Automating incentives boosts bottom line
Sometimes the least obvious changes can have a big effect, and very often those changes are in areas that might considered outside the remit of the people best placed to make them.
Bank staff remuneration, for instance: since the crisis, the way in which ‘bankers’ are paid has been in the headlines very often, and new regulations are coming into force around the globe that are forcing institutions to be more transparent about remuneration – and even into altering the balance between salaries and bonuses.
So –ho-hum – what used to be an HR issue has become a PR and compliance issue? A board-level compliance issue, perhaps. Well, yes, but the automation of regulatory compliance is essential, and that’s where remuneration issues start to become of interest to the technologists.
That’s what I’ve learned in the past few weeks during the preparation of a webinar that we’ve been working on , and like many things that at first glance seem to be straightforward, once you start looking at the topic, it turns out to be way more interesting than you imagined.
For a kick-off, there is money to be saved through automation, as well as improved regulatory reporting, reduced administrative burden, shorter processing times, increased transparency and centralised governance.
As one of the presenters taking part in the webinar put it: “There is a lot of room for efficiency saving and compliance improvement in this area. This business process is one of the lowest hanging fruit for savings and efficiencies.”
According to PwC research, this is increasingly recognised by firms, particularly those with international operations, who are increasingly designing global frameworks for their incentive plans to increase consistency across territories, though there are difficulties in implementation that the webinar will discuss.
PwC also says that governance sign-off is being done by more senior leaders, including group remuneration committee involvement. In the UK, organisations making adjustments to their governance structure to involve increasingly senior review and sign off, with approvers becoming more accountable for incentive designs
Part of the presentation will feature a case study about an independent merchant banking group based in the City of London that deployed an automated incentive compensation and reporting system in its asset finance division.
An internal risk assessment of sales incentives found a lack of centralised governance and controls in place, leading to a need to improve control for control and a desire to develop new incentive policies. In particular, it wanted to move to profitability-based incentives rather than volume-based and ensure that all levels of employee would be eligible for commission or bonuses based on individuals or team performance.
To hear more about how that worked out, join the webinar …