How Spreadsheets, Workarounds, and Fragmented Processes Erode Business Value

Are you calculating commissions correctly? Sure. But at what cost? 

Many companies are using spreadsheets and various workarounds to run their Sales Compensation program. This could be adjusting commissions in a spreadsheet, sending out emails to get approvals or even having fragmented business processes that effect how we manage sales incentives.

It may seem like everything is working just fine. Your Compensation team is doing what they need to do. You are producing commission statements and getting your reps paid.

There is an issue though. 

Analysts are spending too much time on manual tasks. There can be errors in calculations and delays in payments. Poor audit control and inability to scale. These are some of the things you are exposing yourself to by running your Sales Compensation process on spreadsheets and workarounds.

There is a price to pay when you allow Sales Compensation to be operated on manual tasks.  

Using Spreadsheets 

Whether it’s to validate transactions, calculate credits, adjust quotas or reconcile commissions and payment. Many Sales Compensation teams rely on spreadsheets for these types of activities.

While using a spreadsheet can be a great tool to help analyze and manipulate data it becomes dangerous when you allow them to drive your Sales Compensation process.

Lets say you have a company with 1000 sales reps that you need to process commission payouts for. Your Compensation team will be pulling data and using spreadsheets to validate credit and ensure commission was calculated correctly. Then reconciling that against what you are paying out.

One bad formula can impact hundreds of commission statements. Analysts will then have to dig deeper to figure out what happened. Even if you catch these errors before payments go out it takes time away from your team to investigate.

Now what if you have different versions of that spreadsheet floating around Sales Operations, Finance and Payroll. Which one is correct? Did someone change a formula? Who made that adjustment? Will you be able to produce those calculations in the event of an audit?

 Using Workarounds 

Often times you will find workarounds in place because systems and processes are not set up correctly. Or there isn’t proper alignment between different business functions.

An email is sent to inform someone of a territory change. An incentive is built outside of your commission system. A spreadsheet is used to resolve a credit dispute. Someone in finance sends you a quick email to approve an adjustment.

These workarounds can happen day to day in most Sales Compensation organizations. When you start to look at all the workarounds you have in place it becomes very concerning.

Here is an example. 

You create a quarterly accelerator for a certain product line. You don’t have the functionality to do this inside your commission system so your team builds the accelerator out in spreadsheets. They upload the payment into your commission system once they have validated the amounts.

Well maybe you have 50 reps participating in this incentive. So it may not be that big of a deal. But what happens when that incentive grows to 300 reps in 6 months?

Now you have to go through the same process again with more reps and more time spent validating that you are calculating these incentives correctly. You’ve created a workaround that is taking your team time and money.

Not to mention if you are paying someone too much or not enough you’ve put the company at risk.

 How this effects other departments. 

Sales Compensation doesn’t exist in a vacuum. We rely on Sales Operations, Finance, HR, IT and Payroll to complete our day to day tasks.

So when we allow these processes to become fragmented we are costing these departments time as well.

Maybe Sales Operations makes a territory change and doesn’t communicate that to your Compensation team. Or Finance needs to reconcile the numbers you sent over to Payroll. Your Compensation team will then have to dig deeper into these issues and figure out what went wrong.

Here are some ways this can cost you productivity:

a. Solving the same issues over and over 

b. Not knowing who owns the issue at hand. Causing delays to get things resolved. 

c. Taking time away from your Sales Compensation team to spend more time working with spreadsheets instead of driving business value.

There are many highly skilled professionals working in Sales Compensation that are spending too much time reconciling data. We need to find ways to eliminate these manual tasks and free up those people to help the business grow.

How this costs you when your business is growing.

If your process allows you to process commission for 200 reps it may be difficult to scale when you grow to 2000.

As you add more territories and business units you will have to add more products and plans to your system. Which will create more administrative work for your team.

If your company decides to open up shop in 3 more countries you will be dealing with currency conversions, payroll and other business processes that may differ.

Having a manual Sales Compensation process will only create more work for your team when you start to expand your business. You may need to hire more analysts to keep up with demand.

What can you do? 

You don’t need to remove every spreadsheet from your Sales Compensation process. Just try to remove them from your daily processes that could be done more efficiently.

Some tips on how to improve your process.

a. Have standardized processes in place. From building a plan to paying out commission.

b. Know who owns what process. Whether that be Sales Comp, Sales Ops, Finance, IT, HR or Payroll.

c. Have better controls. Make sure you have approvals and controls in place before payments go out.

d. Remove the need for spreadsheets where possible. Automate calculations and validations. 

e. Start tracking how many times your team has to intervene in the process.

When making the business case for this type of project don’t just look at the technology. Look at how much time your team will save and how many corrections they will no longer have to make.

Summary 

There are many reasons why Sales Compensation teams use spreadsheets and workarounds to run their processes. But they are costing you time and money.

By removing these tasks you can create a more efficient Sales Compensation process. One that can scale as your business grows.

Ask yourself. If you doubled your sales force tomorrow could your commission process handle it?