Sales Compensation Blog

Here at Salary.com we are counting down the days - the hours, actually - until the end of the year, and I'm sure you are doing the same.  So naturally, I'm thinking about end of period closing issues.

Some administrators will leave a period open until they need to start calculations for the next period. This can be a dangerous practice. You could possibly change the data, and the amount you sent to payroll may not agree with what your system is showing.

I am a firm believer that you must lock down your system when you send the feed to payroll. That is the only way you can guarantee that the numbers you sent to payroll and all the details that support that earnings calculations will be the same.  If you ever have to discuss in a court of law how you calculated someone's commission, you need to be able to provide undisputable proof as to how the commission was calculated. This can only be done if you have closed the period before sending it to payroll and  archived your supporting data and reports.

The Motivator Team wishes you a wonderful holiday season and all the best in 2010!

It is the last day of the quarter/month for many sales people today. This starts the beginning of a painful administrative process for your payroll and sales operations. Below is a "story of the ‘deal spreadsheet.'"

1. This infamous "deal spreadsheet" is sent from sales or operations over to accounting where commission is calculated on each deal and inserted into another column in the spreadsheet- this can take up to 2 days.
2. The spreadsheet is then sent to sales managers for approval and discussion. 1-2 days
3. After their changes are put into the spreadsheet, it is broken into individual spreadsheets for each rep and emailed out with the appropriate deals, calculated commissions and expected total commission payment. 1 day
4. Sales people evaluate their spreadsheet, compare it with their own shadow accounting and the back and forth begins- this takes another day. 1 day
5. At this point, if there is a discrepancy, (and this happens about 90% of the time, according to this white paper) it requires emails or discussions between sales people and managers or sales people and admins. 1-4 days

So, up to two weeks after the end of the month/quarter sales people are still unsure of their commission amounts from last month/quarter, that is no way to build trust or motivate. Using spreadsheets is probably one of the most inefficient ways to build trust within your organization and it doesn't drive growth. Sales people don't feel like they can trust their comp spreadsheet, so they pick it apart every quarter and waste precious selling hours doing an administrative task that just takes from the bottom line.

What are you experiencing? What takes the most time in your process? What have you done to make it better?