The Influence Insiders BlogTalkRadio show will be the first Wednesday of every month, 12:00-1:00 pm eastern time.  Our first show will be this coming Wednesday, so don’t miss it!

We’ve set up our station at: http://www.blogtalkradio.com/i2i

The call in number will be the same for every episode: (646) 381-4430

Influence Insiders is a core group of experts, bloggers, thought leaders and smart folks who will be getting together monthly to talk about the things that challenge them and their clients associated with engaging audiences. The line up is impressive and should provide all of us with some interesting points of view.

The Team

Ann Bares (Minneapolis): Managing Partner – Altura Consulting Group, author of the blog Compensation Force (a Workforce.com featured blog) and editor/contributor for multi-author blog Compensation Café and one of the Top 25 Talent Blogs as ranked by Fistful of Talent (FOT) – a popular talent management and HR focused blog. Ann has been a compensation consultant with RSM McGladrey, Inc., Riley, Dettmann & Kelsey LLC, and Watson Wyatt Worldwide.

Frank Roche (Philadelphia): Partner iFractal – sponsor and contributor to very popular KnowHR blog. Frank and his team focus on helping their clients talk to their employees. In the past Frank led Mercer’s Human Capital Practice in the Netherlands and worked at Hewitt Associates.

Heather Margolis (Boston): President Channel Maven Consulting – Prior to her current role Heather led channel programs for companies like EMC, EqualLogic, and Dell.

Lance Haun (Portland, Or): Lance has a long history in the HR field and authors the highly rated and read blog YourHRGuy – now called Rehaul. He currently is VP Outreach for a company called Meritbuilder – an online employee reward/recognition portal with a unique feature of being portable – moving with the employee as they move.

Todd Hanson (Appleton, WI): CEO of Catalyst Performance Group. Todd’s group is heavily into measuring the ROI of marketing and incentive/reward programs. They are currently measuring the ROI on the recent Motivation Show, works in partnership with the ROI Institute and he authors the blog called the ROI of Engagement.

Paul Hebert (Greenville, SC): Managing Director I2I – author of Incentive Intelligence, contributor at Fistful Of Talent and general good guy. 20 years helping companies design and operate incentive, recognition and loyalty programs – degree in Statistics, worked on the Space Shuttle and B1 Bomber while employed at Rockwell and did a stint at a branding and corporate identity firm.

And myself…

Disclaimer: Content plagiarized borrowed from Paul Hebert and Heather Margolis‘ blogs.

The story goes like this: Eircom, the principal provider of fixed-line telecommunications services in Ireland, is not having the greatest year. When they realized that things were not going as well as they should, they decided to take some drastic measures.

First, they decided not to pay bonus commissions to sales staff for the first three months of 2009. They also decided to cut costs by canceling bonuses due to some sales staff from 2008. As if things couldn’t get worse for Eircom’s sales force, they also decided to cancel performance-related bonuses for this year and for the coming two years!

http://www.irishtimes.com/newspaper/finance/2009/0425/1224245377673.html

Many companies have had to face cash flow problems over the last year and have reacted in one of two ways with respect to Sales Performance. Cut incentive programs like Eircom did, and as a result destroy the motivation of the entire staff, or embrace it and recognize the paying employees for their performance is the best way to become more competitive.

What do you think?

What has changed is the degree of centralization associated with both the design and administration of the program. In this year’s survey 58% of the respondents indicated that they use a centralized process for designing the compensation program. Another 20% indicated that the process is led by corporate with varying levels of decision making by individual business units or local geographies. Both of these numbers represent significant increases from years past. Some of the increase may be a reflection of sampling bias, but I have definitely seen a trend towards more centralization. Increased consistency of roles, greater emphasis on cross-selling and improved efficiency are all cited as reasons for the move. The same trend can be seen in the area of program administration. 33% of this year’s respondents indicated that their programs are administered globally. Another 15% have some form of global oversight. Both numbers are up substantially from years past. Certainly increased consistency of the plans allows for more centralization (i.e., fewer local exceptions). There is also no question that cost and efficiency play major roles in this shift, as well as the availability of technology solutions that make increased centralization possible.

So, what are the takeaways? From a program ownership standpoint the data suggests that it comes down to a combination of industry and each company’s unique circumstances. Legacy ownership, compensation philosophy, relevant skill sets and resource capacity all play a role. I will say that my bias is that the sales compensation program is a tool for sales executives. Sales leaders should be in the best position to understand what motivates their sales representatives and links them to the company’s sales priorities. All things being equal I prefer to see decisions about the program structure (e.g., measures, weights, mechanics) made by sales leadership.

In terms of the plan design process and program administration there is an undeniable trend towards increased consistency and centralization. We started to see this trend even before the current economic situation and anecdotally (we’ll see more formally after next year’s survey) there is nothing to suggest it is slowing down. It might make perfect sense to manage everything locally. But it might also be time to revisit your current approaches and make some changes.

Mike Meisenheimer is a Sales Performance Management and Technology Executive. He can be contacted at mike.meisenheimer@opensymmetry.com

One of the study book I am using had the question from yesterday’s poll.  When I read it, I was thinking exactly what Paul pointed out in his comment; it doesn’t seem like there’s a best answer here.  On one hand I want to reward everyone on the team for their work, but at the same time I want to reward individuals for their performance.

In the sales world, this situation is usually resolved with a ’split’, where everyone involved in a sale gets a certain percentage of the total commission…  and this is either a rule that is predetermined, or that can be decided on a per transaction basis by the employees involved or by the manager.  But when individual contribution is not as easily measurable, allocating commission to individual team members for their contribution can become really tricky!

As of today, 6 people voted ‘Give money to each member in proportion to their share of the work’ our of 8.  It’s still a small sample to make any statistical inference, but I have a feeling that most people might pick that first answer choice.  That’s the one I picked.

The official guide book answer was: “Reward everyone the same”.  Fair enough, when learning these frameworks, not all answers and author perspectives always make sense…  I’ll just have to remember which answer they are looking for, for the exam next week.

I went to the event, not because I expected them to ‘teach’ me to become rich and more successful; I went because I wanted to see them in person, and Trump in particular. So here are some of my first impressions. Donald tries to pretend he’s a jerk on TV, but he actually seems to be a nice and funny guy (I’d like to say that I won’t tell your secret Mr. Trump, but too late!). This was my second time seeing Terry and he was as energetic and enthusiastic as before. Finally I was a bit surprised that Brett seems to be as ‘nice’ as people say he is!

The message from Terry Matthews and Donald was similar. Success requires persistence, the ability to handle pressure, some luck, more sweat, some risk taking, etc. That’s what I expected to hear.

However, Brett took me by surprise by sharing his touching story, and many things he said really resonated with me. His early success came from the investment banking advisory firm he co-founded, Wilson Mackie & Co. He then co-founded FirstEnergy Capital Corp, a Canadian brokerage firm that provides investment-banking services to Canada’s oil and gas sectors. He is now involved with many startup companies, the CBC Dragons’ Den TV series, writing a book, but he is especially involved with a large number of nonprofit initiatives.

Success comes from hard work, and the problem is that there are only so many hours in a day. To achieve his tremendous success, Brett often put work before many other things – a mistake he only realized later in life. Work came before spending time with his family, resulting in a divorce. He neglected his kids. He suffered from depression, developed a an alcohol dependency, and gained a lot of weight. He also blames stress for contributing to his prostate cancer which he survived and which was a big wake up call.

Now that his life is in order after seeking professional help and realigning his priorities - spending more time with his kids and girlfriend, losing the weight, and living a healthier life style - Brett is in a good position to say that it’s important to get the priorities straight: focusing on physical and mental health and to be there for family and friends. This is a key to success, and it’s by being successful that it is possible to have the greatest impact in the community and in the world.

I finally found a new role model.

Last week, a source from the Fed said the agency would propose guidelines aimed at curbing the “culture of excessive risk-taking” at the nations over 5,000 federally-insured banks. Such rules apparently apply to any employee, such as lending officers, able to take risks that could impact the institution.

It’s hard to say how the Fed will guide incentive pay practices for sales-type functions. Something akin to the Transportation Security Administration (TSA) as the government’s response to 9/11 comes to mind. I think sales incentives are the box-cutter equivalent to the industry’s woes – sure they played a role, but the system’s failure came down to a broader, and not soon-to-be repeated, set of circumstances.

And just as focusing exclusively on reinforced cockpit doors may have provided a more cost-effective solution to keeping our skies safe from hijackers, requiring that banks disclose what products provide incentive pay is as deep as the government needs to go here.

For years, the SEC and NASD (now FINRA), have issued guidelines for the pay practices of registered financial advisors. While these agencies do not require full disclosure, some prudent brokerage firms publish details of their advisor pay plans in pamphlets made available for clients, not unlike the information in proxy disclosures regarding executive compensation. These agencies periodically audit the pay history of brokers, looking for incentive earning trends at the product level.

While the system has enabled brokerage firms to establish and manage competitive cash incentive plans, it’s cumbersome and potentially not feasible when applied to the entire commercial banking industry. There’s a difference, also, in the responsibilities between financial advisors and lending offers. Financial advisors offer a broad array of instruments to their clients who are concerned, generally, with managing their money. Loan officers represent a more specific product – loans – that must meet the bank’s credit standards, as must the prospective consumers of those loans. Most loan officers will tell you, getting loans approved through the bank’s underwriting is a much regulated process.

Of course stories abound of loan officers back in the salad days selling subprime residential mortgages, instruments widely heralded as the watershed for our current economic crises, that preyed on unsuspecting consumers and misrepresented the product. Critics will point to the incentive schemes that drove this behavior. But behind the motivated salespeople and relaxed lending standards was government policy that encouraged lending to subprime consumers. Apropos that the government now fixes its own mess, yet I hardly see how making salespeople indifferent to what or how much they sell is going to help.

So what’s management to do with yet another vague set of pending guidelines? A common response to the TARP regulations was to do nothing. Seldom is do-nothing a good approach, and in a highly scrutinized yet competitive industry, it’s a recipe for bad publicity, bad business, or both. Banks should not aim to create a risk-adverse sales culture. Salespeople thrive on risk, and the incentive plan is a key component. To stay off the Journal’s front page, banks should ensure they are able to disclose, when so requested and at a high level, the way in which they pay each salesperson, including the pay differential between average and top salespeople in each job role, and the products eligible for incentive pay. And banks should prepare to report, down to the individual salesperson level, the source and amount of each incentive pay dollar.

Sometimes the government is effective for getting us to do things we should be doing anyway, like wearing seatbelts (no disrespect to the independently-minded citizens of New Hampshire). Being able to explain how you pay your salespeople is good compensation practice, and good business. Yes, companies without the systems for doing so must spend a decent sum to enable this capability. But the cost pales in comparison to having unmotivated salespeople. Voluntary disclosure, not heavy-handed incentive design regulation, provides the most practical solution. Let’s avoid another TSA when reinforced cockpit doors will do the trick.

Scott Barton is a management consultant specializing in incentive design and management for the banking industry. Write to him at scottbarton22@gmail.com

OpenSymmetry has been offering strategy services for a while - mostly activities leading to an implementation.  Some of these services included evaluating the compensation system’s current state, helping out developing a business case, documenting requirements, writing RFPs, performing readiness assessments, evaluating proposals, etc.  A few months ago they also created a small ‘Business Transformation’ unit responsible for everything process related (process optimization, process reengineering, process reviews, change management, etc).  This seems like a reasonable offering considering that most compensation problems arise from process issues more than technology issues!  Coincidentally, my next challenge at OpenSymmetry is to lead and grow this new strategy business unit (anyone needs any help?).

What is really a departure from OpenSymmetry’s system integration focused model however, is the introduction of Sales Compensation Design Services. OpenSymmetry is no longer only focused on system integration and related strategic services - it now offers services for the entire SPM spectrum from plan design to system delivery to support and managed services. Some of the new compensation design services include:

• Business priority clarification and compensation philosophy
• Sales role definition
• Program eligibility
• Compensation levels and base salary/incentive mix
• Performance measures, weights and mechanics
• Crediting and support programs
• Modeling and costing
• Plan documentation and communication

As we are quickly approaching this time of the year where major changes are required for the 2010 compensation plans, OpenSymmetry is organizing a free webinar discussing current trends and findings from our research on compensation management practices, as well as sharing lessons learned and examples of how leading companies have been dealing with the current economic climate.  The webinar will be held on September 22, 2009 at 1:00 pm Central Daylight Time.  If you can’t make it, we will record the event and I will be pleased to provide the link to the recording.  I will also post the key recommendations on this blog.

What is Monaco?

Bingo!

But Monaco is also the name of Callidus’ latest on-demand offering. The only problem is that they haven’t done a very good job at advertising it – which is one of the reasons why I’m receiving many questions on this topic.

The press release about Monaco came out a few months ago but faded quickly. It describes Callidus Monaco as:

A robust, SaaS offering that delivers the most modern-looking and rich user interface experience available in the sales performance management marketplace today. The Callidus Monaco Suite is the only unified SPM software solution that provides complete alignment of the entire business with corporate objectives to optimize performance, streamline profitability and deliver a rapid ROI.

…Yet another “only unified SPM software solution”. That press release also mentions that the solution is a multi-tenant SPM offering which streamlines:
• Objective Management
• Quota Management
• Reporting and Analytics
• Compensation Calculation
• Embedded Workflow
• Plan Distribution

After reading this, I was wondering if Callidus Monaco was only a rebranding of the Callidus On-Demand SPM, a new solution that would be replacing it eventually, another offering that would be available in parallel, the same solution but ‘multi-tenant’…?

What I found out is that Monaco is a combination of many existing on-demand offerings, focused on SMBs. For example, the Objective Management and Quota Management features are offered through TrueMBO and TrueQuota which I reviewed here. TrueMBO and TrueQuota can be purchased as standalone applications, but they are also unified with the core ‘Monaco’ product which is similar to TrueComp with a Web 2.0 facelift and more basic templates available out of the box.

Callidus Monaco will be offered in parallel to Callidus SPM On-Demand.  Callidus On-Demand will be  limited to customers in specific industries such as Insurance.  All other customers wanting to use an On-Demand solution from Callidus will be offered Monaco.

One of the gentlemen in conversation is a small business owner with about 35 employees. He was quick to answer his own question – “of course, performance should come first, but my (employees) don’t get this.”

I bit my tongue and stayed out of the conversation. But this seemingly shallow exchange got me thinking that indeed, someone could dispute this notion depending on how they view base salary and variable pay.

In the case of base salary, pay comes before performance. Sure, the employee receives a paycheck only after having performed the work. But the level of base salary is contingent on the skill this employee brings to the table. So in this sense, pay comes first. Over time the employee demonstrates a level of proficiency that either confirms or questions management’s initial expectations. Come the focal review, management may decide to place another bet by giving a merit increase to the employee. But there’s no guarantee that the employee will perform in line with management’s now higher expectations.

With variable pay, performance comes first – whether it’s the company’s performance or the employee’s against a set of objectives. Management can provide an advance or draw, but if the employee does not cover the draw, the pay becomes surrogate for base salary.

If the employee expects, or feels entitled to, a bonus, this is a problem. Similarly, there’s a problem if the employee feels entitled to a merit increase, or even continuance of his/her current base-salary rate when failing to meet management’s initial expectations of proficiency. Neither side wins in this scenario. Management feels put off that the employee doesn’t appreciate his/her compensation and the employee is disengaged, bitter, and possibly starting to think about getting another job.

Maybe I should have intervened. Then perhaps the small business owner could answer his employees’ question, and also appease them, by saying, “yes, you are right – pay does come first in the form of your base salary.” He can then rather seamlessly and without guilt or conflict, revisit the performance expectations inherent in the variable pay program.

Contact Scott Barton at scottbarton22@gmail.com