1. Using Incentive Compensation
  2. Examples of Calculating Earnings Using Interpolated Rates

Examples of Calculating Earnings Using Interpolated Rates

These examples show incentive earnings calculations using an interpolated rate, also known as a proportional split, across rate tiers. Create and manage expressions and rate tables in the Compensation Plans work area.

Here's the amount rate table, which consists of the Tier and Rate values. The third column isn't part of the actual rate table. It's included here to show you the calculation that derives the resulting rate table rate for each tier.

Tier

Rate

Calculation to Derive Rate Table Rate

0 -- 000

10

(Amount / (Tier 1 Upper Value - Lower Value)) * Tier 1 Rate)

1,000 -- 3,000

40

(Tier 1 Rate + (Amount / (Tier 2 Upper Value - Lower Value)) * Tier 2 Rate)

3,000 -- 8,000

100

(Tier 1 Rate + Tier 2 Rate + (Amount / (Tier 3 Upper Value - Lower Value) * Tier 3 Rate)

8,000 -- 20,000

2,000

(Tier 1 Rate + Tier 2 Rate + Tier 3 Rate + (Amount / (Tier 4 Upper Value - Lower Value) * Tier 4 Rate)

Transactions Processed Individually and Split Proportionally Across Rate Tiers

Here's the scenario:

  • The calculation process processes all transactions individually against the rate table.

  • A proportional split occurs when a transaction crosses rate table tiers.

  • The total amount of the earning is 149 USD.

This table shows transactions over time and the corresponding commission amount calculations using the rate table amounts.

Transaction

Date

Amount (USD)

Commission Calculation

Commission Amount

Description of Amount

T1

01-Jan-2015

200

((200 / 1000) * 10)

2

20 percent of tier 1

T2

02-Jan-2015

300

((300 / 1000) * 10)

3

30 percent of tier 1

T3

15-Jan-2015

1,500

(10 + (500 / 2,000) * 40)

20

All of tier 1 plus 25 percent of tier 2

T4

01-Feb-2015

1,200

(10 + (200 / 2,000) * 40)

14

All of tier 1 plus 10 percent of tier 2

T5

15-Feb-2015

2,000

(10 + (1,000 / 2,000) * 40)

30

All of tier 1 plus 50 percent of tier 2

T6

01-Mar-2015

4,500

10 + 40 + (1,500 / 5,000) * 100)

80

All of tiers 1 and 2 plus 30 percent of tier 3

Calculation at End of Interval and Proportional Split for Accumulated Transactions

Here's another scenario:

  • Calculation occurs at the end of the interval, month in this case.

  • Because calculation is grouped by interval, the calculation process creates only a single earning record for each interval.

  • When you split the monthly attainment across rate table tiers, the total amount of compensation earned is 164 USD.

This table shows monthly transactions and the corresponding commission amount calculations using the rate table amounts.

Month

Amount (USD)

Earning Calculation

Earning Amount (USD)

Description of Amount

January

2,000

(10 + (1,000 / 2,000) * 40)

30

All of tier 1 plus 50 percent of tier 2

February

3,200

(10 + 40 + (200 / 5,000) * 100)

54

All of tiers 1 and 2 plus 4 percent of tier 3

March

4,500

(10 + 40 + (1500 / 5000) * 100)

80

All of tiers 1 and 2 plus 30 percent of tier 3

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