The Changing Landscape for Incentive Compensation
Incentive compensation management (ICM) systems have traditionally focused on the needs of sales divisions, but these groups are typically distinct from other departments within the organization and are usually compensated based primarily on new sales transactions. For sales, a significant portion of overall compensation is often variable throughout the year. Conversely, for most other employees, incentive compensation is less common, compensation reviews are annual and intra-year adjustments to compensation are rare.
However, many organizations have recognized the value of subscription-based or other recurring revenue, and this gives rise to other sources of revenue beyond traditional new sales. Organizations are broadening the types of revenue to which compensation is linked and are looking beyond the narrow channels of “new business.” As a result, the transactions being compensated are now more diverse and can include retained customers, upsell, cross-sell and expansion into existing accounts, revenue events from additional and indirect sales channels through partners and resellers, and events being generated in new, digital e-commerce channels.