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Compensation Management Scenarios

Businesses strive to create a performance oriented culture wherein employees are highly productive and are aptly rewarded for the same. However, the compensation process is froth with problems and is laborious, costing businesses high operational and administrative costs.

Automating the compensation process is one significant factor towards resolving the complexities of the compensation process.

Below are two scenarios wherein two of the problems are identified and the process of resolving them and changing them into an advantage is described.

1. Transforming the bane of a manual based compensation system to the benefits of a automated compensation system

Organization Profile

A leading insurance firm, that offers insurance and investment products for the US market. The firm has recruited and trained about 30,000 insurance agents to interface with customers and sell their products. The firm has done so, with an aggressive business plan & strategy in place, to achieve a significant growth over the previous year.

The Challenge

The firm however, has a manual & outdated process to calculate its commission and incentive payout for its agents, which is resulting in high operations and administrative costs and also costly errors in terms of wrong payments made. The inefficiency has also resulted in deep employee dis-satisfaction and consequently, high attrition. If this wasn't enough, the firm constantly spends its precious resources on resolving disputes arising of the discrepancies.

The Strategy

The strategy is to replace the manual process of commission entry and processing with an automated system, so as to calculate commission and bonuses more accurately and efficiently. The system would also enable greater flexibility in terms of applying varying compensation pay structures across the agent spectrum, which isn't possible currently.

The Solution & its Benefits

An automated commission compensation system is created & implemented. The benefits that the system brings are (brought were):

Accurate & quick calculation of commission payments
Flexibility to create different compensation structures for different products, with easy creation and maintenance of the same.
Reduction in operations and administrative costs
Elimination of payment errors
Automated electronic production and distribution of commission statements

Now, with the aid of the above benefits, the firm has not only been able to cut costs and achieve employee satisfaction at the same time, but has also achieved the target it had laid out for itself.

The above are only a few of the many possibilities & benefits, of automating the compensation process.

2. Overcoming the inefficiencies associated with the process of gathering employee details from various sources, with a compensation data warehouse.

Customer Profile:

A leading financial services firm wanted to upgrade its compensation system. The organization wanted to streamline and automate its compensation structure, to create a performance oriented culture to optimize employee performance & thereby business success.

The Challenge:

The organization however, had multiple databases of employee information from which relevant information had to be drawn for the purpose of compensation & benefits administration. The staff constantly found themselves, missing out on key employee data, spending enormous amount of time on gathering and verifying information and at times rewarding the wrong employee.

The challenge was to create a single, integrated system so as to effectively administer their compensation and benefits program.

The Solution:

The solution here was to create a consolidated compensation data warehouse, which would gather and enable management of employee information from multiple sources.

It would also enable:

Obtaining details of the different rating measurements by appraisers
Total compensation review with the standardizing of different ratings and producing an performance index for each individual
Allocation of reward & benefits budget, division wise; thereby facilitating strategic compensation-planning

The Results:

The Organization now has all its employee details consolidated into one database, making it easy to retrieve & validate the required information whenever needed. It could also retrieve historical records easily.

Besides that, measurement formats were recognized & standardized and the divisional budget allocation within the overall budget could be decided according to performance.

Overall, the earlier mistakes made were eliminated and the amount of time and effort spent on searching, retrieving and validating information were reduced significantly, resulting in considerable administrative costs savings. Also the entire process of allocating budgets division wise was streamlined and made easy.

Contact us with your Compensation management solution development requirement. Our Client Engagement Team will get back to you within one business day.