In performance-driven organizations, few processes are as impactful as delivering timely and accurate compensation to your commissionable employees. Failing to meet this table stakes expectation both highlights your internal teams spending too much time on the payroll process, and can often lead to distrust and even regrettable attrition in a sales organization. Unfortunately, meeting this expectation is easier said than done, with the complexity often resulting in a time-consuming and error-prone process. 

 To ensure organizations are meeting their employees' expectations and delivering commissions as quickly as possible, compensation admins should be tracking the benchmark for evaluating and optimizing commission processes to create maximum efficiency – Time-to-Payroll, or TTP.

What is Time-to-Payroll (TTP)?

TTP measures how long it takes from calculating commissions to issuing payroll, essentially gauging the efficiency of your commissions program.

What does Time-to-Payroll encompass?

While this may seem like a simple, short series of activities, it’s often  layered with stages – including reviews, approvals, inquiries, and adjustments – that must be checked off before commissions are paid out. Most often, the downstream flow of activities looks like this:

• Commission Calculations Run: Automated systems compute individual commissions based on predefined rules and performance metrics.
• Payout Reviews & Approvals: Supervisors review commission calculations for accuracy and approve them for payout.
• Dispute Management: Any discrepancies or disputes regarding commissions are addressed and resolved during this stage.
• Comp Adjustments: Adjustments are made for any changes or updates to commission structures or rules.
• Commissions to Payroll: Finalized commission amounts are transferred to the payroll system for inclusion in employees' paychecks.

Without meeting each of these critical steps along the way to payouts, you’ll likely face significant gaps and challenges in your commission process.

Why is Time-to-Payroll so important?

While it may be a fairly simple metric, commissions TTP can serve as a vital indicator of the efficiency of a company's commissions program and its surrounding processes. A swift TTP not only ensures timely payouts to employees, it also indicates a streamlined operational framework. Conversely, a slow TTP can signal bottlenecks, hindering productivity and suggesting the need for optimization.

What influences Time-to-Payroll? 

What all goes into the Time-to-Payroll processes, and where are different organizations pulling levers for optimization? There are number of aspects impacting this metric, but the key buckets are: 

• Process Automation: Having automation and intelligence built into your commissions processes (calculations, reviews, approvals, disputes, adjustments, etc.) can help reduce manual errors and thus expedite Time-to-Payroll. 
• Effective Communication: Facilitating seamless communication between departments within a common system is essential for expediting approvals and resolving inquiries quickly.
• Business Complexity: Being able to handle the specific needs and complexities of your business  is critical to ensure efficiency and accuracy in calculations and payouts.

By thoughtfully considering and implementing each of these factors into your commissions’ processes, you’ll be well on your way to meeting or exceeding industry standards for Time-to-Payroll. 

What does good look like? 

Setting a Time-to-Payroll (TTP) benchmark to strive for is a key first step to making your commission process more efficient. But what should that benchmark be? 

Based on a survey of CaptivateIQ customers in 2024, we saw that:

• Prior to CaptivateIQ, average Time-to-Payroll was 14.7 days
• Now with CaptivateIQ, customers saw a 31% improvement
• With an average Time-to-Payroll of 10.1 days

While a three business-week TTP serves as a reasonable benchmark for most organizations, as you can see there’s significant opportunity for improvement based on the implementation of automated systems & processes. Achieving this balance of speed and accuracy signifies a well-orchestrated process, helping you deliver timely, accurate payouts to commissionable employees and operational excellence to the organization

How do you measure Time-to-Payroll? 

While understanding industry standards for Time-to-Payroll (TTP) can be helpful, measuring your own process is critical to driving impact for your commission processes. Here's how you can calculate TTP: 

• Define the Starting Point: Determine when commission calculations begin. This could be immediately after the end of the commission period or upon receiving finalized sales data.
• Identify the Endpoint: Pinpoint the moment when payroll is issued, marking the completion of the commission process.
• Calculate the Duration: Simply count the number of business days and time elapsed in this period. 

By following these steps, you can set an internal benchmark for tracking Time-to-Payroll. 

How can you optimize Time-to-Payroll?  

So once you’re measuring Time-to-Payroll, all that’s left to do is begin to improve upon it. These are some of the practical steps you can take to optimize Time-to-Payroll (TTP): 

• Identify Bottlenecks: If TTP exceeds your target timeframe (ex. two weeks), investigate where delays occur. Is it in approvals, disputes resolution, processing or somewhere else?
• Streamline Processes: Implement automation to expedite repetitive tasks and reduce manual errors. This could involve automating processes like approvals or integrating systems for seamless data flow.
• Centralize Communication: Improve communication channels between departments by creating a source-of-truth. Centralized communications can accelerate decision-making and reduce back-and-forth delays.
• Training and Education: Provide training to all stakeholders to ensure they understand their roles and responsibilities. Educate them on the importance of timely actions and the impact on TTP.
• Continuous Improvement: Regularly monitor TTP and evaluate the effectiveness of implemented changes. Continuously seek opportunities for further optimization and refinement.

By using TTP as a performance metric and taking proactive steps to address inefficiencies, you can deliver serious benefits to your business.

The benefits of tracking Time-to-Payroll:

Why should your business be tracking TTP? With commissions being such a critical business process, there are a lot of downstream benefits to keeping close tabs on this process: 

• Operational Efficiency: By streamlining commission processes, businesses can significantly reduce TTP and enhance overall operational efficiency.
• Employee Satisfaction: Timely commission payouts contribute to improved employee satisfaction and morale, fostering a positive work environment.
• Data-Driven Decision Making: TTP metrics offer invaluable insights that help you identify inefficiencies and areas for improvement within commission processes, guiding data-driven decision-making and strategies.

As businesses navigate the intricacies of commission management, embracing metrics such as Time-to-Payroll can pave the way for enhanced efficiency and productivity. By monitoring and optimizing TTP, organizations can ensure timely commission payouts, boost employee morale, and streamline operational processes for sustained success in today's competitive landscape. It's time to harness the power of TTP and unlock the full potential of commission processes in this new era of efficient growth.