When it comes to the unsung heroes of your organization, this title can easily be bestowed upon your compensation administrators. Why? Because nobody on the outside of commissions can ever truly understand how complicated and complex this process can be.
Most people assume that it is a straightforward process – paying reps based on the sales that they bring in – but that naïve mindset is quickly debunked when you truly understand the chaos behind your compensation administrator’s processing checklist.
Understanding Commission Complexities
1. Varying Compensation Structures
Commission plans are rarely one-size-fits-all. Even within a single company, the organization may tailor incentive pay based on different roles, territories, product lines, or seniority levels.
Within a single organization, you might find:
- Flat-rate commissions
- Tiered commissions
- Quota-based accelerators
- Bonuses for specific milestones
- Draws against commission (recoverable or not)
- Hierarchy rollups
- Split commissions
This is all something that the compensation administrator is responsible for keeping track of and each variation adds layers of logic that lead to complicated formulas and extended processing times.
2. Fragmented Data
Your organization’s data lives in multiple places and when it comes to processing incentives, your calculations may depend on a variety of factors and data points.
Specifically, comp admins generally draw upon data from CRM systems to track the deals themselves, financial applications that manage invoices and track payments, and HCM platforms for tracking employee seniority and payroll data, with various spreadsheets filling in any remaining gaps.
At the minimum, your compensation administrator gathers data from three different sources – data that will need to be cleaned and consolidated before it can even begin to be processed. This step in the commission processing checklist is most often the most time-consuming, draining, and error-prone.
3. Timing of Commission Payments
When is a deal actually “done”? It depends. Every organization is different. Some build their compensation plans around the signing of the contract, while others choose to wait for invoicing and payment collection. The timing of when an organization chooses to acknowledge the completion of a transaction plays a key role for when those payments will be processed and distributed to your employees.
The logistics of tracking when payments need to be included in your commission cycle can be a headache in itself, especially when you likely have sales reps who are keeping a close eye on the deals that they are closing.
As an added complicating factor, many organizations have a clawback policy, which means that if a customer ends up canceling after a sales rep has already been paid, the sales rep in question must refund either part of or the entire commission that they received.
4. Confirming Payment Accuracy
Mistakes – even small ones – can erode trust quickly. With not just your reps, but your leadership teams as well. Accurate commission calculations are the single most important component of managing incentive pay, and auditing your data for accuracy can be overwhelming.
Usually at the review stage, most comp admins have already dedicated a good chunk of their time – we have seen plans that take up to a week to process – and they are starting to run on fumes. Repetitive tasks like auditing data cause fatigue, so going back through data, when you have already reviewed it for days at a time, can often cause administrators to miss discrepancies.
5. Reporting on Your Commission Data
For any admin still relying on Excel to manage sales compensation, our sympathies are with you. Sales and commission reports are utilized throughout your organization and creating them manually through Excel can be tremendously tedious. The data outlining how much revenue was generated, how many new clients were signed, and your top-performing products, informs strategy development at varying levels of your organization, so you need reports to be accurate, polished, and ready to go at a moment’s notice. Without the proper tools, this is extremely difficult to do, making every request for a sales report a highly involved task.
6. Providing Transparency to Sales Reps
Commission payments are personal, and your reps will watch with anticipation for the deal they close to hit their paycheck. For an employee whose wage structure is completely dependent on their performance, sales reps tend to keep a much closer look at their pay than your other employees, meaning you need an efficient way for your reps to stay up-to-date on their sales earnings.
By providing manual wage earnings to your reps, you are taking time away from your reps and your comp admins, which can easily become frustrating for both parties. Your compensation administrator will scramble to provide the data the rep is requesting, while your rep is left waiting for an answer that should be easy to find.
How to Solve Complex Commissions with Core
The answer to solving complex commissions? Automation.
Many of the variables that make commission management so complex in the first place, can be simplified easily through automation and below we are going to walk through how Core tackles each complicating factor.
1. Implementing Rules to Track Varying Compensation Structures
Core’s rules engine is designed specifically for managing complex compensation structures. Your compensation plans are built into the system as rules, which trigger calculations automatically based on your pre-defined logic. If you have tiers or accelerators that need to be accounted for in your cycle, the system will apply those automatically once your rep reaches your defined quota targets.
2. Consolidating Disparate Data
Core can integrate with any upstream or downstream data source. This means whether you gather your data from three different systems or twenty, you can easily connect these sources to Core and sync your data automatically to pre-populate fields without having to do any manual work.
Additionally, Core’s platform supports conversions and uploads from various file formats, including Excel, PDF, txt, etc.
3. Trigger Commissions Based on Received Payments
As mentioned above, Core integrates seamlessly with your ERP and financial applications. So, whether your company pays on receipt of payment or at the close of a sale, all of that data can be easily extracted and synced with Core to process payments based on your defined schedule.
4. Ensuring Payment Accuracy with Automated Auditing
In Core, auditing falls into three main categories: Rule Auditing, Data Auditing, and Output Auditing. First, Core’s rule auditing features allow you to see exactly what data sources are included in the calculation and the order in which the logic is being processed. You can even run a sample calculation to ensure that your rule is processing data the way you want.
Next, you can validate your data as it’s imported or synced with the system. Core’s data auditing tools alert you to any potential discrepancies in your data such as if key data sets are missing, duplicate entries are being registered, or if any imported sales data is exceeding normal ranges.
Lastly, you can audit the final outputs for your payments through a single-view to trace the exact calculations involved for that result, without having to navigate through multiple screens to reconcile.
Together, these features provide safeguards for every step of your commission management processes, eliminating common errors and saving you valuable time with the click of a button.
5. Reports for Admins, Reps, and Leadership
Core’s platform has a variety of reporting tools available, including a complete library of off-the-shelf reports, customizable dashboards, and on-the-fly analytics.
In addition to the library of pre-built reports available, Core’s report module allows users to create completely customized reports based on their company’s specifications. Once generated, reports can be easily distributed in bulk via email to individual reps or leadership groups.
Aside from reports, admins can create custom dashboards that allow them to track their most important performance metrics in a single screen. Dashboards can also be created for your sales team, so they have an all-encompassing view of their customers, sales, and payment details.
Finally, for more on-the-fly reporting options, Core’s analytics module provides users quick and easy tools to create interactive charts through drag-and-drop functionality. Users can choose whatever graphical format they need and update their analytics in real-time by filtering data to drill down into the details behind each metric.
All of the reporting options in Core can be made accessible to your sales reps or leadership teams through customizable user-permissions.
6. Online Sales Portal
There really is no reason for your sales reps to have to email your compensation administrators at all. Your employees can use Core’s online portal to track their sales, see pay details, review pending transactions, and even submit disputes if they have any questions about their pay. This all-in-one portal gives your employees complete transparency, while streamlining all commission-related communications to a single source of truth.
Complex Commissions Can Be Simplified
An organization doesn’t need to be necessarily large to have complex commission processes. In fact, we regularly see mid-sized companies struggle to manage their incentive pay because of convoluted and layered compensation plans.
There are many variables that go into processing incentive pay that when added together make commission management not just complex, but a beast to be tamed.
Schedule a demo with Core to see how our comprehensive suite of commission automation tools does just that.