Why Spreadsheets Are Really Bad For Sales Compensation Planning

Our top reasons why spreadsheets no longer cut the mustard when it comes to running sales compensation plans.

Excel spreadsheets: the very name gives us the shivers. They’re useful for a lot of tasks, but they’re really really bad for sales compensation planning. In fact, when it comes to increasing productivity, maintaining security, and streamlining operations, spreadsheets just don’t cut it anymore.

In this post, we dive into the top seven reasons why and suggest a smarter way to run your sales commissions in 2022 – and beyond.

1. Spreadsheets are manual and eat time

Spreadsheets are a fine art that most people have absolutely no idea how to master. It’s almost like black magic. You need to know how to format cells, type up formulas, attach those formulas to specific cells, and make sure they all calculate correctly. If they don’t add up after this sustained effort, you’ve got a major problem on your hands. 

On top of the technical stuff, you also need to know how to make the spreadsheet visually sensical. That means color-coding certain rows and cells, making sure you spelled everyone’s names correctly, and ensuring the font is legible and large enough to read. 

If your eyes are starting to glaze over, then you’re not made for the spreadsheet life! Creating and running spreadsheets is manual and therefore hugely time-consuming, plain and simple. It takes up way too many hours – even weeks – every quarter that could be spent on more pressing tasks, like growing revenue.

2. They leave too much room for human error

And it’s not just the heavy time commitment that makes spreadsheets less than ideal for running sales compensation plans. Creating or editing a spreadsheet is like Indiana Jones dodging traps on the way to the Holy Grail. Make one false move and, well, you won’t be beheaded, but you might just break the entire spreadsheet. 

For example, let’s say Steve the sales rep has permission to edit the spreadsheet. He may not understand how his compensation is calculated, so he tries to come up with a figure on his own. As often happens, if the figures don’t match up, he might decide to just change the figure in the spreadsheet to match his own calculations.

Aside from the obvious governance issue (which we’ll talk about later) that one little figure change causes value shifts in other cells. Pretty soon, the entire spreadsheet is compromised, and finance (or whoever built the spreadsheet in the first place) needs to regenerate it. Again, this seemingly small setback adds to the backlog and takes up precious time better spent on more important things. 

Even if one of the cell values or formulas was altered due to human error, it’s still a massive problem for accounting. It’s also a huge headache for everyone involved, especially the person who first triggered the booby trap, i.e., messed up one little thing that ruined the entire spreadsheet.

It just leaves too much room for human error. When there is so much riding on a single document (such as a sales rep’s paycheck), making a mistake shouldn’t be so easy.

3. They lack transparency

Spreadsheets are designed to input, calculate, and display data. It’s ironic, therefore, that they often don’t show the data that you actually need.

From what we’ve already discussed about formulas, you can probably guess that they are vital to the calculation function of a sales compensation spreadsheet. But the thing about formulas is you can’t always see what’s behind them. How were these formulas developed? What factors does this sales compensation plan take into account, and what does it leave out? Are there loopholes in the formulas where subtle value changes can take place that no one notices until it’s too late? 

These are important questions that revenue teams want to know the answers to. They are key to ensuring that compensation is calculated correctly – and fairly. But this level of granularity is often missing from the final spreadsheet. 

It’s important to possess a full understanding of the data contained in a sales compensation plan and how it’s represented. Without this transparency, figures can be doctored, and errors can be made. When it comes to making all data within a spreadsheet accessible and open, spreadsheets fail to meet the mark. 

4. They’re inflexible 

It goes without saying that sales compensation plans should be properly managed so that changes are made only when necessary – and by those who have the authority to do so. That said, with the right governance, commission plans should be flexible to updates as changing circumstances occur. Often, a revenue leader may wish to make changes to a plan mid-flow, or make short-term modifications to a previously signed-off plan. With spreadsheets, this becomes something of an undertaking (to say the least). They just don’t offer the power or flexibility to make subtle changes quickly and on the fly.

5. Security is often an afterthought

Spreadsheets are a huge security risk. The rows upon rows of sensitive client, HR, and payment data that a sales compensation plan contains are extremely vulnerable to theft and hacking. 

The most obvious threat posed by spreadsheets is that they are shared almost exclusively via email and every email an employee sends with a sales compensation plan attached to it is vulnerable to hacking. Consider this scenario: a revenue leader attaches a sales compensation plan as a file to an email and sends it to the sales rep for review. But the recipient’s email account, unbeknownst to them, has been compromised by a hacker, who sees the message and downloads the attachment. That hacker now has access to private information about the company and the sales rep. No matter how robust your company’s security system, hackers can always find a way in. It’s not safe to share sensitive financial data through email. 

Another security risk is imminent when employees, frustrated with the interface or deprived of access to that program, print out spreadsheets and leave them lying around. Anyone could walk into their office and see the sales compensation plan on their desk.   

Spreadsheets are a security risk, whether they are shared digitally or physically. Imagine if a company or employee’s financial information was compromised because of carelessness with exposing spreadsheets. The risk and the stress are simply not worth it. 

6. Forget sales compensation modeling, or running "what if" scenarios

Understanding potential outcomes of your compensation plans according to varying scenarios in the future is extremely tricky to calculate with spreadsheets alone. Sure – it’s possible, but the amount of manual heavy work means it’s often just not worth the time and effort to get a steer on potential spend. Uncertain times (and boy, have the last couple of years thrown up a few bombshells!) make compensation modeling a necessity these days – not just a nice to have. In a climate of uncertainty, the power to understand potential compensation outcomes according to changing circumstances is a must for smart revenue leaders. Wouldn’t it be great to compare different compensation models at different achievement rates or introduce attainment tiers/retainment schedules/targets/personnel and commission rates to your plans in a couple of clicks?

7. In a mobile-first world, spreadsheets simply don’t cut it

For most spreadsheet software, it’s impossible to show more than a few columns of data legibly on mobile. Zooming and endless scrolling are par for the course with the frustrating reality of viewing spreadsheets on the go – there’s just too much data and not enough screen space. While the cards view in Excel has improved things, accessing the data you need quickly and easily is still complex and time-consuming on mobile. And these days, poor access to the data they need on the move is going to hold back or frustrate your sales teams.

So what’s the alternative to spreadsheets for sales compensation plans? 

Okay, so spreadsheets throw innumerable issues when running sales compensation plans. But is there an alternative? 

This is where moving to a dedicated incentive compensation management software just makes sense. If you choose one that's Salesforce native, it'll make your incentive plans secure, error-free, easy-to-use – not to mention with the transparency and flexibility you just can't access with spreadsheets alone. But best of all? Revenue leaders can expect to save 90% of the time they were spending managing spreadsheets when they bite the bullet and move to a more robust sales compensation software. So what are you waiting for?