80% of companies aren't paying salespeople the right commissions
- WorldatWork says 80% of companies are paying salespeople inaccurate commission rates. The 2017 Sales Compensation Administration Best Practices survey by Xactly, a cloud-based solution firm, found that companies with complex compensation programs had higher turnover rates among salespeople, lower rates for meeting sales quotas and more errors in commission payouts.
- The study also showed that 18% of employers don't report commission results to salespeople, and that 47% are slow to process commission payments, sometimes taking four or more weeks.
- Other key study results showed that 38% of companies rated their reporting capabilities and analytics as insufficient or below average; companies with complex compensation.plans were 2.5 times more likely to have less than 80% accuracy; and 23% don't communicate sales commission and compensation plans until two months after the fiscal year begins.
Employers have good reason to improve their commission and compensation plans by reducing the number of errors and communicating those plans earlier. The Xactly study shows that efficiency and transparency are important to employees, apparently so much so that it affects retention.
Many companies are turning to new, cloud-based technologies to keep better track of their pay systems. HR tech now promises to streamline the day-to-day processes that have historically bogged HR managers down in procedure. The new tech is not only more accurate; it also provides HR a chance to focus more on long-term strategy and more broad compensation planning.
- WorldatWork Sales Commission Payouts: You're Doing It Wrong