Calculate Monthly Commissions Using As-Of Attainments for the Interval (True-Up Calculations)

This example demonstrates how to create an incentive compensation plan that calculates monthly commission earnings based on the as-of attainment for the interval.

Pay participants a percentage on the revenue amount that they generate, without any cap
Calculate the running total for the revenue amount from product sales to determine the commission rates
Calculate the commission amount based on the as-of attainment for an interval, adjusting the previously calculated amount (also known as true up)

Here are 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?	True up
How many measures do you require and what are their weights?	One measure, no weights
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 rate, 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 with Running total
What is the unit of measure?	Amount
What is the performance interval?	Month
Does the calculation involve quota?	No
Does the calculation involve a scorecard?	No

Summary of the Tasks

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

Enter the 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 for the plan component to use with the incentive formula.

Create the Compensation Plan

Create a compensation plan that pays monthly commissions, without any cap, based on a percentage of generated revenue.

Click Create in Manage Compensation Plans.
Name the plan No Cap Commission.
Enter start and end dates 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 incentive earnings using accumulated credit amounts multiplied by a rate table rate.

On the Plan Components section toolbar, click Create.
1. Enter the primary details.
  1. Name the component Earnings by Rate.
  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 performance measure determines period incentive attainment as a running total of generated credit amounts.

On the Performance Measures section toolbar, click Create.
1. Name the performance measure Period Attainment Credit.
2. Enter the performance interval as Period (Month).
3. Click Next twice.
4. Add the credit categories. If a 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 Credit Amount.
    2. On the Configure Expression section Attributes 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.

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

Create a formula to calculate incentive earnings using the running credit amount total.
1. In the Payout Frequency field, select Period.
2. In the Expression Name field, select Create New Expression.
  1. Name the expression Earnings by Rate.
  2. In the Configure Expression section, create the earnings expression Measure result.Period Attainment Credit.ITD Output Achieved * RTR.
    1. On the User Defined Objects menu, select Measure result.
    2. Search for and select the measure that you just created to determine period attainment as a running total of generated credit amounts, Period Attainment Credit.
    3. 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. Select True Up.
4. The reset interval is the same as the payout frequency.
  
  If you change the reset interval, then it should be longer than the payout frequency (quarter or year). Typically the reset interval is the same as the measure interval. For example, if you want to accumulate over a year but pay monthly based on year-to-date attainment, then you set the measure interval and reset interval as year.
5. In the Include Indirect Credits field, select All.

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

Create a rate table to find the rate to apply, based on the running credit amount total, when calculating commission payout.

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

On the Rate Table section, click Create.
1. Name the rate table.
2. In the Type field, select Percent.
3. On the Rate Dimensions section toolbar, click Create.
  1. Name the dimension.
  2. In the Type field, select Percent.
  3. 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 to 9,999,999. Make the final To value much larger than you would ever conceivably use.
  4. Click Save and Close to return to the Create Rate Table page.
4. 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.
5. Click Save and Close to return to the Create Plan Component: Add Rate Table page. The rate table you created is in the first row of the Rate Table section.
In the Rate Dimension Inputs section Expression Name field, select Create New Expression.
1. Name the expression.
2. In the Configure Expression section, create the rate dimension input expression Measure result.Period Attainment Credit.ITD Output Achieved.
  1. On the User Defined Objects menu, select Measure result.
  2. Search for and select the measure that you just created to determine period attainment as a running total of generated credit amounts, Period Attainment Credit.
  3. Select ITD Output Achieved.
  4. Click Add to Expression.
3. Click Save and Close to return to the Create Plan Component: Add Rate Table page.
The Expression Name field contains the name of the expression that you just created.
Select Split for all rate dimension inputs.

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