Building Effective Compensation Plans

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presented at TrueConnection: Sales Performance Management Conference 2007 by Joe DeHaven, Solutions Architect at Callidus Software Inc.

presented at TrueConnection: Sales Performance Management Conference 2007 by Joe DeHaven, Solutions Architect at Callidus Software Inc.

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  • 1. Building Effective Compensation Plans Joseph E. (Joe) DeHaven, CLU, ChFC, FLMI Principal Solutions Architect Callidus Software
  • 2. 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
  • 3. 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
  • 4. 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
  • 5. 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.
  • 6. 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)
  • 7. 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.
  • 8. Plan Communications
    • The “DOs” for Plan Change Communications
    • DO COMMUNICATE Early
    • DO COMMUNICATE Often
    • DO Avoid Surprises
    • DO Ensure Feedback
  • 9. “ 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
  • 10. 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
  • 11. 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
  • 12. 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 )
  • 13. 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
  • 14. 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.
  • 15. 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
  • 16. 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
  • 17. Closing Thought
    • “ The future belongs to those who prepare for it today.”
    • Malcolm X
  • 18. Building Effective Compensation Plans QUESTIONS?