Twenty years ago, in my first sales job selling residential solar systems, I received my physical monthly commission checks with a cryptic memo line that often cut off mid-deal. It left me guessing which sales I was being paid for and whether the amount was accurate. Incentive compensation management (ICM) has come a long way since those days of blind trust in the numbers, but there’s still so much more it can achieve.
At Performio, we see this as an incredible opportunity—not just to improve ICM, but to build the best ICM solution in the world. One that empowers sales teams, makes life easier for compensation admins, and handles complexity with ease.
Having spent years immersed in the challenges of ICM, I want to share my perspective on what it takes to overcome them—and how Performio is paving the way with a fresh approach.
Where ICM software solutions keep falling short
The way I see it, ICM software should have four core capabilities:
- Organize and manage all commission-related data
- Manage incentive plans and calculate payouts
- Provide transparency into performance and payouts for leadership and sales reps
- Automate incentive comp-related workflows like calculations, approvals, and disputes
Any serious ICM option on the market today is going to do all four of these to some degree.
Most of these jobs are simple enough—if your incentive comp plans are basic and your business rarely changes. But as your plans become more complex, and your organization becomes more dynamic, it becomes difficult to build software that reliably handles these jobs at scale. For all but the simplest companies, most of today’s ICM products fall short of truly meeting customer needs. There are a few critical areas where today’s solutions struggle:
Balancing ease of use with flexibility
The core tension in ICM software lies in finding the balance between ease of use and flexibility. The software should be intuitive to navigate and manage—but if you simplify too much, you lose the ability to handle complex scenarios. On the other hand, going all in on flexibility can create overly complicated systems that are a nightmare to learn and maintain. Resolving this tension has always been the biggest challenge in ICM.
Handling complexity and exceptions
ICM plans are as varied as the organizations they serve, and your software should never limit how you choose to motivate and compensate your people. The majority of ICM solutions rely on formulas or rules to manage complexity and exceptions, but these methods result in a web of logical expressions that becomes impossible to make sense of.
ICM software should enable customers to roll out any kind of plan they design using out-of-the-box features. Leaders should never be limited in their plan options because their ICM solution can’t handle them. And they should not have to rely on a software vendor to build a custom solution for their unique needs.
Taking control of change
Incentive compensation is dynamic. Salespeople change roles, sales leaders adjust quotas and rates, and the IT team is always modifying data structures. Administrators need tools that let them reflect these changes in the system on their own. They shouldn’t have to reach out to a vendor for support every time they need to make a change. Unfortunately, most systems make self-management all but impossible, forcing admins to rely on costly and inadequate vendor support.
Misplaced priorities in the industry
The issues I’ve described above (the ease-of-use/flexibility tradeoff, managing complex use cases, and self-service) stand in the way of ICM tools delivering the value customers need. But instead of addressing these issues head-on, I get the impression that the industry has turned its priorities toward less-critical problems.
If you look at the main players in ICM software, you’ll notice that they are expanding their capabilities beyond those four main jobs I listed earlier. It isn’t uncommon to see traditional ICM vendors venture into the broader Sales Performance Management (SPM) category with offerings like territory & quota planning, benchmarking, and sales forecasting.
I understand why these companies are making this choice. Once your core product is passable, it’s tempting to move on and tackle another problem to increase your TAM and give your sales & marketing teams something to talk about.
But this approach sacrifices focus, and ultimately customers pay the price.
There are plenty of great planning and forecasting applications out there. By contrast, elegantly managing incentive compensation is still an unsolved challenge. By prioritizing less critical problems, our industry is shifting focus away from its core priority: automating the full breadth of incentive compensation.
The problems I describe above continue to live on in current ICM solutions. A big reason is that most ICMs rely on either formulas or rules for managing plans. Both methods make it nearly impossible for these tools to address the three major issues I outlined earlier:
Formula-based tools Formula-based tools offer the flexibility to create virtually any logic you need—but that power comes at a cost. It’s like being handed a toolbox and some lumber, then being asked to build a house. While theoretically possible, the process is unnecessarily complex, requires mastering proprietary syntax, and is highly prone to human error. And the complexity only grows with time. As plans evolve and new logic is layered on, the number of formulas multiplies, creating a tangled web of outdated and overlapping logic. Before long, the system becomes brittle and nearly impossible to maintain.
Rule-based tools simplify things with predefined logic, often using straightforward "IF-THEN" statements. Think of it as assembling a prefab house: the pieces fit together easily, but the design is rigid and customization is limited. Rules, like formulas, compound over time. Every exception, adjustment, or tweak adds another layer of complexity. Eventually, you’re left with an unwieldy collection of rules that’s just as brittle and unmanageable as a formula-based system.
Both approaches work fine for simple and intermediate incentive compensation management tasks. But once both types of tools run up against the big three issues I described above, they become less helpful—or not helpful at all. Their compounding complexity over time turns your system into an unmanageable headache.
Performio’s vision for the future of ICM
At Performio, we’ve chosen a different path. Rather than branching out into the broader SPM market, we are doubling down on ICM. Our vision is to tackle the toughest challenges in this space and build a solution that fully addresses the four core jobs of incentive compensation management: organizing commission data, managing plans and payouts, providing transparency, and automating workflows.
We’ve developed powerful data management capabilities that streamline the process of importing and transforming raw transactions, people, and reference data. Our platform eliminates the need for any manual data pre-processing by allowing teams to import data from any source in any format and then use our library of native ETL tools to transform it into the correct state. This reduces effort and ensures you have full visibility into all aspects of your data.
For plan management, Performio’s component-based architecture handles even the most complex plans with ease. Our components function as versatile building blocks for your sales comp plans, empowering users to design plans that are as unique as their organizations while maintaining the simplicity and flexibility needed for scaling. And the power of our components continues to grow as you evolve your plans. When it’s time to change your plans you can modify them, swap them out, duplicate them, re-use them across plans, or configure new ones.
Our beautiful dashboards for payees and our AI-powered Analytics Studio promote transparency by making it easy for reps and leaders alike to understand performance trends, identify key insights, and ensure that payouts are clear and accurate. With intuitive visualizations, dynamic filtering, drill-down capabilities, and more, our tools provide actionable insights that help you make smarter decisions faster.
Finally, Performio’s configurable workflows automate critical processes like calculations, approvals, and dispute resolutions. By streamlining these tasks, we free up your team to focus on what really matters—driving results—while maintaining full control over your processes.
By focusing on these four critical areas, Performio is shaping the future of ICM. We’re committed to simplifying complexity, enhancing transparency, and empowering organizations to achieve their full potential. While others expand into adjacent markets, we’re staying true to our mission: building the best ICM solution in the world.
—Grayson Morris, Performio CEO
To see what Performio can do for your organization, request a demo today.