Creating the Product Bonus Plan Component

To calculate period earnings using weighted scores, create a product bonus plan component that contains the product and weighted score performance measures.

1. Click the Create Plan Component task.

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

4. Click Next to open the Define Performance Measure page.

a. _{Add the performance measures and set the corresponding weight and earning basis values, as shown in this}

table.

Measure Weight Percentage Earning Basis

Product A 30 Yes Product B 30 Yes Product C 60 Yes Weighted score 100 No

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

a. _{In the Payout Frequency field, select Period.}

b. _{In the Expression Name field, search for and select the earnings expression that calculates the period}

product bonus based on the weighted score.

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

a. _{In the Rate Table Dimensions field, enter 1.} b. _{In the Rate Table section, add a row.}

c. _{In the Name field, search for and select the rate table that finds the bonus based on the weighted score.} d. _{In the Rate Dimensional Inputs section Expression Name field, search for and select the expression that}

calculates the period product bonus.

7. Click Save and Close to return to the Manage Performance Measures page.

Creating the Incentive Compensation Plan

Create an incentive compensation plan that contains the product bonus plan component and calculates period bonuses for three product lines using a scorecard.

1. Click the Create Compensation Plan task.

Tip

Always end date your compensation plans.

2. Click Next to open the Add Plan Component page.

3. Click Save and Close to return to the Manage Compensation Plans page.

Calculating Monthly Product Bonuses with a

Scorecard: Worked Example

This example demonstrates how to create a performance measure that uses weighted scores to calculate monthly product bonuses.

The incentive plan calculates a monthly bonus using the dollar value of the product that the sales force sells for that period. The plan calculates the:

• _{Attainment as a weighted score that could range from 0 to 100}

• _{Score for each product line based on the period revenue for three product lines}

The following table summarizes key decisions for the performance measure in this scenario:

Decisions to Consider In This Example

How should the application process the transactions?

Grouped by interval,

What is the unit of measure?

Score

What is the performance interval?

Monthly

Does the calculation involve quota?

Does the calculation involve a scorecard?

Yes

Summary of the Tasks

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

1. _{Create the attainment and rate dimension input expressions.} 2. _{Create the scorecard.}

3. _{Create one performance measure, associating the attainment expression, scorecard, and rate dimension input}

expression.

Use default values for fields unless the steps specify other values.

Creating the Expressions

Create two expressions:

Type of Expression Purpose

Attainment

Calculate period revenue attainment

Rate dimension input

Calculate the period weighted score for a product line

1. Click the Create Expression task.

2. In the Configure Expression section, create the attainment expression SUM(Credits.Credit Amount) and the rate dimension input expression RTR * Measure.Weight Attainment.

a. _{On the Attributes menu, select Functions - Aggregate Functions - SUM.} b. _{Click (.}

c. _{On the Attributes menu, select Credits - Credit Amount.} d. _{Click ).}

e. _{Click Save and Create Another.}

Rate Dimension Input

a. _{On the Attributes menu, select Rate Table Rate.} b. _{Click *.}

c. _{On the Attributes menu, select Measure - Weight.} 3. Click Save and Close to return to the Manage Expressions page.

Creating a Scorecard

Create a scorecard for the performance measure to use to find the score to apply based on generated revenue.

Note

1. Click the Create Rate Table task.

2. On the Rate Dimensions section toolbar, click the Create icon button.

a. _{In the Tiers section, add the From and To values for each tier, such as 0 -- 10,000, 10,000 -- 50,000, 50,000}

-- 100,000, and 100,000 -- 9,999,999..

Tip

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

b. _{Click Save and Close to return to the Create Rate Table page.} 3. Click Edit Rates.

a. _{Edit the rate for each tier, such as 25, 50, 75, and 100.}

b. _{Click Save and Close to return to the Create Rate Table page.} 4. Click Save and Close to return to the Manage Rate Tables page.

Creating a Performance Measure

Create a performance measure that determines revenue attainment for the period based on sales credits, such as desktop.

1. Click the Create Performance Measure task.

2. In the Unit of Measure field, select Score.

3. Click Next to open the Define Goal page.

a. _{In the Target field, enter the goal, such as 1,200,000.} 4. Click Next to open the Add Credit Categories page.

a. _{Add the credit category, such as Desktop.}

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

5. Click Next to open the Define Measure Formula page.

a. _{In the Process Transactions field, select Grouped by interval.}

b. _{In the Expression Name field, search for and select the expression that calculates period revenue}

attainment.

6. Click Next to open the Add Scorecard page.

a. _{Complete the fields, as shown in this table.}

Field Value

Rate Table Dimensions 1

Field Value

Split Attainment Across Tiers Yes

Apply Split Fixed within a tier

b. _{In the Scorecard section, add a row.}

c. _{In the Name field, search for and select the rate table that finds the score to apply based on generated}

revenue.

d. _{In the Rate Dimensional Inputs section Expression Name field, search for and select the expression that}

calculates the period weighted score for a product line.