Managing the Multiplicity

Given the complexity of emerging compensation models, an increasing number of banks are putting software to use. While some sales-driven banks still use homegrown spreadsheet-style applications, others are coming around to the new tools.

Software enables banks to track multiple compensation plans and incentives that may be based off many and varied matrices, e.g., line of business, product type and region. It can also provide the analytics that enable management to see how closely they’re meeting goals by individual, team or branch on a weekly or even daily basis. “People at the branch can see their activity, see those new accounts adding up,” says Kathleen Khirallah, a senior analyst for TowerGroup’s retail banking.

Bob Conlin, vice president of marketing for Centive, which has installed incentive management software at several banks including SunTrust Banks, Inc., says that banks that have grown by acquisition often find themselves with dozens, even hundreds, of pay plans that might be all over the map. Conlin says one bank Centive worked with had 300 different compensation programs running.

Indeed, Wachovia Corp.’s bramble of incentive plans got more complex after its 2001 merger with First Union. That’s why Terry Gilbert, vice president and manager for Wachovia’s incentive management and infrastructure, three years ago began to look for a new platform to handle its compensation management, eventually choosing Callidus as a partner.

The process of customizing the software to meet the Charlotte, N.C. bank’s needs was “quite painful,” Gilbert admits, given the complicated and often multi-layered nature of the bank’s hierarchies and its compensation plans. But Gilbert is pleased with the “robust platform” that’s been running since September 2004. It now runs 30 separate compensation plans for more than 25,000 people at the bank.

Gilbert says that he’s heard of several banks that still rely on multiple compensation plans off spreadsheets with little automation, and it “complicates the ability to deliver effectiveness. When you’re driving off spreadsheets... there’s a much greater potential for errors.”

Karen Epper Hoffman