Calculate Monthly Bonuses Using a Weighted Score

This incentive plan example demonstrates how to calculate a monthly bonus for three product lines.

Attainment is a weighted score that ranges from 0 to 100, based on the period revenue for the product lines
The bonus is based on the weighted score using a simple rate table

Here are the key decisions for the plan component in this scenario.

Decision to Consider	In This Example
What is the payout frequency?	Monthly
What type is the calculation?	Interval-based
How many measures do you require and what are their weights?	Four measures, weights of 30, 30, 40, and 100 percent, respectively
Are any of these measures linked?	The last measure is dependent on the first three
How many rate tables do you require, and how many dimensions for each table?	One rate table, with one dimension
How do you want to apply the rate?	Split the attainment; rates are fixed within a tier

Here are the key decisions for performance measures in this scenario.

Decisions to Consider	In This Example
How should the application process the transaction?	Group by interval for all measures
What is the unit of measure?	Score
What is the performance interval?	Monthly
Does the calculation involve quota?	No
Does the calculation involve a scorecard?	Yes, with one rate dimension Split the attainment; rates are fixed within a tier

Summary of the Tasks

In the Compensation Plans work area, create an incentive compensation plan by creating the parts first, and then associating them with the plan component.

Create the rate dimension input and weighted score expressions.
Create the score and bonus rate tables.
Create the three product performance measures with different credit categories, associating the weighted score expression in the measure formula for each.
Create a sum weighted score expression and performance measure.
Create the bonus payment rate dimension input and earnings expressions.
Create the plan component, associating the performance measures, earnings expression, rate tables, and rate dimension input expression that you created earlier.
Create the incentive compensation plan and associate the plan component.

Use default values for fields unless the steps specify other values.

Create Rate Dimension Input and Weighted Score Expressions

Create the two types of expressions in the following table used by all three of the product performance measures.

Type of Expression	Purpose
Rate dimension input	Used in the scorecards to calculate period revenue attainment
Weighted score	Used in the measure formula, to calculate the period weighted score for a product line

Click Create in Manage Expressions.
In the Configure Expression section, create the rate dimension input expression SUM(Credit.Credit Amount) and weighted score expression RTR * MAX(Measure.Weight).

Name the first one Rate Dimension Input.
1. On the Attributes menu, select Functions > Aggregate Functions > SUM.
2. Click the left parenthesis (.
3. On the Attributes menu, select Credit > Credit Amount.
4. Click the right parenthesis ).
5. Click Save and Create Another.
Name the second one Weighted Score.
1. On the Attributes menu, select Rate Table Rate.
2. Click the asterisk *.
3. On the Attributes menu, select Functions > Aggregate Functions > MAX.
4. Click the left parenthesis (.
5. On the Attributes menu, select Measure > Weight.
6. Click the right parenthesis ).
Click Save and Close to return to the Manage Expressions page.
Click Done.

Create the Scorecard and Rate Table

This table describes the purpose of the two rate tables:

Used By	Where	Purpose
All of the product performance measures	Scorecard page tab	Find the score to apply when calculating bonus earnings, based on revenue attainment
Plan component	Rate Table page or tab	Find the bonus based on the weighted score

Do these steps twice to create the measure scorecard and plan component rate table.

Click Create in Manage Rate Tables.
Name the rate table.
- Name the scorecard Bonus Earnings.
- Name the plan component rate table Bonus Score.
On the Rate Dimensions section toolbar, click Create.
1. Name the rate dimension.
  - Name the scorecard dimensionRevenue Attainment.
  - Name the rate table dimension Bonus.
2. In the Tiers section, add the From and To values for each tier, such as:
  - 1 -- 10,000, 10,000 -- 50,000, 50,000 -- 100,000, and 100,000 -- 9,999,999 for the scorecard dimension Revenue Attainment
  - 0 -- 20, 20 -- 40, 40 -- 60, 60 -- 80, and 80 -- 999 for the rate table dimension Bonus
  Make the final To value much larger than you would ever conceivably use.
3. Click Save and Close to return to the Create Rate Table page.
Click Edit Rates.
1. Edit the rate for the tier, such as:
  - 25, 50, 75, and 100 for the scorecard
  - 1,000, 2,000, 3,000, 4,000, and 5,000 for the rate table
2. Click Save and Close to return to the Create Rate Table page.
After creating the scorecard, click Save and Create Another.

After creating the plan component rate table, click Save and Close to return to the Manage Rate Tables page.
Click Done.

Create Product Score Performance Measures

Create three product score performance measures that use the weighted score expression created earlier to determine revenue attainment amount based on period revenue. Create the first measure using the guided process and the remaining measures by duplicating the first one.

Click Create in Manage Performance Measures.
Name the measures by product.
1. Product A Score
2. Product B Score
3. Product C Score
In the Unit of Measure field, select Score.
Enter start and end dates for the year.
Click Next to open the Define Goal page. In the Target field, enter the goal, such as 1,200,000.
Click Next to open the Add Credit Categories page. Add the credit category for product A, such as Green Servers. If the credit category doesn't exist, then click Create to create it and add it to the measure.
Click Next to open the Define Measure Formula page.
1. In the Process Transactions field, select Grouped by interval.
2. In the Expression Name field, search for and select the expression that calculates the period weighted score for a product line, named Weighted Score.

Click Next to open the Add Scorecard page.

Complete the fields, as shown in this table.

Field	Value
Rate Table Dimensions	1
Split Attainment Across Tiers	Yes
Apply Split	Fixed within a tier

In the Scorecard section, add a row.
In the Name field, search for and select the scorecard that finds the score to apply when calculating bonus earnings, based on revenue attainment, Bonus Earnings.
In the Rate Dimensional Inputs section Expression Name field, search for and select the expression that calculates period revenue attainment, Rate Dimension Input.
Click Save and Close to return to the Manage Performance Measures page.

Repeat the following steps twice to create the second and third performance measures.
1. Search for and select the product A measure that you just created, Product A Score.
2. On the Search Results section toolbar, click Duplicate.
3. Edit the name and display name to be Product B Score. The second time, change the name to Produce C Score.
4. Select the Credit Categories tab.
5. Delete the existing credit category.
6. The first time, add the credit category for product B, such as Sentinel Power Servers.
  
  The second time, add the credit category for product C, such as Tablets.
7. Click Save and Close to return to the Manage Performance Measures page.
8. Click Done.

Create the Sum Weighted Score Expression and Performance Measure

Create an expression to calculate the sum of the weighted period score, for all product lines. Then, to determine the weighted score by summing the individual scores, create a performance measure that uses the expression that you just created.

Click Create in Manage Expressions.
Name it Sum Weighted Score.
In the Configure Expression section, create the sum weighted score expression Measure result.Product A Score.ITD Output Achieved + Measure result.Product B Score.ITD Output Achieved + Measure result.Product C Score.ITD Output Achieved.
1. On the User Defined Objects menu, select Measure result.
2. In the Measure field, select Product A Score.
3. Select ITD Output Achieved.
4. Click Add to Expression.
5. Click plus +.
6. In the Measure field, select Product B Score.
7. Select ITD Output Achieved.
8. Click Add to Expression.
9. Click plus +.
10. In the Measure field, select Product C Score.
11. Select ITD Output Achieved.
12. Click Add to Expression.
13. Click Save and Close to return to the Manage Expressions page
14. Click Done.
Click the Create Performance Measure task.
Name it Product ABC Score.
Enter start and end dates for the year.
In the Unit of Measure field, select Score.
Click Define Measure Formula in the guided process.
1. In the Process Transactions field, select Grouped by interval.
2. In the Expression Name field, search for and select the expression that calculates the sum of the weighted period score for all products lines, Sum Weighted Score.
Click Save and Close to return to the Manage Performance Measures page.
Click Done.

Create Bonus Payment Expressions

Create the two expressions shown in this table.

Type of Expression	Purpose
Rate dimension input	Calculate the period product bonus
Earnings	Calculate the period product bonus based on the weighted score

Click Create in Manage Expressions.
In the Configure Expression section, create the rate dimension input expression Measure result.Product ABC Score.ITD Output Achieved and earnings expression RTR.

Name the rate dimension input expression Product Bonus.
1. On the User Defined Objects menu, select Measure result.
2. In the Measure field, search for and select the measure that you created: Product ABC Score.
3. Select ITD Output Achieved.
4. Click Add to Expression.
5. Click Save and Create Another.
Name the earnings expression Weighted Product Bonus.
1. On the Attributes menu, select Rate Table Rate.
2. Click Add to Expression.
Click Save and Close to return to the Manage Expressions page.
Click Done.

Create the Product Bonus Plan Component

To calculate period earnings using weighted scores, create a product bonus plan component that contains the product and weighted score performance measures.

Click Create in Manage Plan Components.
Name it Product Bonus.
In the Calculate Incentive field, select Per interval.
In the Incentive Type field, select Bonus.
Enter start and end dates for the year.

Click Next to open the Add Performance Measure page.

Add the performance measures and set the corresponding weight and earning basis values, as shown in this table.

Measure	Weight Percentage	Calculation Sequence	Earning Basis
Product A Score	30	1	Yes
Product B Score	30	1	Yes
Product C Score	60	1	Yes
Sum Weighted Score	100	2	No

Click Next to open the Define Incentive Formula page.
1. In the Payout Frequency field, select Period.
2. In the Expression Name field, search for and select the earnings expression that calculates the period product bonus based on the weighted score, Weighted Product Bonus.
Click Next to open the Add Rate Table page.
1. In the Rate Table Dimensions field, enter 1.
2. In the Rate Table section, add a row.
3. In the Name field, search for and select the rate table that finds the bonus based on the weighted score, Bonus Score.
4. In the Rate Dimensional Inputs section Expression Name field, search for and select the expression that calculates the period product bonus, Product Bonus.
Click Save and Close to return to the Manage Performance Measures page.
Click Done.

Create the Incentive Compensation Plan

Create an incentive compensation plan that contains the product bonus plan component and calculates period bonuses for three product lines using a scorecard.

Click Create in Manage Compensation Plans.
Name it Monthly Bonus Using Weighted Score.
Enter start and end dates for the year.

Tip: Always end date your compensation plans.
Click Next to open the Add Plan Component page.
1. Add the plan component that calculates period earnings using weighted scores, Product Bonus.
Click Save and Close to return to the Manage Compensation Plans page.
Click Done.