Example of Incentive Compensation Business Units by Division and Zones

This example shows business unit analysis as part of enterprise structure planning by division and zones.

You work for a multinational conglomerate that operates in 15 countries worldwide.

You have three processing centers:

Asia-Pacific
Americas
Europe and Middle East

And you have two divisions:

High-tech Products
Consumer Services

High-tech Products has ten very complex compensation plans that are used globally. It creates all plans and administers quota worldwide in USD.

Consumer Services has over 100 similar simple, but slightly variant locally used compensation plans. It creates compensation plans with rate tiers and quotas in USD or EUR and pays all participants in their local currency.

There's no overlap of plans between the divisions. All employees report to in-region managers. There are no cross-region teams.

You want to segregate data for security purposes by division. Compensation analysts in different regional centers work on a 24 x 7 basis on paysheets for any participant worldwide in their assigned division. Both divisions and all business units use USD as the operating currency so that executives can easily review all performance and expenses.

Global Enterprise Structure Model

Because you need multicurrency processing and reporting, you decide to create three separate business units.

Set up one business unit to handle the ten complex global compensation plans for the High-Tech Products division in one place.
Set up the other two business units to handle the two zones (USD and EUR) for the Consumer Services division, with operating currency set to USD and EUR, respectively. This setup enables you to reduce the 100 differing plans to 5 global plans with personalized weights, quotas, and rates.

The implementation of three business units:

Meets the currency processing requirements
Provides consistent enforcement of company policies
Improves efficiency across the organization