It wasn’t that long ago that most companies had a payroll clerk and managed payroll functions in-house. However, as technology models evolved to offer a more effective, lower-cost outsource model, businesses quickly recognized the benefits, and today it is unusual to see companies of any size managing this function in-house. It is clearly more cost effective to outsource payroll obligations to companies that are better equipped to handle the specialized knowledge and level of complexity involved.
The same trend is now happening with firms that pay sales people and employees commissions and bonuses. Organizations are realizing that while spreadsheets may be free, when labor is factored in the actual costs for managing and tracking commission rules, changes, calculations, and reports internally is much higher than thought. Consequently, they are switching tactics and outsourcing their commission management to organizations that are set up to handle complex calculations with tailor-made commission management solutions and a high degree of automation.
Organizations are realizing that while spreadsheets may be free, when labor is factored in the actual costs for managing and tracking commission rules, changes, calculations, and reports internally is much higher than thought.
“David”, the owner of a health insurance company, is learning this lesson the hard way. His current commission administrator put in her two-week notice, and now David is under pressure to find and train a replacement to take control of the company’s commission calculations done in dozens of spreadsheets that no one other than the current administrator understands.
David now has two choices. The first option would be to direct his time, money, and resources into advertising, interviewing, hiring, and training a new commissions administrator. This would be a risky choice. A LinkedIn Global Recruiting Trends Report from 2017 states that only 30% of companies are able to fill a job requisition in less than a month. Once employed, it takes weeks, if not months to bring a new hire up to date on the company’s processes and order of operations with no assurance that they will stick around long enough to make the process worth the time. He is also up against a commission payment deadline and is not sure how he can cover that task and interview new candidates at the same time.
David’s second option would be to skip the process of hiring someone new and instead outsource the work to a reliable professional organization that has the commission management tools to easily administer plan changes, update reports, audit results and provide web access to pay statement and performance metrics to his sales people.
A reputable commission management company would offer David:
- The latest commission tracking software to fully automate his organization’s commission calculations.
- Relief to not worry about training and maintaining employees who are unfamiliar with the complexity of the organization’s needs.
- The support of a team of professionals who are experts in the application and know how to best use the available tools and features to implement changes or troubleshoot issues.
- The ability to support sales with an online library of professionally developed commission payout reports, performance metrics, and dashboards to understand how they were paid, what commissions are pending, how they are doing against targets, and areas to focus on to maximize payouts.
- Easily accessible history of all sales and commission activity.
When David factored in the fully loaded cost of labor for a skilled commission administrator he found that he would actually spend less with an outsourced solution and get a far better product including: professional reports, web access for sales, experienced administrators, secured historical records. At the same time, he eliminated the risk of another admin leaving the company in a bind.
Core Commissions offers four unique packages of commission tracking software that are flexible enough to fit the needs of any organization including a managed services option. Any level of complex rules are supported including tiered rates, splits, overrides, bonuses, and chargebacks.
David’s next step is to evaluate his organization and decide which features (Incentive Building Tools, Audit and Analysis, Reporting and Output, Advanced Features, Support, and Setup Options) his company could take advantage of. Schedule a demo to learn about how your organization can benefit from outsourcing commission management.