Calculate Monthly Commissions Based on Percentages of Generated Revenue

This example demonstrates how to create an annual incentive compensation plan.

Provide participants with a monthly commission based on a percentage of the generated revenue
Include no cap

Review 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?	One measure with no weight
How many rate tables do you require, and how many dimensions for each table?	One rate table with one dimension and four tiers
How do you want to apply the rate?	Split the attainment, rates are fixed within a tier

These key decisions are for the performance measure in this scenario.

Decisions to Consider	In This Example
How should the application process the transaction?	Individually
What is the unit of measure?	Amount
What is the performance interval?	Monthly
Does the calculation involve quota?	No
Does the calculation involve a scorecard?	No

Summary of the Tasks

In the Compensation Plans work area, create an incentive compensation plan using a top-down approach:

Enter primary details for the plan.
Create and add a plan component.
Create and add a performance measure that includes a new attainment expression in the measure formula.
Define a new earnings expression in the incentive formula for the plan component.
Create and add a rate table to the plan component for use with the incentive formula.

Create the Compensation Plan

Create a compensation plan that pays participants a percentage on product revenue, without any cap:

Click Create in Manage Compensation Plans.
Enter the name Percentage of Generated Revenue.
Enter a start and end date for the quarter.

Tip: Always end date your compensation plans.
Click Next to open the Create Compensation Plan: Add Plan Component page.

Step 1: Start creating the plan component within the compensation plan guided process.

Create and add a plan component, rather than adding an existing one. The new plan component calculates earnings using credit amounts and a percentage rate table.

Click Create.
1. Enter the primary details.
  1. Enter the plan component name Percent Commission
  2. In the Calculate Incentive field, select Per event.
  3. In the Incentive Type field, select Commission.
2. Click Next to open the Create Plan Component: Add Performance Measure page.

Step 2: Create and add the performance measure within the plan component guided process.

Create and add a performance measure, rather than adding an existing one. The new measure calculates attainment as the credit amount that the crediting process generates for each transaction.

Click Create.
1. Enter the name Credit Amount Attainment.
2. Click Next.
3. In the Define Goal screen, click Next.
4. In the Add Credit Categories screen, add the product credit categories.
  
  If the credit category doesn't exist, then click Create to create it and add it to the measure.
5. Click Next to open the Create Performance Measure: Define Measure Formula page.
  1. In the Process Transactions field, select Individually.
  2. In the Expression Name field, select Create New Expression.
    1. Name the expression Credits.
    2. On the Configure Expression section Attribute menu, select Credit > Credit Amount.
    3. Click Save and Close to return to the Create Performance Measure: Define Measure Formula page.
      
      The Expression Name field contains the name of the expression that you just created.
  3. Select Running total.
6. Click Save and Close to return to the Create Plan Component: Add Performance Measure page.

Step 3: Finish creating the plan component within the compensation plan guided process.

Finish creating the plan component:

Click Next to open the Create Plan Component: Define Incentive Formula page.

Create a formula to calculate sales earnings using the performance measure.
1. In the Payout Frequency field, select Period.
2. In the Expression Name field, select Create New Expression.
  1. Name the expression Credit Results.
  2. In the Configure Expression section, create the earnings expression Measure result.ITD Output Achieved * RTR.
    1. On the User-Defined Objects menu, select the attribute Measure result.
    2. Search for and select the measure that you just created, Credit Amount Attainment.
    3. On the Attributes menu, select ITD Output Achieved.
    4. Click Add to Expression.
    5. Click the asterisk *.
    6. On the Attributes menu, select Rate Table Rate.
  3. Click Save and Close to return to the Create Plan Component: Define Incentive Formula page.
    
    The Expression Name field contains the name of the expression that you just created.
3. In the Include Indirect Credits field, select All.

Click Next to open the Create Plan Component: Add Rate Table page.

Create and add a rate table. The calculation process uses it to find the rate to apply when calculating sales earning payout based on the running credit amount total.

In the Rate Table Details section, complete these fields.

Field	Value
Number of Dimensions	1
Split Attainment Across Tiers	Yes
Split Option	Fixed within a tier

On the Rate Table section, click Create and name it Running Credit Rates.
1. On the Rate Dimensions section toolbar, click Create and name it Running Credit.
  1. In the Tiers section, add the From and To values for each tier, such as 0 -- 10,000, 10,000 -- 50,000, 50,000 -- 100,000, and 100,000 -- 9,999,999. Make the final To value much larger than you would ever conceivably use.
  2. Click Save and Close to return to the Create Rate Table page.
2. Click Edit Rates.
  1. Edit the rate for each tier, such as 2.5, 5, 7.5, and 10.
  2. Click Save and Close to return to the Create Rate Table page.
3. Click Save and Close to return to the Create Plan Component: Add Rate Table page.
The name of the rate table you created appears in the Rate Table section.
In the Rate Dimension Inputs section Expression Name field, select Create New Expression and name it ITD Output Results.
1. In the Configure Expression section, create the rate dimension input expression Measure result.Credit Amount AttainmentITD Output Achieved.
  1. On the User-Defined Objects menu, select Measure result.
  2. Search for and select the measure that calculates attainment as the credit amount, Credit Amount Attainment.
  3. On the Attributes menu, select ITD Output Achieved.
  4. Click Add to Expression.
  5. Click Save and Close to return to the Add Rate Table page.
  The Rate Dimension Inputs section Expression Name field contains the name of the expression that you just created, IT Output Results.
Select Split for all rate dimension inputs.

Click Save and Close to return to the Create Compensation Plan page.
Click Save and Close to return to the Manage Compensation Plans page.