SOURCE: Callidus Software Inc.

Callidus Software Inc.

August 11, 2009 04:00 ET

UK Will Recover Quicker From Downturn With Variable Compensation

Better Management of Bonuses Critical to Company Success

LONDON--(Marketwire - August 11, 2009) - Variable compensation, such as bonuses and incentives, is critical for UK organisations looking to survive the current recession. However, better management and control is needed to ensure that variable compensation delivers promised benefits for staff, companies and shareholders.

Analysis by Callidus Software (NASDAQ: CALD) found that 62 per cent of the 23.01 million employees(1) in the UK private sector benefit from variable compensation. Yet, 90 per cent of organisations still use manual or spreadsheet-based methods to manage variable compensation -- leading to widespread errors, a lack of company-wide control and subjective bonuses as seen in the recent banking crisis.

Variable compensation covers the provision of additional benefits to an employee if they hit certain, agreed goals. These can include financial bonuses, sales incentives, stock options or non-monetary rewards such as extra holiday entitlements or gift vouchers.

Staff in sales-based roles are the largest group of recipients of pay for performance, along with senior and middle management teams. Sectors such as finance, retail and hospitality rely most heavily on variable compensation as a cost-effective motivator for staff.

"Excessive bonuses have been vilified as the cause of the current recession, but when applied properly, variable compensation can help move the UK economy forward. It is the poor execution of incentive systems without real control or linking to overall company objectives rather than bonuses per se that are bad for business," said Bill Schuh, VP for EMEA, Callidus Software. "Pay for performance is a powerful tool and proven motivator. Right now, UK companies need all the help they can to keep staff motivated to combat the recession. But to avoid the mistakes of the past, they need a rigorous, transparent approach to managing and controlling the whole process. Linking objectives to reward motivates employees across a business, gives them an understanding of corporate goals and effectively pays for itself."

By setting objectives and rewarding employees for achieving them, UK companies benefit from a motivated, engaged workforce and sales channel that is aligned with corporate goals. As rewards are paid out of increased income, this cost-effectively drives improved performance without increasing fixed costs.

Managed properly, variable compensation delivers five key benefits for employees and UK companies:

--  Increased cost-efficiency - adding revenue while ensuring fixed costs
    are kept static
--  Greater motivation - employees have targets to aim for and are
    motivated to meet corporate goals
--  Flexibility - compensation can be changed quickly and easily as
    corporate objectives change
--  Transparency - creating, publishing and reporting against set
    objectives demonstrates good corporate governance to staff, customers and
    shareholders
--  Improved company culture - company wide schemes demonstrate that there
    is no disconnect between the rewards of employees and senior managers,
    increasing morale
    

"Companies need to learn the lesson of history and stop managing variable compensation in an ad-hoc or amateur way," added Schuh. "Recent events have proven that a tool as complex and powerful as pay for performance cannot be managed manually or merely confined to the sales or senior management teams. It needs advanced, company-wide systems that can take corporate objectives, cascade them across the business and then provide the ability to manage, control and evolve them."

Callidus' solutions help companies align corporate objectives with sales strategy. Together, they unlock a company's ability to combine sales and incentive compensation with key aspects of employee performance management. Callidus' software solutions deliver a high ROI in a very short period of time by allowing sales executives to make better incentive decisions, providing timely visibility into channel operations, and giving them the flexibility to rapidly deploy new sales and distribution strategies and tactics.

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About Callidus Software®

Callidus Software (www.callidussoftware.com) (NASDAQ: CALD) is the market and technology leader in Sales Performance Management (SPM). Performance-based compensation is one of the largest investments for all companies. Callidus' customers gain a competitive advantage by maximizing the return on this strategic asset. Our award-winning Software-as-a-Service (SaaS) applications set the standard for pervasive performance management across the enterprise. Over 1.9 million employees and channel partners have their performance managed by Callidus Software.

(1) Based on figures from the Office of National Statistics June 2009 http://www.statistics.gov.uk/cci/nugget.asp?id=12

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