Following the global financial crisis, banks’ incentive compensation plans came under greater scrutiny than ever before, so institutions looked for ways to better meet the increased expectations.
Zions Bancorporation seized control of incentive compensation management with a cloud-based IBM solution, enabling a detailed audit trail, defined workflows, reporting and dashboards.
Supportscost-effective regulatory compliance, reducing risk and raising accountability
Increasesefficiency by reducing off-cycle and discretionary payments
Offersnew insights into impact of incentive plans and how to drive performance
Business challenge story
Putting transparency front and center
In the wake of the global financial crisis, new regulatory obligations were drawn up to help prevent a similar situation from ever arising again. One example is the guidance issued by banking regulators around incentive compensation plans, which requires banks to have practices and arrangements that do not encourage unnecessary and excessive risk-taking.
David Hauptman, Business System Analyst at Zions Bancorporation, takes up the story: “The new regulatory requirements called for greater transparency around the way banks managed incentive compensation; we needed to be able to present a full audit trail to show that we were conforming to the rules. Zions Bancorporation began investigating how to satisfy these new expectations.”
Zions Bancorporation operates as a collection of eight division banks, each with their own brand and operations. Each bank had a unique approach to incentive compensation management.
Marybeth Long, Business System Analyst at Zions Bancorporation, explains: “Our team, which was set up to oversee the transition to more transparent incentive compensation management, faced a challenge. Every bank had their own way of doing things: many used spreadsheets to record payments while some would email the payroll department with names and amounts. The regulatory changes gave us an opportunity to tighten up processes, boosting efficiency at the same time as increasing accountability.”
To underpin a more standardized and transparent approach to incentive compensation payments across its banks, Zions Bancorporation selected IBM® Incentive Compensation Management, and engaged IBM Gold Business Partner OpenSymmetry to help with the roll-out.
“We chose IBM Incentive Compensation Management because of the comprehensive visibility it offers, plus its flexibility,” elaborates Long. “The consultants from OpenSymmetry were phenomenal, helping us to create our first two plans so we could quickly get to grips with the way that the solution works.”
Zions Bancorporation began by re-building approximately 100 plans covered by the new regulatory guidance within IBM Incentive Compensation Management. Feedback from the payroll department was so positive that the company extended the solution to all its incentive compensation plans.
“We chose to take a hands-off approach, putting together plans per our users’ requirements,” recalls Long. “We develop the plan, submit it for user testing and tweak it until our employees are happy. With the IBM solution, we can define workflows, building in approvals and a detailed audit trail at every stage. Payroll are delighted because they receive a notification of exactly who, what and when they should pay incentives, and can be confident that all the necessary approvals are in place.”
Today, Zions Bancorporation has more than 300 plans set up with the IBM solution, which pay out annually, quarterly, monthly and bi-monthly. Hauptman adds: “We could pay out daily if we wanted to, that’s the power of IBM Incentive Compensation Management, and the beauty of it is that we can manage it all from a single place. We can also keep track of discretionary bonus elements, requiring users to record their reasons for any payments outside of plans.”
Additionally, Zions Bancorporation uses the solution to provide regular reporting and dashboards to plan managers and payroll employees, delivering unprecedented insight into payments. Hauptman remarks: “The appetite for insight into compensation management is high at Zions Bancorporation, and we take full advantage of the presenter report feature.”
The company was the first to upgrade to the latest release of IBM Incentive Compensation Management, moving to a cloud-based solution that includes continuous delivery of new enhancements. Long explains: “Like all early adopters, we were nervous about being guinea pigs – but IBM made sure that we achieved a smooth rollover. Following a brief learning curve, we soon found that the new user interface is much easier than previous versions. Best of all, IBM continually optimizes the solution without significant interruptions to our operations.”
Going above and beyond
Equipped with a detailed audit trail for compensation payments, Zions Bancorporation can efficiently and comprehensively fulfill regulatory requirements.
“We benefit from much greater accountability around incentive compensation,” says Hauptman. “That enables us to reduce our exposure to risk and prevent abuse of the system.”
Zions Bancorporation has also succeeded in boosting efficiency, reducing the time and costs associated with managing compensation managements and payments.
“Before, our payroll department had to deal with ad hoc requests to make incentive payments – that doesn’t happen anymore,” states Long. “Plan managers must provide a reason for discretionary payments. By reducing off-cycle and discretionary payments, we save time for payroll and increase control over payouts.”
Going forward, Zions Bancorporation plans to put the new insights it has gained into compensation management to greater use. The company expects that more coherent data sets will allow it to develop a deeper understanding of what works best to drive appropriate performance and support the company’s culture of compliance and customer service.
Hauptman comments: “We have already experimented with IBM Watson Analytics™ to delve deeper into our data, and once we have greater consistency we’d like to dive back in.”
Long concludes: “The project started as a way to achieve a more cost-effective way to promote regulatory compliance, but it has sparked something much bigger. With IBM technology, we are laying the foundation for a data-driven approach to incentive compensation management that delivers much better results.”
Zions Bancorporation is one of the United States’ premier financial services companies, with total assets exceeding USD 60 billion. It operates under local management teams and distinct brands in 11 western states: Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington and Wyoming.
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Take the next step
IBM Incentive Compensation Management helps organizations improve sales performance and gain operational efficiencies with better management of incentive compensation plans, and smarter administration of sales territories and quotas. Visit us at ibm.com/spm to learn more about how IBM Incentive Compensation Management can help you improve the effectiveness of sales teams and support your organization’s growth objectives. Additionally, get the latest sales performance management insights by following us on Twitter at @IBMSPM and join the conversation #IBMSPM.
OpenSymmetry is the world’s largest independent consulting company specializing in the implementation of sales performance management and incentive compensation solutions. To learn more about OpenSymmetry, visit www.opensymmetry.com