A recent report from CaptivateIQ uncover key areas for improvement in how to use incentives to drive organizational growth.
In its annual State of Incentive Compensation Management Report, based on a survey of more than 200 U.S.-based B2B incentive compensation leaders, CaptivateIQ officials found 59% of companies rely on incentive compensation to fuel growth, outdated processes— manual workflows create costly errors, inefficiencies— that are holding many of these programs back from driving the growth they seek and impacting program return on investment. A combined 66% of companies have overpaid and/or underpaid commissions in the past year alone.
Additionally, organizations are slow to adapt to proven cost-reduction automation strategies that improve accuracy, efficiency, and productivity in the past year, with just 39% making an alteration of the way they do business. Many struggle to demonstrate the return on investment of incentive compensation, making it difficult to secure executive buy-in for necessary improvements—fewer than one-third (30%) feel very prepared to navigate economic shifts and market volatility with their current incentive strategies.
Valuing Compensation
CaptivateIQ Co-CEO and Co-Founder Mark Schopmeyer, a leading sales performance management solution, noted compensation is a key issue in today’s challenging macroeconomic environment
“Too often, compensation is treated as a cost center rather than a strategic growth lever,” said Schopmeyer in a statement. “Manual processes not only drain time and resources, they also introduce errors that erode trust and performance.”
Tying Incentives to Company Priorities
Incentive compensation remains one of the most effective tools for aligning performance with business priorities. CaptivateIQ official found that the most forward-thinking teams are expanding incentive programs beyond sales, reviewing performance more frequently, adapting plans in real time, and tying rewards to company-wide priorities. The research found that:
- 72% of organizations plan to expand incentive compensation programs to new departments, such as marketing, finance and HR.
- Reviewing and adjusting plans more frequently correlates with higher revenue performance: companies reviewing performance weekly versus annually reported almost 2x significant growth.
- 53% are making it a priority to increase seller motivation this year.
Increased Visibility
Many organizations still struggle with issues around data accuracy, visibility, and communication when it comes to their incentive compensation programs. To that end, 35% of respondents that a lack of transparency for sellers about how incentive compensation is calculated is a top challenge for their teams and 52% of organizations provide sellers with real-time visibility into current and potential earnings.
As teams look to improve trust, transparency, and revenue results, AI and real-time insights are becoming essential tools for reducing confusion and surfacing what matters most. Of those using AI, more than half (55%) say it has improved real-time visibility for sellers.
“With only 27% of companies fully automating their compensation programs, there’s a huge opportunity for organizations to modernize and unlock the full potential of incentives to motivate teams, increase transparency, and drive efficient growth,” said Schopmeyer.
To read the full report and learn more about how forward-looking organizations are approaching incentive compensation, including best practices for scaling beyond sales teams and increasing visibility through automation and AI, visit: https://stateoficmreport.captivateiq.com.