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Using Incentive Compensation
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This guide also applies to on-premise implementations

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1 Overview

This chapter contains the following:

Manage Incentive Compensation: Overview

Manage Incentive Compensation: Overview

Oracle Fusion Incentive Compensation enables organizations to successfully align behavior with corporate performance and financial objectives. Incentive compensation administrators, managers, and analysts can use Manage by Exception functionality to ensure that compensation and payment plan setup is complete, transactional errors are resolved, processing performance is as expected, disputes are minimized, analyst workload is balanced, and payments are accurate and on time. Participants and participant managers can use embedded reports to monitor year-to-date performance, earnings, and payment.

The following figure shows the high-level flow of the main Manage Incentive Compensation business activities. Descriptions of each main activity are provided after the figure.

Manage Incentive Compensation business process activities

Model and Configure Incentive Plans

As part of designing incentive plans, incentive compensation plan administrators can create:

  • Performance measures to determine attainment towards goals

  • Incentive formulas to accurately compute earnings for each level of attainment

  • Classification rules so that different incentive rewards may be applied for performance across different lines of business

Plan administrators can also maintain a library of plan components, including performance measures, user-defined calculation expressions, and multidimensional rate tables, which they can:

  • Assemble to form commission or bonus plan components

  • Adapt to support the incentive program requirements of multiple participant types and roles

Configure Credit and Rollup Rules

Incentive compensation managers can use date-effective rules to determine who will receive credit for each business transaction and how much credit will be allocated. They can:

  • Adapt rules to support allocation based on multiple criteria.

  • Create a hierarchical structure for use in rolling credit up the management chain, or across organizations or other sales distribution entities.

  • Define teams as required to support team-based incentives.

Assign Incentive and Draw Plans

Incentive compensation managers can define rule-based incentive payment draws and recovery plans, as required. They can also import participants and assign to them incentive compensation analysts. Compensation analysts are responsible for participant-specific plan configuration and processes and can do the following:

  • Assign compensation and payment plans to participants

  • Organize participants into relevant payment groups to support downstream payment processes.

  • Personalize plans and define other participant-specific attributes, including the participant's home currency, to support participant-specific incentive agreements.

Manage Incentive Compensation Processes and Workload

Incentive compensation managers and analysts can quickly review key performance indicators to ensure setup is complete, transactional errors are resolved, processing performance is as expected, disputes are minimized, analyst workload is balanced, and payments are accurate and on time. They can access details, as required, to take relevant action.

  1. Collect Transaction and Performance Data: Incentive compensation managers and analysts can collect transactions and other data used to measure participant performance from spreadsheets and various applications using an open, standard-based integration framework or a file-based data import utility.

  2. Credit Participants: Compensation managers and analysts can run processes to accurately determine direct and indirect credit receivers associated with each business transaction. They can also override rules, reallocate credits, and alter credit split percentages or amounts when required and can leverage a Microsoft Excel workbook for mass updates or manual creation of credits.

  3. Calculate Incentive Earnings: Compensation managers and analysts can run processes to classify transactions and credits as well as calculate earnings. They can also research the cause of classification or calculation errors and review earnings details to verify the accuracy of plan design and reduce shadow accounting.

  4. Determine Incentive Payments: Compensation managers can generate trial payments and review a summary for each payment batch, including the total amount to pay. They can also create reports in Oracle Fusion Transactional Business Intelligence to monitor participant exceptions, as required.

    Compensation analysts can review participant payment details for the period as well as apply discretionary bonuses or make other manual payment adjustments, as required. They can also review statistics to ensure participants are included in payment processing at relevant frequencies so that everyone is paid accurately and on time.

  5. Manage Incentive Disputes: Incentive compensation participants and participant managers, as well as compensation analysts and managers, can create dispute records for missing transactions as well as incorrect credits, earnings, and payments, and attach relevant documentation. Business rules ensure that disputes are automatically routed to the compensation analysts responsible for resolving the disputes and automatic notifications or approvals are sent.

    Compensation managers and analysts can review participant dispute history and other information to aid in the resolution of the dispute, as well as view participant information in context to gain quick access to participant-specific assignments, quotas, plan details, and transactional history. They can access a complete audit trail of changes affecting payments, and trace payments back to associated earnings, credits, and transactions. When resolved, the application retains the approval history.

Monitor Performance and Review Incentive Results

Participants and participant managers can use commission statements to monitor year-to-date performance, earnings, and payment for each period. They can review:

  • Performance summaries that describes attainment towards goals for each performance measure, and drill to associated credit details

  • Historical performance and earnings and understand current performance expectations to determine how to get the most out of the incentive program

Secure access ensures that participant managers can review only their own compensation information or that of their team. Participant comparisons and ranking provide participant managers with relevant business insights.

Approve and Distribute Payments

Incentive compensation managers can use business rules to automatically hold unexpected payments and enable release of payments after exceptions are approved as well as include participant managers in the payment approval process, when required.

Incentive compensation managers and analysts receive automatic notifications of payment exceptions and can obtain access to relevant performance or payment history before approving payments for distribution to participants. Compensation managers can also deliver final payment information, in relevant participant currencies, to appropriate payroll or payables application to cut checks.

The following table lists the Manage Incentive Compensation business process activities and their corresponding work areas.


Business Process Activity

Work Area

Model and Configure Incentive Plan

(Reminder: This is where you manage classification rules and credit categories.)

Compensation Plans

Configure Credit and Rollup Rules

Participant Assignments

Assign Incentive and Draw Plans

Participant Assignments and Participant Snapshot

Manage Incentive Compensation Processes and Workload, Collect Transaction and Performance Data, Credit Participants, and Calculate Incentive Earnings

Credits and Earnings

Determine Incentive Payments and Approve and Distribute Payments

Payments

Manage Incentive Disputes and Monitor Performance and Review Incentive Results

Participant Snapshot and Sales Compensation