Every Incentive Compensation Management project kick-off typically includes a version of this guidance from the project sponsor:
“We don’t want to keep doing what we’ve been doing. What we really want is to change our business processes so that we get the most out of the software we’ve selected.”
This sounds like the right approach, but what we’ve learned is that in many cases these changes to business processes are exceptionally difficult to implement after the project has already started. Often, the root of this challenge is in the multi-departmental nature of incentive compensation: What may be an easy change for Sales Ops to absorb could in turn be disruptive to Finance’s processes.
Without getting the lift from business process changes, an investment in new software can often underwhelm. This leads project owners to ask the question:
“How do I maximize both my impact and my probability of success?”
At Intangent, we have executed on many successful Incentive Compensation Management deployments that follow these two mantras:
“Failing to plan is planning to fail”
and
“Don’t try to boil the ocean”
When applied to Incentive Compensation Management projects, the above mantras can translate to: Let’s be realistic in what we can achieve given a certain budget and a certain timeline. And when it comes to the question of maximizing project success, the answer is to use experience and domain knowledge to optimize project scope, timelines and budget. This means developing a Future State that is achievable and selecting the right software to support that Future State.
Why Future State Drives Vendor Selection
During the early stages of an Incentive Compensation Management (ICM) project, it’s best to take an inventory of what we’re currently doing. This is broadly known as a Current State assessment. As part of the analysis of the Current State, business owners, technologists and consultants raise opportunities for improvement. These improvements, once analyzed, agreed-to and packaged into a business and technology architecture, result in a Future State.
The Future State always includes a healthy chunk of business process changes. While Change Management is a deep topic unto itself, we can summarize elements of it here. In short, we need to seek consensus when facing a process change. In many cases, these changes are intradepartmental and can be easy to introduce. In other cases, we are pursuing interdepartmental process changes which can be more political and may require leadership to negotiate an agreement. In any case, these changes are considerably easier to introduce if done early – well before the associated implementation project begins.
An interesting result from this effort is that the Future State business architecture will disproportionately emphasize process change. This is because process change is viewed as the solution to many Current State flaws and changes are communicated as part of the Change Management effort. The emphasis placed on new processes increases the value of outside experience and expertise with ICM software. Tapping into ICM experts ensures that the selected Incentive Compensation Management software will adequately and easily support these newly designed and agreed-to business processes.
Vendor Selection: The Bridge Between a Good Plan and a Great Project
Returning to our project sponsor’s desire to get the most out of their investment in ICM software, there are two potential outcomes from that point forward. Organizations that have planned carefully, selected software that meets their future needs and have a sensible implementation plan will enjoy the greatest benefits from their investment. On the other hand, organizations that skip these valuable steps will be left scrambling – hoping that their chosen software platform will meet management’s high bar for success.
Our Incentive Compensation Management Strategy Team Can Help
Want to learn more about how to plan for, buy and implement Incentive Compensation Management software? Contact us today to speak with our Incentive Compensation Management experts.