved accuracy of the time and resource required for testing.

The testing phase(s) of an implementation could be considered the most important component to the delivery of a technology solution, and not uncommonly, is the most overlooked item. The Reason? There are many common perceptions/problems clients might see, such as:

1. Underestimating the time and effort required
2. Lack of strategy/no strategy in place
3. Desire to reduce cost and shorten the project duration
4. Lack of knowledgeable resources (both business and testing)

The reality is testing is a major component that truly impacts the success or failure of a project. Testing: Why you Need to Develop and Run Test Cases in your SPM Environment summarizes the importance of testing by stating it will uncover data issues, take into account all conditions and rules that might factor into how something is calculated, and will help organizations save money down the road. It is about being able to quickly identify and resolve issues before they hit the bottom line and utilizing experts and best practices to quickly reach success.

In order to mitigate unnecessary errors after the deployment of an Incentive Compensation Management solution, as well as ensure quality, there are three key actions to take into consideration.

1. Don’t let Testing Slip through the Cracks: Develop a Strategy – There is significant value in performing testing. Incentive Compensation Management and Sales Performance Management systems are extremely complex. Organizations who ignore the need for testing and/or do not utilize the right resources and best practices will find themselves at the same or even worse position than they were before the implementation. The initial strategy for testing comes in two different parts. First, the basics including, who is in charge of what testing components, where and when testing will happen, what periodic data is required and how it will be identified. The second part of the strategy must include different scenarios with insight into what the results/calculations should be. This ensures the system is prepared to handle all expected outputs.

2. Don’t Wait until it is too Late – User Acceptance Testing (UAT) preparation needs to be begin as soon as possible. It is recommended that it even be in tandem with the configuration to ensure system success, with a minimum of 3 months of data. It is about having quality data because ultimately, there will be fewer legitimate issues to arise in testing. Fewer issues lead to higher quality components and when quality is validated then the system administrators see the value in the system, and upper management can determine the ROI – saving time, energy, and money on costly mistakes.

3. Let the Experts be in Charge – When clients keep testing in house it not uncommon for them to underestimate the amount of time, effort and the skill set required. On large scale ICM implementations, in house testing averages about 12 weeks and requires at least 7 testers. This is prior to any consideration of time for training and enablement of testers, which is often difficult because internal tester(s) usually have the dual responsibility to finish their day jobs. Having experts brought into the picture, reduces the average amount of time to test the same system to 8 weeks on average with only a maximum of 6 testers required, as well as the added benefit of executing more test cases in a shorter amount of time. The compounded effect of quality resources, shorter timelines and greater effort all result in real savings for a project both short and long-term.

It is imperative to remove the mindset that testing is just an added cost. Testing is about verifying quality systems and implementation that adds value to your organization. First impressions and end user acceptance of a new technology solution go hand-in-hand for the success of a project. Testing before the system administrators take complete control reduces the risk of failure.  To tie it back to Kaizen, think of the testing experts as that small change that can make a lasting impact on efficiency. Experts are helping to reduce the amount of steps it takes to get the system up and running, enabling your organization to become self-sufficient. The more testing that is done up front, the more likely your organization will see the value in the technology, confidence in the implementation, and the more engaged and accepting your employees will be of the new technology solution. Employees will transform from being just an “admin” trying to calculate metrics to an “analyst” or sales rep selling to ensure organizational success.

At OpenSymmetry, we have a leading success rate of 99% on project delivery which eclipses the industry standard of 50%. We leverage the outputs of Kaizen to ensure both our projects and customers are successful, as well as provide measurable proof. Kaizen combined with our deep domain expertise and the largest global staff of SPM consultants is assurance that your Incentive Compensation Management and Sales Performance Management Solutions will be delivered successfully and provide real rapid results.