How to improve the accuracy of your sales incentive payouts?

While selecting a software vendor for Incentive Compensation Management, the first thing that you should be looking at is the ability of the vendor to deliver software with the right quality architecture. Clarity of the problem definition and confidence in the solution does not count for much unless the project implementation and ongoing operations guarantees high quality, error-free deliverables. For any incentive compensation management project, a structured quality process is of primary importance. Typically, the operations team in such projects understands the importance of this aspect but is unable to deliver due to various reasons such as inflexibility of existing systems, time taken to implement changes, lack of parameterization etc.

All the above reasons result in delayed payments and increased queries from the field. However, the operations team does not usually have access to good output data for dispute resolution. Sophisticated software can help automate periodic processing requirements to alleviate these issues.

However, a few important questions need to be answered early on before selecting the software vendor for managing incentive compensation: - Does the software vendor understand the industry, type of incentive plans and data associated with the business area? - Do they have a good understanding of how outputs can be used by downstream systems and what kind of actionable insights can be derived? - Does the core team have the right mix of technology and IC operations expertise? - Do they have the right attitude and approach towards implementing quality control processes?

How does one think about the quality and the processes that should be developed to ensure error-free deliverables? What thought processes must we use to ensure our processes can prevent errors upfront, and if some errors still get through, what processes can we build to capture them?

QA vs QC

Quality Assurance (QA) and Quality Control (QC) are equally important for the success of any Incentive Compensation project, and it’s desirable to understand upfront how that has been incorporated into the overall architecture of the software. This is imperative for incentive compensation management because of the financial implications and its impact on salesforce engagement. A disengaged salesforce can have a much broader impact on top-line revenue and the company may face the risk of losing high performing reps to competitors.

Quality Assurance focuses on asking the right question. This needs to be thought through during the design of the software. QA ensures that system architecture incorporates the right validation elements and facilitates the process of generating error-free deliverables.

Quality Control focuses on getting the right answer. This is important during the execution of the process. In this approach, checks are performed in a phased manner at intermediate steps to ensure that the final output is correct. Quality control plays a critical role in ensuring confidence in the final deliverable.

Incentive Compensation software should be designed such that it simplifies the data cleansing process and provides summaries which can help gain confidence in the quality of the output at different steps.

Aurochs IC Manager is a simple, self-managed sales compensation software for the pharmaceuticals & Life Sciences industry with an integrated quality framework which incorporates both QA and QC elements.

IC Manager has in-built capability to create rich visual data summaries which help analysts to track key business metrics and serves as an early warning system for external market events and localized behavior changes. It also allows analysts to view kickouts of in-built validations for each of the inputs and outputs to avoid multiple reruns and payment delays.

Aurochs follows a 4 level quality framework -

Data Validations -

Check for discrepancies within the input file such as nulls, and duplicates based on pre-defined key combinations - Record Counts - Format and structure

Constraint Checks -

Field length checks - Range checks for data values - Comparison with valid value lists - Month-over-month variations using configurable thresholds

Referential Integrity checks -

Data integrity against key dimensions master list - Cross-input integrity checks using master files (pre-defined in the software) - Integrity of output against master input files - Business Insights - Configurable thresholds to identify outliers - Visual dashboards highlighting performance distribution, data trends - Descriptive statistics - Top and bottom performers - Plan effectiveness metrics

Aurochs IC Manager is designed to identify data and processing issues upfront and helps the customer in engaging the salesforce more effectively. This also helps the customer in reducing shadow accounting costs, and dispute resolution time and frees up compensation analyst time to support more value-added activities. Aurochs has been architected with a quality framework as the heart of our product offering. We are committed to creating error-free deliverables by continually improving our validations list.

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