Human capital management (HCM) is a holistic business strategy that should make every employee a competitive asset to deliver better operating and financial results. In other words, the lessons learned from managing trading partners (suppliers and customers) should be likewise applied to better managing employees. The bottom line on EIM systems (being closely related to HCM) is that their potential should not be ignored, since this software category promises to generate a fairly rapid and tangible return on investment (ROI), outline expensive over- and under-payment errors, and reduce administration overheads. It also provides business managers with the ability to plan ahead and align sales objectives with business goals. With sales being indisputably the lifeblood of virtually any company, selling should without a doubt be a more accurately accountable process forming the basis of a company's overall strategic objectives.
For the sales and marketing, field service, accounting, information technology (IT), and human resources (HR) departments to become more strategic within any organization, companies should investigate deploying EIM tools in order to free all managers from time-consuming, yet tactical, record-keeping functions. They should ensure that all stakeholders are committed, since the realization of EIM benefits depends on IT departments implementing the appropriate infrastructure; HR, sales, and finances need to communicate the goals of their programs and reengineering the processes for improved output; and employees and managers must change their approach to the way they conduct administration.
To be successful, vendors must provide strategic HCM solutions that deliver integrated compensation and performance management with readily available knowledge and coaching for both employees and managers. In summary, strategic HCM solutions (including EIM) should allow organizations to cascade goals and objectives from the corporate level through to managers and individual employees. The ultimate winners will be the enterprises that understand the connection between people and corporate performance, that know how to manage changes within the organization, and that have applied processes and systems to connect their employees to corporate strategic initiatives.
Still, given that there are "different strokes for different folks," the question is how much EIM does any given enterprise truly need, and in what shape and form. Maybe some companies can get by with simpler payment methods, whereby merit bonus plans are preferable to commissions, because they are easier to administer, and because they keep cost-of-sales and cost-of-labor in check. Profit sharing ties payout to corporate results like growth in revenue or profit, whereby several percent of base salary can be allocated for additional payout purposes—but it might fail if participants view the program as an entitlement (which yields modest satisfaction for payouts in good years and significant dissatisfaction for no payouts in bad years). Conversely, sales compensation plans (commissions) tie performance measures to individual or sales teams' efforts, as these plans provide a base salary plus an at-risk component that is paid based on the person's ability to reach a predefined goal. Other similar add-on programs reward employees with a specified dollar amount or a percentage (often between 5 and 10 percent) of base salary for achieving pre-established goals. While effective, too many duplicate plans, excessive payments, inappropriate goals, and inconsistent eligibility criteria can weaken their value.
To help minimize compensation overhauls, managers should keep performance measures down to only a few key metrics, and they should be easy for employees to understand. To establish the most appropriate metrics, compensation experts should interview senior management to determine future sales objectives; they should talk to corporate-level staff to learn what is currently working and what areas need improvement; and they should consult with field sales management and sales personnel for their understanding of the existing program and their suggestions for improvement. After gaining input from the appropriate employees, the user enterprise has to create new sales metrics that are in line with both corporate goals and sales professionals' aspirations. The sales metrics should be challenging yet achievable goals (beyond merely standard) that at least half of the sales force should be able to achieve (although meeting mere standard should not be rewarded), and that an additional fraction (10 percent to 15 percent) of the sales force should exceed.
For the sales and marketing, field service, accounting, information technology (IT), and human resources (HR) departments to become more strategic within any organization, companies should investigate deploying EIM tools in order to free all managers from time-consuming, yet tactical, record-keeping functions. They should ensure that all stakeholders are committed, since the realization of EIM benefits depends on IT departments implementing the appropriate infrastructure; HR, sales, and finances need to communicate the goals of their programs and reengineering the processes for improved output; and employees and managers must change their approach to the way they conduct administration.
To be successful, vendors must provide strategic HCM solutions that deliver integrated compensation and performance management with readily available knowledge and coaching for both employees and managers. In summary, strategic HCM solutions (including EIM) should allow organizations to cascade goals and objectives from the corporate level through to managers and individual employees. The ultimate winners will be the enterprises that understand the connection between people and corporate performance, that know how to manage changes within the organization, and that have applied processes and systems to connect their employees to corporate strategic initiatives.
Still, given that there are "different strokes for different folks," the question is how much EIM does any given enterprise truly need, and in what shape and form. Maybe some companies can get by with simpler payment methods, whereby merit bonus plans are preferable to commissions, because they are easier to administer, and because they keep cost-of-sales and cost-of-labor in check. Profit sharing ties payout to corporate results like growth in revenue or profit, whereby several percent of base salary can be allocated for additional payout purposes—but it might fail if participants view the program as an entitlement (which yields modest satisfaction for payouts in good years and significant dissatisfaction for no payouts in bad years). Conversely, sales compensation plans (commissions) tie performance measures to individual or sales teams' efforts, as these plans provide a base salary plus an at-risk component that is paid based on the person's ability to reach a predefined goal. Other similar add-on programs reward employees with a specified dollar amount or a percentage (often between 5 and 10 percent) of base salary for achieving pre-established goals. While effective, too many duplicate plans, excessive payments, inappropriate goals, and inconsistent eligibility criteria can weaken their value.
To help minimize compensation overhauls, managers should keep performance measures down to only a few key metrics, and they should be easy for employees to understand. To establish the most appropriate metrics, compensation experts should interview senior management to determine future sales objectives; they should talk to corporate-level staff to learn what is currently working and what areas need improvement; and they should consult with field sales management and sales personnel for their understanding of the existing program and their suggestions for improvement. After gaining input from the appropriate employees, the user enterprise has to create new sales metrics that are in line with both corporate goals and sales professionals' aspirations. The sales metrics should be challenging yet achievable goals (beyond merely standard) that at least half of the sales force should be able to achieve (although meeting mere standard should not be rewarded), and that an additional fraction (10 percent to 15 percent) of the sales force should exceed.
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