Building Effective Compensation Plans Joseph E. (Joe) DeHaven, CLU, ChFC, FLMI Principal Solutions Architect Callidus Software

Presenter Joe DeHaven – At Callidus Eight Years Service Principal Solutions Architect Project Manager Principal Consultant Compensation Consultant Worldwide Clients Supported Insurance and Financial Services – 20+ Clients Computer Hardware and Software – 10+ Clients Telecommunications – 5+ Clients Other Verticals – 5+ Clients

Eight Years Service

Principal Solutions Architect

Project Manager

Principal Consultant

Compensation Consultant

Worldwide Clients Supported

Insurance and Financial Services – 20+ Clients

Computer Hardware and Software – 10+ Clients

Telecommunications – 5+ Clients

Other Verticals – 5+ Clients

Presenter Joe DeHaven – Before Callidus Field Sales Administration and Payroll Compensation Plan and Component Design Compensation Plan Pricing Plan Modeling (Macro and Micro) Plan Introductions to Sales Force ♦♦♦ Planning and Analysis Accounting Field Office - Business Management

Field Sales Administration and Payroll

Compensation Plan and Component Design

Compensation Plan Pricing

Plan Modeling (Macro and Micro)

Plan Introductions to Sales Force

♦♦♦

Planning and Analysis

Accounting

Field Office - Business Management

Agenda Design Considerations “ Get the Big Rocks First” Stephen R. Covey Consider Plan Changes Early Design and Implement Feeds Publish Reports Introduce Change to Sales Force Review TrueComp Rule Writing Techniques Processing Speed Overall Efficiency

Design Considerations

“ Get the Big Rocks First”

Stephen R. Covey

Consider Plan Changes Early

Design and Implement Feeds

Publish Reports

Introduce Change to Sales Force

Review TrueComp Rule Writing Techniques

Processing Speed

Overall Efficiency

Design Considerations Effective Design applies equally to: TrueComp Configuration and Compensation Plan Design. Get the “BIG ROCKS” First Concentrate on taking care of the important areas first.

Effective Design applies equally to:

TrueComp Configuration and

Compensation Plan Design.

Get the “BIG ROCKS” First

Concentrate on taking care of the important areas first.

Plan Design Considerations Effective Compensation Plans Simple Direct Readily Understood Aligned with Organizational Goals Create a “win-win” with plan changes Maintain Focus (few components)

Effective Compensation Plans

Simple

Direct

Readily Understood

Aligned with Organizational Goals

Create a “win-win” with plan changes

Maintain Focus (few components)

Plan Communications GET THE MESSAGE OUT EARLY! Make Upcoming Change a “Worst Kept Secret” Produce Reports with new KPMs before pay is impacted! Sales Reps will “own” a new component if they feel that they can influence it.

GET THE MESSAGE OUT EARLY!

Make Upcoming Change a “Worst Kept Secret”

Produce Reports with new KPMs before pay is impacted!

Sales Reps will “own” a new component if

they feel that they can influence it.

Plan Communications The “DOs” for Plan Change Communications DO COMMUNICATE Early DO COMMUNICATE Often DO Avoid Surprises DO Ensure Feedback

The “DOs” for Plan Change Communications

DO COMMUNICATE Early

DO COMMUNICATE Often

DO Avoid Surprises

DO Ensure Feedback

“ Future Proof ” Your TrueComp System Analyze Potential New Data Elements Include on transactions DO this early Have new data available for analysis After analysis and design Communicate new factors through new reports DO this BEFORE it impacts compensation

Analyze Potential New Data Elements

Include on transactions

DO this early

Have new data available for analysis

After analysis and design

Communicate new factors through new reports

DO this BEFORE it impacts compensation

Advanced Rule Writing Techniques ALLOCATE Phase Transactions  Credit  Measurements DO Use ECA for Direct Credits Fastest means of Credit Allocation DO Use Roll Structures for Indirect Credits

ALLOCATE Phase

Transactions  Credit  Measurements

DO Use ECA for Direct Credits

Fastest means of Credit Allocation

DO Use Roll Structures for Indirect Credits

Advanced Rule Writing Techniques ALLOCATE Phase Use Generic Attributes vs. Extended Attributes DO Use GAs for most used rule evaluations DO Use EAs for least used rule evaluations DO Use EAs for Reporting

ALLOCATE Phase

Use Generic Attributes vs. Extended Attributes

DO Use GAs for most used rule evaluations

DO Use EAs for least used rule evaluations

DO Use EAs for Reporting

Advanced Rule Writing Techniques ALLOCATE Phase Consider alternatives to OLP (2 nd Pass) Integration Pre-Process (Accumulator) Allows Regular Transaction processing Period-to-date Generic OLP Plug-In developed ( Requires configuration )

ALLOCATE Phase

Consider alternatives to OLP (2 nd Pass)

Integration Pre-Process (Accumulator)

Allows Regular Transaction processing

Period-to-date

Generic OLP Plug-In developed ( Requires configuration )

Advanced Rule Writing Techniques ALLOCATE Phase TrueComp 5.2 introduces GAs on ECA. Can process unlimited splits with a single transaction. More efficient than prior releases Easier for Integration Easier for Compensation Rule coding

ALLOCATE Phase

TrueComp 5.2 introduces GAs on ECA.

Can process unlimited splits with a single transaction.

More efficient than prior releases

Easier for Integration

Easier for Compensation Rule coding

Advanced Rule Writing Techniques ALLOCATE Phase Limit number of Primary Measures Where possible avoid “sub-total” Measurements. DO Use Credit GAs to allow grouping for reports. Ideal  Less than 10 Primary Measures per participant. Excessive  Look to reduce at 50 PMs per participant. DO Use Credit GNs for passing multiple values to Measurement rules.

ALLOCATE Phase

Limit number of Primary Measures

Where possible avoid “sub-total” Measurements.

DO Use Credit GAs to allow grouping for reports.

Ideal  Less than 10 Primary Measures per participant.

Excessive  Look to reduce at 50 PMs per participant.

DO Use Credit GNs for passing multiple values to Measurement rules.

Advanced Rule Writing Techniques REWARD Phase Secondary Measurements  Incentives  Deposits DO use GAs on Secondary Measure and Incentive Group multiple values on a single database object More efficient – logical groupings of values Avoid Commission Processing in Incentive Rules – (expensive). (Potential 2 nd or 3 rd pass) Consider use of Fixed Values with Credit Rules

REWARD Phase

Secondary Measurements  Incentives  Deposits

DO use GAs on Secondary Measure and Incentive

Group multiple values on a single database object

More efficient – logical groupings of values

Avoid Commission Processing in Incentive Rules – (expensive).

(Potential 2 nd or 3 rd pass)

Consider use of Fixed Values with Credit Rules

Advanced Rule Writing Techniques Rolling Credits vs. Rolling Measurements Balance between: cost of credit creation (volume) potential large “islands” from rolling measures A large island is created when a position at the top of an org chart receives roll-ups If you can avoid large islands, rolling measures generally is more efficient

Rolling Credits vs. Rolling Measurements

Balance between:

cost of credit creation (volume)

potential large “islands” from rolling measures

A large island is created when

a position at the top of an org chart receives roll-ups

If you can avoid large islands,

rolling measures generally is more efficient

Closing Thought “ The future belongs to those who prepare for it today.” Malcolm X

“ The future belongs to those who prepare for it today.”

Malcolm X

Building Effective Compensation Plans QUESTIONS?