Fortune 500 global security software corporation
The company’s payout process required simplification to remove complexity that had been resulting in costly mistakes and delays in the issuance of sales commissions
Genpact used its analytic expertise to design a streamlined process for determining how sales commissions were calculated and paid globally. The proposed changes included:
- Unified the incentive compensation platform implemented across regions
- Standardized incentive plans created that can be easily adapted to changing business and market conditions
- Saved 3,000 person-hours annually
- Yielded nearly US$500,000 in cash and controllership validation savings
- Generated US$1 million in impact through targeted optimization project
- Improved payout accuracy from 88% to 99%
Sales compensation formulas involve significant complexity and must provide a mix of consistency and adaptability to unique situations and conditions. This Fortune 500 provider of global security software was seeking a unified, systematic approach to automating the way the company financially motivated and paid its 4,500 sales reps worldwide.
Inconsistent use of the Oracle Incentive Compensation platform in different regions meant that comp plans lacked comparable elements and uniformity. There were also significant issues with payment accuracy and non-value-added (NVA) overhead. In addition, the company lacked timely visibility to analyze the sales team’s performance—such as goal attainment, territory performance, sales force productivity, and other strategic metrics—to make needed adjustments.
Over four years, Genpact helped the customer use Lean Six Sigma methodology to help on various comp-management issues and challenges that aided in the design of comp plans and budgets, payouts formulas, payroll reconciliation, and more.
The client had previously deployed the Oracle Incentive Compensation ERP tool to calculate commissions in EMEA and Asia-Pacific, but not in North America. A sub-optimal process meant payout accuracy was unacceptably low, creating potential employee morale/motivation challenges. Significant manual intervention was needed since multiple in-house data analysis tools were used to calculate commissions. Changes to comp plan designs were also difficult to execute quickly. With sales commissions exceeding $320 million in 2012, the client also sought better visibility in the form of strong analytics and simplified financial reports that could more quickly identify opportunities for improvement and strengthen business performance.
Our team analytics, process, and technology experts helped the client install, configure, and deploy its Oracle Incentive Compensation ERP solution for commission payouts as a single, unified, worldwide platform. Genpact also provided execution support from planning to implementation, and helped create standard operating procedures and user training in 2011.
Using the global implementation of the Oracle Incentive Compensation solution, the client now manages 1,800 separate sales commission plans for 4,500 global sales reps. From an automation perspective, the solution has saved 360 hours a year in NVA time and more than 2,700 hours of NVA time associated with matters such as revenue validation. That produced $140,000 in EBIT cash savings and controllership savings of $350,000.
Payout accuracy has increased, too, rising from 88% to 99%. This increase improved employee morale and motivation while preventing incorrect allocations of funds and tightening audit compliance. What’s more, those payouts are being completed in a best-in-class cycle time of 30 days in arrears.
The client also created a range of analytic reports across the company’s various regions, including a target optimization project that had a total business impact of $1.1 million. Analytic work included audit and stack reporting that improved process quality while ensuring regulatory/financial compliance.
A smarter, more agile sales comp planning process
Since business conditions can change frequently, most companies create sales comp plans designed to address a single fiscal year. Each year, the client undertakes a new planning process to readdress commission plans for the upcoming fiscal year. This leads to significant changes that are inherently disruptive to the underlying processes and systems that support sales comp and often requires revision of various aspects of company comp plans such as quotas, incentives, timings, and other dimensions.
Genpact’s assistance in implementing Oracle Incentive Compensation helped facilitate an agile sales comp planning process, enabling the company to quickly adjust its commission plans and stay aligned with the business strategy.