This example demonstrates how to create a plan component to calculate a quarterly incentive bonus that is based on the generated revenue attainment for the Computers and Accessories product lines. The plan calculates the attainment for each product line as the summarized revenue that the salespeople generate for each quarter. It calculates the bonus as a percentage of the total quarterly revenue attainment of both product lines, using a two dimensional rate table. The following table summarizes key decisions for the plan component in this scenario:
Decision to Consider In This Example
What are the incentive and earning types? What is the payout frequency?
Bonus, Monetary earnings, and Quarter What type is the calculation? Interval-based
How many measures do you require and what are their weights? Are any of these measures linked?
Two measures, weight of 100 percent for each The measures are linked
How many rate tables do you require, and how many dimensions for each table? How do you want to apply the rate?
One rate table, with two dimensions Use a single rate for the entire attainment
The following table summarizes key decisions for performance measures in this scenario:
Decisions to Consider In This Example
How should the application process the transaction? What is the unit of measure and what is the
performance interval?
Group by interval Amount and Quarter Does the calculation involve quota? No
Does the calculation involve a score card? No
Create a new plan component by creating the pieces first, and then associating them with the plan component.
1. Create the input expression. 2. Create the rate table.
3. Create the two performance measures, with different credit categories, and associate the input expression as the measure formula for each. 4. Create two input expressions and one output expression.
5. Create the plan component, associate the output expression as the incentive formula, and associate the rate table created earlier.
Creating the Input Expression
Create an input expression to calculate revenue attainment for the interval (Quarter), which both performance measures use as their measure formulas.
1. On the Compensation Plan Overview page, click Create Expression to open the Create Expression page.
2. Complete the general fields, as shown in this table.
Field Value
Name Canada SE Revenue Attainment Exp
Description Measure revenue attainment for the interval.
Type Calculation
a. For Attributes, select Functions - Aggregate Functions - SUM . b. Click (.
c. For Attributes, select Credits - Credit Amount . d. Click ).
4. Click Save and Close.
Creating the Rate Table
Create a new 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. Enter the general information. 2. Create the rate dimensions. 3. Edit the rates.
1. Enter the general information.
1. On the Compensation Plan Overview page, click Create Rate Table to open the Create Rate Table page.
2. Complete the general fields, as shown in this table.
Field Value
Name Canada SE Bonus RT
Description Two dimensional rate table to find the bonus based on revenue attainment for the product lines Computers and Accessories.
Type Percent
2. Create the rate dimensions.
Perform the following steps twice, the first time using the computer attainment values, and then using the accessories attainment values.
1. In the Rate Dimensions section, click Create to open the Create Rate Dimensions page.
2. Complete the general fields, as shown in this table.
Field Computer Attainment
Value
Accessories Attainment Value
Name Canada SE Computers Attainment RD
Canada SE Accessories Attainment RD
Description This rate dimension has three tiers for revenue attainment ranges. Use it to determine the corresponding bonus rate.
This rate dimension has two tiers for revenue attainment ranges. Use it to determine the corresponding bonus rate.
3. In the Tiers section, add the tiers, as shown in this table. Computer Attainment RD From To 0 10,000 10,000 20,000 20,000 9,999,999 Accessories Attainment RD From To 0 5,000 5,000 9,999,999
4. The first time, click Save and Create Another and repeat the steps to create the second rate dimension; the second time, click Save and Close.
3. Edit the rates.
Perform the following steps twice, the first time using the computer attainment values, and then using the accessories attainment values.
1. Click Edit Rates.
2. Edit the rate for each tier, as shown in this table. Canada SE Computers Attainment RD Canada SE Accessories Attainment RD Rate Percent 0 - 10,000 0 - 5000 2.5 0 - 10,000 5000 -- 999999 3 10,000 - 20,000 0 - 5000 4 10,000 - 20,000 5000 - 999999 5 20,000 - 999999 0 - 5000 6 20,000 - 999999 5000 - 999999 7
3. Click Save and Close for your rates.
4. The first time, click Save and Create Anotherfor your rate table and repeat the steps to create the second rate dimension; the second time, click
Save and Close.
Creating Performance Measures
Create two performance measures that use the input expression created earlier to determine the revenue attainment amount for the interval (quarter), for the Computers and Accessories product lines, respectively. Use the first performance measure and the duplicate feature to create the second performance measure.
1. Enter the primary details for the first performance measure. 2. Define the goal for the first performance measure.
3. Add the credit categories for the first performance measure. 4. Define the formula for the first performance measure. 5. Search for the first performance measure.
6. Create the second performance measure.
1. Enter the primary details for the first performance measure.
1. On the Compensation Plan Overview page, click Create Performance
Measure to open the Create Performance Measure: Enter Primary Details page.
2. Complete the fields, as shown in this table.
Field Value
Name Canada SE Computer Revenue PM
Description Computers revenue attainment amount based on sales credit received for the interval.
Include in participant reports Yes
Use external formula No
Start Date 01/01/2010
End Date 12/31/2010
Performance Interval Quarter
Unit of Measure Amount
3. Click Next.
2. Define the goal for the first performance measure.
1. On the Define Goal page, complete the fields, as shown in this table.
Field Value
Target 1,200,000
Unit of Measure Amount
2. Click Next.
3. Add the credit categories for the first performance measure.
1. On the Add Credit Categories page, add the two categories Desktop and
Laptop.
If the credit categories do not exist, after you finish creating your
performance measure, click Create Credit Category to create them. Then, click Manage Performance Measures to add the new credit categories to this performance measure.
2. Click Next.
4. Define the formula for the first performance measure.
1. On the Define Measure Formula page, complete the fields, as shown in this table.
Field Value
Process Transactions Grouped by interval
Expression Name Search for and select the expression that you created: Canada SE Revenue
Attainment Exp.
2. Click Save and Close.
This worked example does not have a score card.
If you want to check your choices and entries before saving, click Review to open the Review page.
5. Search for the first performance measure.
1. On the Compensation Plan Overview page, click Manage Performance
Measures to open the Manage Performance Measures page. 2. In the Search section, enter Canada SE Computer%.
3. Click Search.
6. Create the second performance measure.
1. In the Search Results section, select the row with the name Canada SE Computer Revenue PM.
2. Click Duplicate.
3. Edit the Name value to Canada SE Accessories Revenue Measure PM. 4. Edit the Description value to Accessories revenue attainment amount
based on sales credit received for the interval. 5. Click Credit Categories.
6. Delete the existing Desktop and Laptop credit category rows. 7. Add two new credit categories, Printers and Monitors.
If the credit categories do not exist, after you finish creating your
performance measure, click Create Credit Category to create them. Then, click Manage Performance Measures to add the new credit categories to this performance measure.
8. Click Save and Close.
Creating Expressions
Create three expressions:
• Two input expressions that calculate the product revenue attainment for the interval, for the Computers and Accessories product lines, respectively
• An output expression that calculates the bonus payment
Perform the following steps three times, first using the computer input expression values, second using the accessories input expression values, and third using the output expression values:
1. On the Compensation Plan Overview page, click Create Expression to open the Create Expression page.
2. Complete the general fields, as shown in this table. Field Computer Input
Expression Value
Accessories Input Expression Value
Output
Expression Value Name Canada SE Bonus
Input Computers Exp Canada SE Bonus Input Accessories Exp Canada SE Bonus Calculation Exp
Description Expression to get the attainment of Canada SE Computer Revenue PM Expression to get the attainment of Canada SE Accessories Revenue PM Expression to calculate the bonus
Type Calculation Calculation Calculation
3. In the Configure Expression section, create your expression. Computer Input
Expression
Accessories Input Expression
Output Expression
1. For User Defined
Objects, select
Measure results. 2. Search for and
select the measure that you created,
Canada SE
Computer Revenue PM.
3. For Attributes, select ITD Output
Achieved. 4. Click Add to
Expression.
1. Search for and select the measure that you created:
Canada SE Accessories Revenue PM. 2. Select ITD Output
Achieved. 3. Click Add to
Expression.
1. Click (.
2. For User Defined
Objects, select
Measure results. 3. Search for and
select the measure that you created,
Canada SE
Computer Revenue PM.
4. Select ITD Output
Achieved. 5. Click Add to
Expression. 6. Click +. 7. Search for and
select the measure that you created,
Canada SE Accessories Revenue PM. 8. Select ITD Output
Achieved. 9. Click Add to
Expression. 10. Click ).
11. Click Rate Table
Result. 12. Click Add to
4. The first two times, click Save and Create Another and repeat the steps to create the remaining expressions; then, click Save and Close.