1. Using Technology to Manage and Optimize Incentive Compensation
Incent Perform Grow
Using Technology to
Manage and Optimize
Incentive Compensation

2. Using Technology to Manage and Optimize Incentive Compensation
Business leaders have long understood the importance of rewards and incentives – think of the carrot
and stick analogy – as the key to motivating people and driving their business goals.
Leaders also understand the importance of managing risk, proactively protecting their organizations
from downward turns that can affect their long-term performance or reputation.
Compensation management is essential for achieving alignment – the direct connection between
the overall corporate goals and individual rewards. It is the structure of compensation plans – the
framework of rewards and bonuses that incentivize staff to increase performance and reach company
goals.
In today’s complex business environment, companies increasingly struggle to manage their plans
across hundreds or thousands of product lines, customers, territories and employees. Consequently,
companies from all industries are using Incentive Compensation Management (ICM) technology to
manage and optimize their compensation plans.
The Business Environment and Incentive
Compensation
Within companies, we find a range of different business units typically having a role overseeing the
ICM program.
For instance, sales departments use compensation management to incent sales team performance.
Human resource departments manage the development and administration of bonus structures,
performance plans, individual goal-setting and management forecasting. Finance departments
are responsible for creating reports for financial analysis, maintaining audit trails for compliance
requirements.
While each of these departments has a role in managing ICM systems, finance departments, and
ultimately the CFOs, are expected to play increasing leadership roles managing ICM in the future.
These increasing responsibilities include designing, implementing and managing compensation plans.
Finance departments are increasing their involvement in the management of ICM because of their
ability to improve decision-making, ensuring the company strikes the balance between increasing
revenue and maintaining profitability. With an inherent sense of risk management, the CFO will bring a
balanced perspective on the costs and benefits to be gained from the compensation strategy.
Who Leads Incentive Compensation
Management (ICM)?

3. Using Technology to Manage and Optimize Incentive Compensation
Despite the emergence of advanced solutions for ICM, spreadsheets or homemade solutions
continue to be widely used in all industries. Surveys have found that most companies still use a
combination of spreadsheets, e-mail and manual processes to manage their compensation programs.
However, these solutions were never designed to handle the complexities of modern ICM programs
or deliver the flexibility that companies need to manage risk.
Spreadsheets have increased risk of errors. Studies have found that spreadsheets commonly have
errors that, despite review among different users, go undetected and uncorrected. In 2013, a
task force examining the losses incurred by Wall Street giant J.P. Morgan found that spreadsheets
using manual calculations that were “error-prone” and “not easily scalable” were responsible for
unmitigated risk and significant financial losses.
Spreadsheets also present other problems, including the “spreadsheet guru” problem, where only
a single team member owns the document, understands how it works and can make changes to it.
Similarly, in many companies, the only way for team members to do analysis is to submit queries to
the spreadsheet guru, wait for the guru to conduct the analysis and submit the results.
These approaches are time-consuming, inefficient and unlikely to achieve alignment with corporate
goals.
As a company continues growing, the organization will eventually reach the point when they must
decide whether to forego the spreadsheet approach and invest in a technological solution.
Many companies are either at the decision point, or approaching it rapidly, about whether to make
the investment. There are some sure signs that suggest when it is time to invest in a dependable and
advanced solution.
Use of Spreadsheets
When to Adopt the Technology
Calculating sales incentives and distributing payments has become a serious
administrative burden
The distribution network is large and a considerable number of stakeholders
receive and depend upon your analysis
Calculations have become very complex, reducing speed and accuracy

4. Using Technology to Manage and Optimize Incentive Compensation
Using Technology to Optimize Incentive
Compensation
Technological solutions have the potential to move a company’s compensation plan to the next level –
ensuring alignment, accuracy, transparency, scalability and speed.
ICM solutions offer some notable benefits, including:
These indicators can help finance executives assess whether it is time to consider an advanced ICM
solution to automate their compensation program.
Adopting a new technology will often produce some resistance to change among the staff. However,
ICM has so many benefits – increased visibility, ongoing tracking against goals, detailed statements,
access to reporting – that the change process will quickly yield a positive response from stakeholders.
Transparency of calculations and payouts has become an issue, fostering
problems of trust or motivation among sales staff. Sales staff who lose trust in
their compensation plans spend significant time “shadow accounting” rather
than focusing on sales strategies
There is an inability to align individual or team goals with overall corporate
objectives
Managers receive a significant number of inquiries from sales team, particularly
about a lack of transparency or disputes about the payment process
The company’s IT costs to manage the program have become burdensome
ENHANCED REPORTING
ICM enhances management’s role by providing up-to-date insightful reports
on sales activity, customer accounts and territory performance.

5. Using Technology to Manage and Optimize Incentive Compensation
IMPROVED ACCESS
Unlike spreadsheets, ICM solutions are widely accessible to all staff and can
provide information and reports to inform decision-making in a range of
business units.
INCREASED ACCURACY
Studies have found that most manual systems overpay up to 8 percent. For
most companies, an 8 percent difference in payouts is a significant impact on
its overall financial health.
ENHANCED TRANSPARENCY
Unlike spreadsheets, the compensation calculations are open to team
members who can see precisely how their payouts are calculated.
INCREASED SCALABILITY
As the company grows, the ICM solution expands to accommodate additional
product lines, team members, customers and territories.
HIGHER SPEED
ICM solutions are automated. Calculations are done automatically as data is
received and inputted.
Overall, ICM solutions are the best approach for aligning compensation incentives with overall
corporate goals.

6. Using Technology to Manage and Optimize Incentive Compensation
Building for the Future
As the business landscape continues becoming more complex with faster transactions, more product
offerings and a more competitive environment, the importance of driving incentives and managing risk
cannot be overstated. Companies must also seek efficiencies and leverage technology to increase their
ability to harness resources towards its goals. ICM is a key tool in these efforts, the benefits allow for
greater future potential for profitability and business success.
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Austin, TX 78731
877-ICONIXX
www.iconixx.com
About Iconixx
Iconixx is a total solution provider for compensation management. The Iconixx product
suite – Iconixx Sales, Iconixx Incentive and Iconixx Merit –makes the company a one-stop
resource for sales, bonus and salary compensation solutions. Our cost-effective,
Cloud-based solutions deliver incentives to the entire workforce for businesses of all sizes.
Drawing on over 15 years of experience, Iconixx also partners with clients to accelerate their
business growth through actionable intelligence. Whether it’s using Iconixx technology or
leveraging a client’s current investment, Iconixx’s expertise can drive efficiencies for their
compensation environment.