1. Using Incentive Compensation
  2. Calculate Quarterly Bonuses Using a Multidimensional Rate Table

Calculate Quarterly Bonuses Using a Multidimensional Rate Table

This example demonstrates how to create a plan component to calculate a quarterly incentive bonus that uses the generated revenue attainment for two product lines.

  • Attainment for each product line is the summarized revenue that the salespeople generate for each quarter

  • The bonus is a percentage of the total quarterly revenue attainment of both product lines, using a two-dimensional rate table

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

Decision to Consider

In This Example

What is the payout frequency?

Quarter

What type is the calculation?

Interval-based

How many measures do you require and what are their weights?

Two measures, weight of 100 percent for each

Are any of these measures linked?

The measures are linked

How many rate tables do you require, and how many dimensions for each table?

One rate table, with two dimensions

How do you want to apply the rate?

Use a single rate for the entire attainment

Here are key decisions for performance measures in this scenario.

Decisions to Consider

In This Example

How should calculations process the transaction?

Group by interval

What is the unit of measure?

Amount

What is the performance interval?

Quarter

Does the calculation involve quota?

No

Does the calculation involve a scorecard?

No

Summary of the Tasks

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

  1. Create the attainment expression.

  2. Create the bonus rate table.

  3. Create the two performance measures with different credit categories, associating the attainment expression as the measure formula for each.

  4. Create two rate dimension input expressions, one for each product, and an earnings expression.

  5. Create the plan component, associating the performance measures, earnings expression, rate table, and the two rate dimension input expressions that you created earlier.

Create the Attainment Expression

Create an expression to calculate revenue attainment for the interval, Quarter, which both performance measures use in their measure formulas.

  1. Click Create in Manage Expressions.

  2. Name the expression Quarter Revenue Attainment.

  3. In the Configure Expression section, create the expression SUM(Credit.Credit Amount).

    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 ).

  4. Click Save and Close.

  5. Click Done.

Create the Rate Table

Create a rate table that uses revenue attainment to find the rate to apply when calculating bonus earnings. You associate it with the plan component that you create later.

  1. Click Create in Manage Rate Tables.

  2. Name the table Bonus Rate for Revenue Attainment.

  3. In the Type field, select Percent.

    Perform the following steps twice to create both rate dimensions.

  4. On the Rate Dimensions section toolbar, click Create.

    1. In the Tiers section, add the From and To values for each tier, such as:

      • 0 -- 10,000, 10,000 -- 20,000, 20,000 -- 9,999,999 for product A

      • 0 -- 5,000 and 5,000 -- 9,999,999 for product B

        Make the final To value much larger than you would ever conceivably use.

    2. After creating the product A rate dimension, click Save and Create Another.

      After creating the product B rate dimension, click Save and Close to return to the Create Rate Table page.

  5. In the Rate Dimensions section, select one of the dimensions.

  6. Click Edit Rates.

  7. Edit the rate for each tier intersection of dimensions A and B. If you have a third dimension C, you select to change the tier for it in the Display Rate Dimensions region.

  8. Click Save and Close to return to the Create Rate Table page.

  9. Click Save and Close .

  10. Click Done.

Create Performance Measures

Create two performance measures that use the attainment expression created earlier to determine the interval revenue attainment for each product line. Create the first measure using the guided process and the remaining measures by duplicating the first one.

  1. Click Create in Manage Performance Measures.

  2. Name it Product A Quarterly Attainment.

  3. In the Performance Interval field, select Quarter.

  4. Enter start and end dates for the year.

  5. Click Next to open the Define Goal page.

    1. In the Target field, enter the goal, such as 1,200,000.

  6. Click Next to open the Add Credit Categories page.

    1. Add the credit categories for product A.

      If a credit category doesn't exist, then click the Create icon button to create it and add it to the measure.

  7. 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 revenue attainment, Quarter Revenue Attainment.

  8. Click Save and Close.

  9. Create the second performance measure.

    1. Search for and select the Product A Quarterly Attainment measure you created.

    2. On the Search Results section toolbar, click Duplicate.

    3. Edit the name and display name to Product B Quarterly Attainment.

    4. Select the Credit Categories tab.

    5. Delete any existing credit categories.

    6. Add the credit categories for product B.

    7. Click Save and Close.

  10. Click Done.

Create Two Rate Dimension Input Expressions and an Earnings Expressions

Create three expressions.

Type of Expression

Purpose

Product A input

Calculate the product interval revenue attainment for product A

Product B input

Calculate the product interval revenue attainment for product B

Earnings

Calculate the bonus payment

  1. Click Create in Manage Expressions.

  2. In the Configure Expression section, create the two rate dimension input expressions, Measure result.Product A Quarterly Attainment.ITD Output Achieved and Measure result.Product B Quarterly Attainment.ITD Output Achieved and the earnings expression (Measure result.Product A Quarterly Attainment.ITD Output Achieved + Measure result.Product B Quarterly Attainment.ITD Output Achieved) * Rate Table Rate.

    Product A Input. Name it Quarterly Revenue Product A.

    1. On the User Defined Objects menu, select Measure result.

    2. Search for and select the product A measure that you created, Product A Quarterly Attainment.

    3. On the Attributes menu, select ITD Output Achieved.

    4. Click Add to Expression.

    5. Click Save and Create Another.

    Product B Input. Name it Quarterly Revenue Product B.

    1. On the User Defined Objects menu, select Measure result.

    2. Search for and select the product B measure that you created, Product B Quarterly Attainment.

    3. Select ITD Output Achieved.

    4. Click Add to Expression.

    5. Click Save and Create Another.

    Earnings. Name it Bonus Earnings.

    1. Click the left parenthesis (.

    2. On the User Defined Objects menu, select Measure result.

    3. Search for and select the product A measure that you created, Product A Quarterly Attainment.

    4. Select ITD Output Achieved.

    5. Click Add to Expression.

    6. Click plus +.

    7. Search for and select the product B measure that you created.

    8. Select ITD Output Achieved.

    9. Click Add to Expression.

    10. Click the right parenthesis ).

    11. Click the asterisk *.

    12. Click Select an Attribute.

    13. Click Rate Table Rate.

  3. Click Save and Close.

  4. Click Done.

Create a Plan Component

Create a bonus plan component that calculates earnings for the Quarter interval using total revenue attainment.

  1. Click Create in Manage Plan Components.

  2. Name it Quarterly Earnings.

  3. In the Calculate Incentive field, select Per interval.

  4. In the Incentive Type field, select Bonus.

  5. Enter start and end dates for the year.

  6. Click Next to open the Add Performance Measure page.

    1. Add the product A and B measures, both with the following values:

      • Weight: 100

      • Earning Basis: Yes

  7. Click Next to open the Define Incentive Formula page.

    1. In the Payout Frequency field, select Quarter.

    2. In the Expression Name field, search for and select the earnings expression that calculates the bonus payment, Bonus Earnings.

  8. Click Next to open the Add Rate Table page.

    1. In the Rate Table Parameters section, 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

    2. In the Rate Table section, add a row.

    3. In the Name field, search for and select the rate table that uses revenue attainment to find the rate to apply when calculating bonus earnings, Bonus Rate for Revenue Attainment.

    4. In the Rate Dimensional Inputs section Expression Name field of the:

      • Product A row, search for and select the expression that calculates product A interval revenue attainment, Quarterly Revenue Product A

      • Product B row, search for and select the expression that calculates product B interval revenue attainment, Quarterly Revenue Product B

  9. Click Save and Close to return to the Manage Plan Components page.

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