Setting Up and Using Matrix Goals

This chapter provides an overview of matrix goals and discusses how to:

• Set up matrix goals.

• Enter matrix goal attainments.

Understanding Matrix Goals

This section discusses the following topics and provides an example of goals matrix and performance score calculation:

• Types of matrix goals.

• Matrix goal terminology.

• Steps for using matrix goals.

Types of Matrix Goals

When you use a goals matrix, you set up goals, performance levels, and a payout schedule. The system calculates a performance score that determines the payout formula that the Award Allocation process uses to calculate awards.

Because a goals matrix determines the payout formula at the organization or group level, consider your options carefully before using a goals matrix for plans administered with one of these plan member rules:

• Employee VC Record

• Employee VC Record with Groups

With these plan member rules, you can set the target payout at the individual plan member level. You override this feature when you use a goals matrix.

You can manage a variable compensation plan with a goals matrix at the organization level or the group level. The level depends on the plan member rule that you established for the plan, as shown here:

• Use an organization goal matrix if the plan member rule is Empl VC Record (without groups).

• Set up the matrix at the group level for group goals if the plan member rule is Empl VC Record with Groups or Define Tree/Group.

  The system does not support matrix goals at the individual level.

Organization Goals Matrix

With this type of matrix, you set performance goals for the entire organization. The performance score for organization goals determines the payout formula for all plan members.

Group Goals Matrix

With this type of matrix, you set performance goals for all members of a group. Child groups inherit the group goals and attainments of parent groups, unless you establish a different goals matrix at the child group level. The performance score for group goals determines the payout formula for all members of the group.

Matrix Goal Terminology

This section discusses terminology related to matrix goals.

Steps for Using Matrix Goals

Here are the high-level steps for using a goals matrix to manage a variable compensation plan:

1. Define goal IDs on the Goals page.

2. Define the goals matrix option on the Plan Definition page.

   To define the goals matrix:

   1. Select Goals Matrix as the plan goals type.

   2. Define the number of columns that you want to set up in the matrix.

3. Set up the goals matrix on the Plan Goals - Matrix Goals page or the Plan Goals with Groups - Matrix Goals page.

   1. Enter the goal IDs that you use to evaluate performance.

   2. Establish a weighting percentage for each goal ID (the cumulative total of the weights for all goals must equal 100 percent).

   3. Enter the threshold, target, and stretch performance level percentages for the number of matrix columns that you define for the plan.

   4. Identify the measurable performance level values for each goal at each performance percentage level.

4. On the Payout Schedule page, identify a payout schedule that represents the amount of award that a plan member would receive at the various performance levels.

5. On the matrix goal attainment pages, enter the goal attainment value for each goal.

   The system performs these calculations:

   1. Determines the performance score for each goal.

   2. Sums the scores of all goals.

   3. Determines the payout formula.

6. Calculate the award using the payout formula by running the Calculate Awards process.

7. Determines the performance score for each goal

See Also

Defining Goals

Example of Goals Matrix and Performance Score Calculation

This example illustrates a sample goal matrix with five rows showing threshold, target, and stretch amounts:

Sample goal matrix showing threshold, target, and stretch amounts

The sample matrix shows these elements:

• Five performance levels ranging from 80 percent to 120 percent (for the threshold, target, and stretch levels).

• Three goals for measuring performance.

• Weight percentages for each goal (the total goal weight is 100 percent).

• The performance values to be attained for each goal at each performance level.

  Note. The contribution margin is usually expressed as a percentage. The plan administrator has indicated that a contribution margin of 12 percent is the lowest value that the organization needs to reach to qualify for a reward. However, 16 percent is the ideal target.

  You do not have to express performance values as percentages. Note that the customer satisfaction performance value is a flat amount because it is measured by scores on a survey.

• The actual goal attainment value expressed in the same measure (percent or flat amount) as the performance value for each goal.

• The score that the system has calculated for each goal and the total performance score.

Calculation of the Performance Score

The formula for calculating the performance score is:

Goal Weight × Performance Level of the Attainment Value

In the example, the attainment value for on-time service accuracy is 92 percent. The 92 percent performance value falls at the 100 percent performance level. So the performance score calculation for on-time service accuracy is:

40% × 100% = 40

The attainment value for the contribution margin is 18 percent. The 18 percent performance value falls at the 110 percent performance level. So the performance score calculation for the contribution margin is:

35% × 110% = 39

The attainment value for customer satisfaction is 85. The performance value of 85 falls at the 90 percent performance level. So the performance score calculation for customer satisfaction is:

25% × 90% = 23

The total performance score is the sum of the scores for all three goals:

40 + 39 + 23 = 102

Note. If the attainment value falls between two performance levels, the system interpolates the performance level. For example, if the attainment value for on-time service accuracy is 91 percent, the system interpolates the performance level to be 95 percent. The 95 percent value is the midpoint between the performance levels at 90 percent and 100 percent, which corresponds to the performance values of 90 percent and 92 percent, respectively.

Determination of the Payout Formula

You set up a payout schedule that associates payout formulas with ranges of total scores. The system evaluates only the scores that are equal to or higher than the threshold when it assigns payout formulas.

Here is an example of a payout schedule:

In this example, the total performance score of 102 falls in the range of 100–109, so the payout formula is 7 percent of quarterly base pay. The Calculate Awards process uses the payout formula when it calculates the award.

Setting Up Matrix Goals

To set up matrix goals, use the Plan Goals (VC_PLAN_GOAL) and Plan Goals with Groups (VC_PLAN_GOAL_WG) components.

This section discusses how to:

• Define a goal matrix for a plan without groups.

• Define a goal matrix for a plan with groups.

• Assign payout formulas to performance score ranges.

Pages Used to Set Up Matrix Goals

Defining a Goal Matrix for a Plan Without Groups

Access the Matrix Goals page (Set Up HRMS, Product Related, Compensation, Variable Compensation, Plan Goals, Matrix Goals).

Payout Schedule	Click to access the Payout Schedule page, where you define payout formulas for various performance levels.
Threshold	Enter performance level percents for each Threshold column of the matrix. Threshold percents are generally less than 100 percent.
Target	Enter the performance level percent for the Target column of the matrix. The Target percent is generally 100 percent.
Stretch	Enter performance level percents for each Stretch column of the matrix. Stretch percents are generally greater than 100 percent.
Goal ID	Select an ID from the options.
Weight	Enter a weight for the goal ID. Express weighting percents in up to two decimal places, for example, 18.25 percent. To save the page, the total of all weights for the payout period ID must equal 100 percent.
Threshold, Target, Stretch	For each goal ID, enter a performance value to be attained at each threshold, target, and stretch performance level in the matrix. Depending upon how you measure the goal, express the performance value as a percentage or as a flat amount.
Total Weight	The system sums the weighting percents as you enter them for each goal and displays the cumulative total in the Total Weight field. Adjust the weights for goals until the sum of all weighting percents for the payout period is 100 percent. To save the page, the total weight must equal 100 percent.

Defining a Goal Matrix for a Plan With Groups

Access the Matrix Goals page (Set Up HRMS, Product Related, Compensation, Variable Compensation, Plan Goals with Groups, Matrix Goals).

Note. The Plan Goals with Groups - Matrix Goals setup page is identical to the Plan Goals - Matrix Goals setup page with the addition of the Group ID field.

See Also

Defining a Goal Matrix for a Plan Without Groups

Assigning Payout Formulas to Performance Score Ranges

Access the Payout Schedule page (click the Payout Schedule link on the Plan Goals - Matrix Goals page or the Plan Goals with Groups - Matrix Goals page).

From Score	Enter the low score in the range for which you want to assign a payout formula. For example, if you want to set a range from 80 to 90, enter 80. The lowest value in the From Score field should be equal to or higher than the threshold score.
To Score	The system populates this field with the From Score that you enter in the next row. The system interprets the range up to the To Score, at the level of two decimal places. For example, if the range is 80–90, any score up to 89.99 is in the range. A score of 90 is in the next range.
Payout Formula	Select a Payout Formula for the range of scores that you defined.

Entering Matrix Goal Attainments

Enter goal attainments after you have completed the performance review. You must complete the attainments before calculating awards.

This section discusses how to:

• Enter matrix goal attainments for plans without groups.

• Enter matrix goal attainments for plans with groups.

Pages Used to Enter Matrix Goal Attainments

Entering Matrix Goal Attainments for Plans Without Groups

Access the Matrix Goals page (Compensation, Variable Compensation, Define Goal Attainments, Matrix Goals, Matrix Goals).

Viewing the Goals Matrix

The system displays the goals matrix that you set up for the plan ID with the values that you entered on the Matrix Goals setup page. You cannot change those values on this page.

Entering Goal Attainments

Entering Matrix Goal Attainments for Plans with Groups

Access the Matrix Goals w/in Group page (Compensation, Variable Compensation, Define Goal Attainments, Matrix Goals w/in Group, Matrix Goals w/in Group).

This page and its fields are identical to the Define Goal Attainments - Matrix Goals page, with the addition of this field: