3Incentive Plans Overview

This chapter contains the following:

Compensating salespeople correctly to motivate them and support your business objectives can be complex. But you can design incentive plans that apply to groups of people. For example, design a plan for new salespeople and another for sales managers.

You model a plan by assembling existing pieces:

In this figure, you combine performance measures, expressions, and rate tables to form plan components. Then assemble the plan components to support the incentive requirements of participant types and roles.

Incentive compensation plan and child objects

Per this flow chart, plan administrators configure incentive plans after planning the compensation strategy and then managers assign the plans to participants.

Manage Incentive Compensation business process
flow diagram with job role swim lanes

Plans contain plan components. Plan components contain performance measures, incentive formulas, and rate tables that together determine how to calculate incentive compensation, when to calculate it, and what attainment to use.

These objects form incentive compensation plans and calculate the attainment and earnings. Plan components, performance measures, expressions, and rate tables are modular and reusable.

The major objects and attributes that compose incentive
compensation plans

Create and manage plans, plan components, and performance measures in the Compensation Plans work area.

Plan Components

Plan components indicate variations of incentive, such as bonus or commission. From a small library of plan components, you can configure many incentive compensation plans, simplifying plan setup and administration. A component assignment is a many-to-many relationship:

  • Assign multiple plan components to a single plan.

  • Assign a single plan component to multiple plans.

Performance Measures

Use performance measures to track participant attainment and progress toward a defined organizational goal. An assignment is a many-to-many relationship:

  • Assign multiple performance measures to a single plan component.

  • Assign a single performance measure to multiple plan components.

A plan component includes:

  • The performance measures used in the incentive formula expressions

  • Any dependent measures used by other measures associated with the plan component

Incentive Formula

The formula part of a plan component specifies how to calculate incentives and contains an expression that computes the earnings during the calculation process. The expression usually includes the calculated results of one or more performance measures. The incentive formula can include a rate table result.

Rate Table

The plan component rate table or performance measure scorecard determines the compensation rate for the attainment and earnings calculations.

Payment Information

Use payment information to allocate payment adjustments from participant payment plans among plan components. You can also designate a third-party payee.

Expressions

Use these interchangeable, reusable groupings of numeric operators and SQL functions as incentive formulas and measure formulas, as well as in expression-based rate dimensions. Expressions can include: