PeopleSoft Enterprise Human Resources 9.1 PeopleBook: Manage Variable Compensation

Setting Up and Using Weighted Goals

This chapter provides overviews of weighted goals and discusses how to:

Set up weighted goals.
Enter weighted goal attainments.
Run the Organization and Group Goals report.

Understanding Weighted Goals

This section discusses:

Weighted goal terminology.
Weighted goal levels.
Steps for using weighted goals.
Calculation of the performance factor.

Weighted Goal Terminology

This section discusses terminology related to weighted goals.

Goal	A performance measure that you define on the Goals page.
Attainment Percentage	The percentage of accomplishment of performance goals at each goal level.

Weighted Goal Levels

You can manage a variable compensation plan by using weighted goals at up to three levels. The three levels are organization, group, and individual. When you define the plan, assign a plan goal weight to each level. The plan goal weight indicates the relative value of each level in the final performance factor calculation. If you don't use a level, assign a plan goal weight of 0 percent.

To calculate the performance of an individual, the system multiplies the goal attainment at each level by the goal weight percentage to produce a weighted attainment. It then calculates the total weighted attainments of all three levels.

Organization Goals

Organization goals are performance goals that you set for the entire organization. Assign a weighted goal percentage to each organization goal to determine its importance relative to other goals at the same level. The attainment percentage of the organization goals affects the variable compensation calculation of all plan members equally. An organization goal might be financial (for example, revenues), or it could be operational (for example, head count).

Group Goals

You can use group goals if you administer the plan by using groups. Group goals are performance goals that you set for all members of a group. Child groups inherit the performance factor of parent groups unless you establish different goals at the child group level. When you specify goals for a group, the group performance factor is calculated based on the attainments for the group's own goals. If no goals are specified, the group performance factor is taken from the parent group.

Assign a weighted goal percentage to each group goal to determine its importance relative to other goals at the same level. The attainment percentage of group goals affects the variable compensation calculation of all members of the group equally.

Individual Goals

Individual goals are performance goals that you set for individual plan members. You assign a weighted goal percentage to an individual goal to determine its importance relative to other goals at the same level. The attainment percentage of individual goals affects only the variable compensation calculation of the individual plan member.

Steps for Using Weighted Goals

Here are the high-level steps for using weighted goals to manage a plan:

Define goal IDs on the Goals page.
Define weighted goals as a plan option on the Plan Definition page.
1. Select Weighted Goals as the plan goals type.
2. Specify the plan goal weights for each of the three goal levels (the total must be 100 percent).
Set up weighted goals in the Plan Goals component (VC_PLAN_GOAL) or the Plan Goals with Groups (plan goals with groups) component (VC_PLAN_GOAL_WG).
Enter goal attainments for each level of weighted goals on the goal attainments pages.
Calculate a performance factor for organization and group goals by running the Determine Allocation Application Engine process (VC_DET_ALLOC).
Calculate a performance factor for individual goals by running the Calculate Awards Application Engine process (VC_CALWRD or VC_CALWRD_WG).
Apply the performance factor to the target payout by running the Calculate Awards process.
Run the optional Organization and Group Goals report before or after the measurement period.

Calculation of the Performance Factor

The Determine Allocations process calculates the performance factor for organization and group goals. The Calculate Awards process calculates the performance factor for individual goals. The Calculate Awards process also calculates the total performance factor and applies it to the prorated target payout.

The system multiplies these three percentages to calculate the performance factor for each goal:

The weighting percentage that you assign to the goal level when you define the plan.
The weighting percentage that you assign to the performance goal.
The percentage of accomplishment of the performance goal.

The formula for calculating the performance factor for each goal is:

Plan Goal Weighted Percentage × Weighted Goal Percentage × Attainment Percentage = Performance Factor

The Calculate Awards process sums the performance factor of all goals to derive the plan member's total performance factor. It rounds the calculation up to five decimal places.

Example of a Performance Factor Calculation and Award Calculation

The following diagram illustrates a performance factor calculation for goals established at three levels, using the formula:

Plan Goal Weighted Percentage × Weighted Goal Percentage × Attainment Percentage = Performance Factor

Performance factor calculation with plan goal weight percentages, weighted goal percentages, attainment percentages, and performance factors

The Calculate Awards process multiplies the prorated target payout by the performance factor to calculate the award.

The following data is used to calculate the quarterly award in this example:

Data Description	Data Value
Worker salary	50,000 USD (annual rate)
Plan payout formula	15% of base pay (quarterly)
Proration factor	0.75
Performance factor	0.95 (calculated in the preceding example)

Here is the calculation of the award:

{((50,000 × 15%) ÷ 4) × 0.75} × 0.95 = 1,335.94 USD

Setting Up Weighted Goals

This section provides an overview of weighted goal setup, lists prerequisites, and lists the pages used to set up weighted goals at the plan, group, or individual level.

Understanding Weighted Goal Setup

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

Set up goals only at levels for which the Plan Goal Weight is above 0% on the Plan Definition page. You can set up any number of goals at each level, as long as the total weighting percent at each level is 100%.

Example of One Goal at One Level

This table illustrates setting up one goal at one level:

Goal	ROI (return on investment)
Weighting Percent	100 percent
Comments	ROI goal of 18 percent

Example of Three Goals at One Level

This table illustrates setting up three goals at one level:

Goal	ROI	EPS (Enrollment Planning Service)	TSR (Total Shareholder Return)
Weighting Percent	50 percent	25 percent	25 percent
Comments	ROI goal of 18 percent	EPS of 2.35 USD	11 percent of TSR

Prerequisites

Before you can set up the goal weights, you must:

Define goals.

See Defining Goals.
Set up the plan definition for weighted goals.

See Specifying the VC Plan Definition.

Pages Used to Set Up Weighted Goals

Page Name	Definition Name	Navigation	Usage
Organization Goals	VC_ORG_GOAL	Set Up HRMS, Product Related, Compensation, Variable Compensation, Plan Goals, Organization Goals Set Up HRMS, Product Related, Compensation, Variable Compensation, Plan Goals with Groups, Organization Goals Compensation, Variable Compensation, Maintain Plan, Plan Goals, Organization Goals Compensation, Variable Compensation, Maintain Plan, Plan Goals w/ Groups, Organization Goals	Assign goals to the plan at the organization level and indicate their relative weighting. The sum of all organization goals must be 100 percent.
Group Goals	VC_GRP_GOAL	Set Up HRMS, Product Related, Compensation, Variable Compensation, Plan Goals with Groups, Group Goals Compensation, Variable Compensation, Maintain Plan, Plan Goals w/ Groups, Group Goals	Assign goals to the plan at the group level and indicate their relative weighting. The sum of all group goals must be 100 percent. The search dialog for the component lists only plans that use groups.
Default Individual Goals	VC_IND_GOAL	Set Up HRMS, Product Related, Compensation, Variable Compensation, Plan Goals, Default Individual Goals Compensation, Variable Compensation, Maintain Plan, Plan Goals, Default Individual Goals	For plans that do not use groups, assign default goals to the plan at the individual level and indicate their relative weighting. The sum of all individual goals must equal 100 percent. The system enters the goals that you set up on the Default Individual Goals setup page as the default goals on the Individual's Goals page, where you can modify them for individual workers.
Default Individual Goals (with groups)	VC_IND_GOAL_WG	Set Up HRMS, Product Related, Compensation, Variable Compensation, Plan Goals with Groups, Default Individual Goals Compensation, Variable Compensation, Maintain Plan, Plan Goals w/ Groups, Default Individual Goals	For plans that use groups, assign default individual goals to each group in the plan and indicate their relative weighting. The sum of all individual goals must equal 100 percent. The system enters the goals that you set up on the Default Individual Goals setup page as the default goals on the Individual w/in Group page, where you can modify them for individual workers.

Entering Weighted Goal Attainments

This section provides an overview of weighted goal attainments and discusses how to:

Enter organization goal attainments.
Enter group goal attainments.
Enter individual goal attainments.
Enter goal attainments for individuals with groups.

Understanding Weighted Goal Attainments

A goal attainment is a percentage that expresses the degree to which the organization, group, or individual meets the stated goal during the performance period. Enter an attainment percentage greater than 100 percent if performance of the goal exceeds expected performance. If you do not enter an attainment percentage for a goal that you have set up, the system uses 0 percent as the attainment percentage for that goal.

Enter goal attainments at each level for which you set up weighted goals in the plan. When you access a goal attainment page, the system displays a data row for each goal ID that you set up at that level for the plan or group.

Enter goal attainments whenever the information is available in the organization's business process, subject to these limitations.

Organization and Group Attainments

Enter all organization and group attainments before you run the Determine Allocation process.

Individual Attainments

Enter individual attainments any time after you've run the Eligibility process but before you run the Calculate Awards process for the plan or group.

Pages Used to Enter Weighted Goal Attainments

Page Name	Definition Name	Navigation	Usage
Organization's Goals	VC_ORG_GOAL_ATN	Compensation, Variable Compensation, Define Goal Attainments, Organization's Goals, Organization's Goals	Enter the goal attainments for the organization goals that you set up for the plan.
Group's Goals	VC_GRP_GOAL_ATN	Compensation, Variable Compensation, Define Goal Attainments, Group's Goals, Group's Goals	Enter the goal attainments for the group goals that you set up for the plan.
Individual's Goals	VC_IND_GOAL_ATN	Compensation, Variable Compensation, Define Goal Attainments, Individual's Goals, Individual's Goals	For plans that don't use groups, add goals and weights, change or delete default goals and weights, and enter goal attainments for individual plan members.
Individual w/in Group (individual within group)	VC_IND_GOAL_WG_ATN	Compensation, Variable Compensation, Define Goal Attainments, Individual w/in Group, Individual w/in Group	For plans that use groups, add goals and weights, change or delete default goals and weights, and enter goal attainments for individual plan members.

Entering Organization Goal Attainments

Access the Organization's Goals page (Compensation, Variable Compensation, Define Goal Attainments, Organization's Goals, Organization's Goals).

Period ID

Select the plan payout period for which you want to enter goal attainments.

Goal ID

Select a goal ID. The system displays a row for each goal ID that you enter on the Organization's Goals setup page. You must enter a goal attainment for each goal that you set up. The system uses 0 percent as the attainment percentage if you leave this field blank.

Weight

The system displays the weighting percentage that you assign to the goal ID.

Attainment

Enter the percentage attained value for the goal.

Long Description

Enter any information pertinent to the goal attainment.

Entering Group Goal Attainments

Access the Group's Goals page (Compensation, Variable Compensation, Define Goal Attainments, Group's Goals, Group's Goals).

The system attributes the performance factor of a group to all of its child groups unless you have set up goals at a child level. As a result, any child group without defined goals takes on the performance factor of the next highest group with defined goals on the tree.

Note. The child group does not inherit the actual attainments; it inherits only the performance factor.

All fields on this page are identical to the fields on the Organization's Goals page, with the addition of the Group ID field.

Group ID

Select the ID of the group for which you want to enter goal attainments. The system displays the description of the group.

Entering Individual Goal Attainments

Access the Individual's Goals page (Compensation, Variable Compensation, Define Goal Attainments, Individual's Goals, Individual's Goals).

The Individual's Goals page is similar to the Group's Goals page and the Organization's Goals page. The Eligibility/Proration process loads the default individual goals onto this page for all eligible plan members. Use the defaults as a starting point for updating the goals of the individual before entering goal attainments.

Period ID	Displays the ID for the plan payout period for which you want to enter goal attainments.
No Goals	Select to delete all individual goals for the plan member. When you select No Goals, the system deletes all individual goal records for the plan member. This renders the fields unavailable for entry. The system then uses 100 percent as the attainment percentage at the individual level. That way, a lack of goals does not cause a reduction of the award.
Total Weight	The system sums the weighting percentages as you change or enter them for each goal, and it displays the cumulative total in this field. Adjust the weights for goals until the sum of all goal weights for the payout period is 100 percent. Before you can save the page, the total weight must equal 100 percent.
Goal ID	Displays a row for each default goal ID that you enter on the Organization's Goals setup page. Select a data row for a default goal ID, or add a new goal by selecting an ID from the options.
Weight	Displays the weighting percentage assigned to the default goal ID. Change the default weight, or enter a weighting percent for a new goal ID. The total of all weights for the payout period ID must equal 100 percent.
Attainment	Enter the percentage attained value for each goal.

Entering Goal Attainments for Individuals with Groups

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

The system does not automatically apply the attainment percentages of a parent group to its child groups on the tree. You must select the group ID of each group for which you want to modify default individual goals and enter attainment percentages.

The Eligibility/Proration process loads the default individual goals into this page for members of groups with default individual goals defined. Use the defaults as a starting point for updating the goals of the individual before entering goal attainments.

All fields on this page are identical to the fields on the Individual's Goals page, with the addition of the Group ID field.

Group ID

Displays the group ID of the plan members whose goal attainments you want to enter.

Running the Organization and Group Goals Report

This section lists the page used to run the Organization and Group Goals report (VC011).

Page Used to Run the Organization and Group Goals Report

Page Name	Definition Name	Navigation	Usage
Organization and Group Goals	RUNCTL_VC_REP	Compensation, Variable Compensation, Variable Comp Reports, Organization and Group Goals, Organization and Group Goals	Run the Organization and Group Goals report (VC011). This report provides the plan goal weights for the variable compensation plan ID and period ID. It also lists all organization and group-weighted goals in the plan with their weighting percentages and attainment percentages.

Period ID	Select the plan payout period for which you want to enter goal attainments.
Goal ID	Select a goal ID. The system displays a row for each goal ID that you enter on the Organization's Goals setup page. You must enter a goal attainment for each goal that you set up. The system uses 0 percent as the attainment percentage if you leave this field blank.
Weight	The system displays the weighting percentage that you assign to the goal ID.
Attainment	Enter the percentage attained value for the goal.
Long Description	Enter any information pertinent to the goal attainment.