Insightful Findings From the SPM Proficiency and Resource Survey

More than 200 companies weighed in for the OpenSymmetry 2020 Sales Performance System and Resource Survey, supported by WorldatWork, which was conducted to cover resourcing proficiency related to managing and executing the processes to drive SPM programs. The intent of this report is to summarize the results and provide an understanding of companies managing sales compensation as it relates to their technology, staffing models, and program performance. Coupling data from the survey with OpenSymmetry’s experience in the space, we will attempt to provide insights learned and explore potential causes for any inefficiencies.

• Section 1: Where do organizations claim to be most proficient as it relates SPM/ICM?
• Section 2: What number of resources are typically leveraged to manage SPM/ICM programs?
• Section 3: Do SPM/ICM automated solutions impact SPM/ICM proficiency or headcount?
• Section 4: Who owns SPM/ICM and what governance models are employed

The data from the survey was analyzed by OpenSymmetry’s SPM experts to authenticate the results and to provide additional context and thoughts related to the key findings.

SPM & ICM DEFINITIONS

SPM – Holistic operational and analytical management of sales performance via automation or streamlined processes. May include management of various types of incentives, objectives, quotas, planning, territories, or analytics.

ICM – Focus on strategic use of different types of incentives for payees to drive behavior in line with the organization’s goals. May include commissions, bonuses, SPIFs or other types of recognition.

DEMOGRAPHICS OF THE SURVEY

Respondents from 10+ industries are represented with many of the responses coming from global organizations. The breadth of participation from the various industries with varying payee counts allowed our team the opportunity to provide additional cross cuts of the data to help draw out meaningful insights.

SECTION 1: SPM/ICM PRIORITIES VS. PROFICIENCIES

To help create some baselines we asked participants to self-report on both their SPM/ICM Priorities as well as where they thought they were proficient. It was interesting to see how well companies aligned self-reported priorities with where they thought they were proficient. The chart below provides a reference where industries with 10 or more responses identified where their priorities are and where they think they are proficient.

Industries excluded due to minimal responses provided include: Healthcare, Medical Products, Other, Pharmaceutical and Biotechnology, Publishing and information services, Telecommunications. In addition to understanding the correlation between priorities and proficiencies, assessing company proficiency (self-reported) allowed for additional analysis to understand if there were other factors that may be impacting a company’s SPM/ICM proficiency. Gaining this insight was important to the research as it would allow us to understand how administrative support and automation were impacting how proficient companies were at managing their SPM/ICM programs.

PROFICIENCY INSIGHTS BY INDUSTRY

SECTION 2: STAFFING RATIOS FOR SPM/ICM

Staffing ratios are more commonly driven by SPM/ICM business needs (e.g. complexity of program, number of disputes, changing plans/reports, etc.) than a defined standard. We are often asked what are the accepted or common ratios seen between payees and administrators as it relates to managing an SPM/ICM program, with the short answer being there is no magical ratio.

While there are many variables that need to be taken into account when identifying the correct number of resources to manage a company’s sales performance management (SPM) program, this survey data has revealed the following benchmark: ratios of business and IT FTEs to payee sales force counts. To help answer this question we have broken down the responses by industry leveraging payee counts greater than +250 reps/agents.

PAYEE ADMIN RATIO BASED ON INDUSTRY*

PAYEE COUNTS VS. SUPPORTING BUSINESS AND IT FTES

Given the impact on headcount ratios as the payee counts increased, the following provides a breakdown based on different payee counts within the survey participants.

SECTION 3: DO SPM/ICM AUTOMATED SOLUTIONS HAVE AN IMPACT ON PROGRAM PROFICIENCY OR HEADCOUNT?

DEPLOYED SPM/ICM’S SOLUTIONS IMPACT ON SUPPORTING FTE HEADCOUNT.

Based on experience helping companies deploy SPM/ICM solutions, it was not a surprise to see minimal impact on support team headcount as a result of automation investments for companies of lower payee counts (less than 1k payees). As the program enhancements are recognized via SPM solution automation, many companies tend to retain their current headcount but are able to direct the focus of their resources towards more strategic tasks. For example, executive and insightful analytics is often a gap but with SPM/ICM solutions, resources are able to better use their time to focus and deliver useful dashboards or reports instead of day-to-day administration tasks.

INDUSTRIES THAT SHOWED A NOTICEABLE REDUCTION IN SUPPORT STAFF WITH THE ADOPTION OF AN SPM SOLUTION

Payee counts less than 1k show a decrease % in support staff needed with a SPM system in place:

• Insurance (21%)
• Manufacturing (6%)
• Technology (23%)

Payee counts more than 1k:

• Financial Services (38%)
• Manufacturing (70%)

We expected to see this with larger teams required to manage the entire process through an excel/manual program or a company paying sales comp through a homegrown program that requires on-going upkeep and/or maintenance. An example of where we saw automation have a noticeable impact on staffing was with companies with over 5000 payees, where the average ratio jumps from 1:259 admins to payees up to 1:392 admins to payees.

DO SPM/ICM SYSTEMS INCREASE COMPANY PROFICIENCIES?

Based on the data collected we were able to look for correlations between program proficiencies and the adoption of SPM/ICM technology. The goal was to find out if companies were able rate themselves higher when automation was being leveraged over those who were still on a mainframe or manual program.

Interestingly we didn’t see much of a difference between companies who invested in SPM/ICM solutions and those that did not at the smaller payee counts (less than 1k payees). There are a number of reasons we could attribute this too but one of the most likely is that a company can create a fairly proficient program through manual means when dealing with a smaller payee count.

Another observation (based on deployment work) is that smaller payee counts will often have more simplistic plans and processes which may allow companies running on manual processes to remain relatively proficient in their own eyes. Lastly, if the participants have not previously managed an SPM/ICM program on a 3rd party application, they may not have a good reference point for knowing the difference in various proficiency levels.

When looking at payee counts under 1k, across all 17 Proficiencies (SPM solution vs. No solution); based on % of each type of submission only 2 proficiencies significantly outperformed having a SPM solution vs not having a solution overall.

• Producing timely payments for sales commissions payees
• Time to payout each period

When data was analyzed for companies with more than 1k payees, (across all 17 Proficiencies) comparing SPM solution vs. No solution, we saw improvements across a few more areas of the program. The following 6 proficiencies outperformed having a SPM solution vs not having a solution overall.

• Producing timely payments for sales commissions payees
• Reporting to the management
• Credibility with the salesforce and management
• Creation and tracking adjustment
• Sales expense forecasting
• Time to payout each period

After reviewing the data comparing the top 5 reported proficiencies between companies employing an SPM system and those without one, we did see significant overlap with 2 exceptions as noted below.

Top 5 Program Proficiencies with SPM System

1. Time to payout each period**
2. Payment accuracy
3. Producing timely payments for sales commissions payees
4. Credibility with the salesforce and management
5. Reporting to the salesforce***

Top 5 Program Proficiencies without a SPM System

1. Data integrity and trust
2. Payment accuracy
3. Credibility with the salesforce and management
4. Producing timely payments for sales commissions payees
5. Reporting to the management

The 2 program proficiencies that differ between having a SPM system and not are the focus of how much time to payout each period and reporting to the salesforce:

**Time to payout each period becomes a much easier objective once a centralized and automated system is in place. When a system is not in place the time focus goes away and payment accuracy starts to override the importance to all parties involved.

***Reporting to the salesforce becomes remarkably easier when a SPM solution has an Analytics module to support mass report/dashboard creation with sometimes out of the box becoming sufficient enough. One of the inherent benefits of a SPM solution is the compilation of incentive data that can support easy to understand visuals and proactively identify opportunities.

SECTION 4: WHO OWNS SPM/ICM AND WHAT GOVERNANCE MODELS ARE EMPLOYED?

Based on the data collected in the survey, we wanted to share the breakdown of ownership of sales comp by the different departments for some of the industries we polled as well as a cumulative look at the various models leveraged to oversee these programs.

When looking at the data across all industries, the designated owner (a formally recognized individual or team) of the sales compensation administration process is:

So, when the question comes up, “Who should own sales compensation administration?”, the above show that the answer is often “it depends” as it relates to who actually owns the sales comp program industry to industry and company to company. There are many variables to understand in terms of in-house expertise, resourcing, budgetary allowance, size or maturity of the company and technology.

CONCLUSIONS/TAKE-AWAYS

From OpenSymmetry’s experience and confirmation through this survey, SPM technology and resourcing is often overlooked and a difficult space to manage at companies of all sizes.

To summarize some of the key findings:

• Although companies with smaller payee counts only reported slight improvement in proficiencies (when deploying an SPM system), larger companies with smaller payee counts did not report achieving reductions in headcounts or improved proficiencies when deploying a SPM system. However, larger companies did report efficiencies from SPM/ICM automation investment in both headcount reduction and program proficiencies.
• Companies realizing efficiencies see administrators being more proactive and analytical vs. just running day to day and processing payments. Increases with insightful reporting helps decrease time to payment as errors are identified earlier than prior.
• The most important priorities based on survey responses are: Payment Accuracy; Data Integrity and Trust; Creditability with Salesforce and Management. Each of these priorities are a culmination of a successful program and are in alignment with ensuring end user experience is of critical importance.
• There was confirmation that there is no “correct” or ideal ratio of FTE administrators to the number of payees or best internal department to own the sales compensation program. In both instances, however, the sales support level should be monitored closely to ensure no drop in level of support.

Many companies need to take a step back and evaluate their potential program optimization to gain a good understanding of areas of opportunity or challenges. In fact, the same companies want to do this but don’t typically know where or how to start. Sales compensation planning and administration is a unique and complex part of any sales organization. You need the expertise, resources, processes and systems in place to improve shortfalls/gaps.