In the intense battle for "shelf space," one of the insurance industry's most powerful weapons is producer compensation.CUNA Mutual Group knew this back in early 2001 when it began to reinvent its approach to field compensation. "Compensation never drives company strategy; it supports it," says Jim Lazarz, vice president of field compensation at the Madison, Wis.-based financial services provider to credit unions. "When the company decides on a strategic direction, we want to design our compensation plans to support that direction-and we need to be ready to administer those plans quickly and efficiently."
A key component to the reinvention of CUNA Mutual's field compensation program was new technology. "Our old legacy system was not flexible enough to 'tee-up' new compensation plans," Lazarz says. "We wanted to go to an Internet-based, browser-based system to deliver reports to our reps and credit unions, and we wanted to reduce unit costs."
In April, CUNA Mutual completed the implementation of an enterprise incentive management (EIM) system, called TrueComp, from Callidus Software Inc., San Jose, Calif. The system enables CUNA Mutual to design and implement new compensation programs in hours or days, instead of weeks or months. In addition, the company no longer has to print and mail 2,000 reams of paper reports each year. And overall, it will reduce its costs by an estimated 25% to 30% from the costs associated with its previous system.
"We group our savings into three categories," Lazarz says, hard-dollar costs, soft-dollar costs and marketplace value. Hard-dollar costs include reduced labor costs in the compensation administration department, reduced IT labor support, reduced mainframe run time and storage, and significantly reduced printing, mailing and imaging costs for the compensation and production reports CUNA Mutual previously mailed to 3,550 payees in its system.
Soft-dollar costs include the costs avoided by implementing plans in hours or days rather than weeks or months, Lazarz says. "We didn't figure these (avoided costs) into our cost/benefit analysis, but we knew they existed."
Finally, CUNA Mutual is meeting its competitive pressures in the marketplace by providing Internet-based reports to its credit unions and field representatives. "There was a very high demand to get real-time reporting electronically through the Internet, he says. "Now, we provide updates by 11 a.m. every morning."
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