Functionality - More Effective and Efficient Management by Objectives (MBOs), Key Sales Objectives (KSOs), Annual Bonuses and Other Incentive Compensation Plans
The Next Step
Just as Varicent SPM can automate the development and administration of sales commissions, reporting and associated analytics, it can easily do the same for MBO, KSO and other incentive compensation programs.
MBOs and the like are generally viewed as agreed upon goals for managers and employees. These goals are aligned with corporate strategies and are designed for maximum organizational performance. The right metrics and objectives can also drive individual employee behavior and productivity.
Avoiding Administrative Headaches
According to Fortune Magazine, “Less than 10 percent of strategies effectively formulated are effectively executed.” Why? There are many reasons, but one of the recurring themes of this lack of execution is that organizations do not effectively link their reward systems to their business strategy. It’s no wonder that linking pay to performance continues to grow in popularity and impact more workers.
Additionally, companies’ reliance on spreadsheets and manual processes to develop, monitor, track and pay out on MBOs and KSOs make it difficult to bring business flexibility to these bonus programs. Relying on spreadsheets for tracking and managing MBO, KSO and other programs are highly manual and error-prone and often lead to overpayments. This approach also lends itself to relying on easy to obtain metrics, rather than the metrics that actually relate and align with specific corporate goals.
As business strategies change through the year, the accompanying “reward” plans – MBO, KSO, etc. -- should as well. Companies struggle with updating and cascading these changes through their organization to keep incentive metrics and payments in line with updated objectives.
Where Varicent Can Help
Varicent SPM is a complete sales performance management offering. With its unique combination of incentive compensation management (ICM), territory alignment, quota setting and performance analytics, Varicent SPM enables better alignment of MBOs, KSOs and other incentive programs throughout the enterprise. Varicent SPM’s centralized administration, workflow, dynamic calculations, data entry capabilities and other functions embedded in the software facilitate the processes, lower the costs and make MBO and other incentive pay programs more effective and easier to manage.
Additionally, with Varicent SPM’s Web-based personalized dashboards and reports, employees, managers and executives can set specific objectives and monitor real-time results. This works for both qualitative, as well as quantitative performance metrics.
How It Works
Varicent SPM facilitates the development of MBOs and KSOs with data entry, workflow, approval tracking and analysis capabilities. MBOs and KSOs can be assigned to individuals, departments, regions and other groups. Once the MBOs are assigned and in the system, Varicent SPM delivers a number of canned and ad-hoc reports on the bonus plan components. This reporting – and its corresponding analysis – can be ‘sliced and diced’ by an unlimited number of factors – employees, lines of business, products, customers, and more.
Benefits
- Better alignment of organizational objectives with individual performance and pay
- Manages MBO, KSO and other bonus plans processes, inputs, calculations, approvals and payments enterprise-wide, across hundreds, and even thousands of payees
- Provides customized dashboarding at any level to track actual and planned results for objectives and targets
- Integrates MBOs and KSOs with other incentive compensation components (such as sales commissions, SPIFFs, other bonuses) for a single source of variable pay information. All of which comes with audit logs, alerts and exception reporting, ensuring accuracy and governance over all incentive compensation programs
- Eliminates reliance on spreadsheets and home grown systems to manage MBOs and other incentive compensation plans, delivering more accurate and timely bonus payments with less administrative costs and effort
