One of the end goals of implementing an incentive compensation workflow is to ensure audit compliance, simplify sales commissions, and streamline business processes. One of the best ways to do this is to ensure your historical records remain accurate – if you’ve implemented Xactly Incent, you can accomplish this by utilizing its model locking feature.
Incentive compensation models are locked for a number of reasons. Best practices for payroll accuracy recommend you lock your model once you've paid out sales commissions for a period. In the event of a payroll change a locked model will only report what was actually paid out, and this avoids discrepancies in future reports. In Xactly Incent, sales compensation records are locked either periodically (by pay period) or by Business Group. If you lock your model periodically you’re freezing the reports during a specific timeframe, for all payees. If you lock by Business Group then you’re selecting only a few areas to lock, while leaving the rest of the model unlocked. To take advantage of this functionality it’s a good idea to incorporate Business Groups into your model design even if the initial requirements obviate the need. This way, you always have the option to incorporate Business Group locking in the future.
Two Common Scenarios for Locking Incentive Compensation Models by Business Group
Different Sales Groups on Different Commission Payroll Cycles
This is the most common scenario that advocates for Business Group locking. Whenever you have different sales geographies or departments that pay their sales commissions at different times you can establish each geography or department as its own Business Group. This allows you to lock each sales group individually to accommodate the varying pay schedules.
Sales Compensation Data Sourcing Issues
If your model sources sales commission data from disparate systems (like different sales geographies) there can be situations where there is a delay in source files or the data is incorrect. If the model is not designed to segment into unique Business Groups, then your commission payout for the larger company as a whole can end up delayed until the data issue resolves. To avoid this, you might decide generate the payroll file anyway. However, you run the risk that your commission calculations might change when the model recalculates. In Xactly Incent, Business Groups can isolate the impact of this situation and allow you to continue to generate your payroll files for all unaffected business groups. You can then lock these files.
You should note that although you can lock a period for specific Business Group, unlocking can only be at a periodic level. If you lock a period across the model for all Business Groups, you cannot unlock it for a specific business group.
Business Group locking is one unique way Xactly Incent can help your incentive compensation team ensure accuracy, meet compliance, and generate efficiency within your commission calculation process.