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The Onus of Bonus

Getting a handle on incentive compensation is no small task. Software can help. Also: Annual reports via video.

The approach makes sense for small to midsize businesses. Jim Fowler, CEO of Jigsaw Data Inc., an online business-card trading service, says he is only now contemplating purchasing software to oversee the variable compensation of the company’s 20 or so salespeople. “We’re just getting large enough to think about it,” he says. “[Until now] we’ve done it the old-fashioned way, with spreadsheets.”

With variable compensation getting more complicated by the day — and with managers keen to exert more control over sales — spreadsheets won’t cut it for much longer. “The [ICM] software allows us to assign and measure goals that directly tie to the company’s objectives,” says NetApps’s Rice. “And it provides predictability for these expenses.”

When it comes to incentive comp, a little predictability is a very good thing. Just ask the folks at CA.

Elaine Appleton Grant writes frequently about business software.

Now Go Sell!
Reasons businesses deploy incentive-compensation schemes*
76% Align worker behavior and performance with business goals
47% Increase revenue and profit
38% Retain nonsales employees
*Multiple responses allowed. Source: Aberdeen Group

You Oughta Be on YouTube

Daughtry and Bon Jovi aren’t the only outfits promoting hip new videos these days. In an odd twist on financial reporting, a handful of companies are imploring shareholders to check out their videos.

Management at marquee businesses such as Sealy Corp. and Ruth’s Chris Steak House Inc. are actively flogging short movies known as video annual reports. The digitized clips, which run anywhere from four to six minutes, play up a company’s financial strengths and market strategies.

The Hollywood approach isn’t just about image, however: a graphics-intense annual report can ultimately cost a large-cap company $1 million to produce and mail. A video report, in contrast, may run $20,000.

The embrace of video is part of a larger movement away from printed shareholder communications, a trend the Securities and Exchange Commission heartily endorses. In fact, the SEC has taken several steps to streamline the delivery of all proxy-related materials. In December, the commission tentatively approved a plan to allow Web-only versions of Schedule 14A proxy statements, Schedule 14C information statements, and annual reports to suffice. That would be a major step forward from the current system, in which beneficial shareholders can request digital delivery of proxy items in lieu of printed matter, an option many choose not to take: during the 2005 U.S. proxy season, Automatic Data Processing mailed about 90 million paper proxy items to beneficial shareholders.

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