Incentive Compensation Calculation Phase Options

The calculation phase determines the sequence when the calculation process computes plan component results. For each participant, the calculation process computes the results for all Phase 1 plan components first, then Phase 2.

Set the calculation phase when creating and managing plan components in the Compensation Plans work area.

Phase 1

Phase 1 is the default value and you use it for most situations.

Phase 2

Select Phase 2 for plan components that meet these conditions:

• The dependent plan component uses the results of any other base plan component calculation, such as Input Achieved.

• The calculation process must compute the base plan component first, for all of the participants associated with this plan.

Phase 1 components are calculated first, then phase 2.

Example

You want to calculate the earnings for managers, based on the earnings of their direct reports. Use two plan components.

• A base plan component set to Phase 1, to calculate the earnings of the direct reports

• A dependent plan component, set to Phase 2, to calculate the earnings of the managers

  For the performance measure of the second plan component, you use a formula to aggregate the earnings for the managers.

When to change the default calculation sequence of components associated with a plan

Change the sequence if a dependent plan component refers to the calculated result of another, base, plan component. The dependent plan component must have a higher calculation sequence than the base plan component.