Supporting Data

When working with compensation, changing the date values can majorly affect payouts.

Effective dates set the date range within which an object’s version is active or valid. The effective date range of an object’s version is determined by that version's start and end dates.

Let’s look at the following example. Terry Callahan has a base salary of $80,000 and a compensation plan that pays an annual bonus of 5% of this amount. If Terry’s base salary increases to $85,000, the date on which the change takes place is critical if his bonus payout is to be accurate.

When you create a new record, such as a new participant or plan, you are prompted for the first version's effective start and end date. You can then create new versions of the object as needed. Creating new versions retains the old versions for auditing purposes.

Classification data is used to organize transactions in meaningful ways. This data is organized into a tree structure to group, classify, organize, and distribute sales transaction data. This ensures that sales reps are accurately compensated and reporting is also accurate.

Categories and classifiers are used to sort and classify transactions. Classified transactions are allocated as credits to generate compensation through Territories.

During the calculation, the Pipeline will compare Transaction fields and match them with classification rules.

What’s the advantage of classification data? Let’s look at an example.

Amy is a Sales Rep who receives a commission whenever a bike product or accessory is sold. The Products hierarchy will contain all products and a classification rule that tells the system how to match a Transaction with the correct product. We can then create a territory that contains all products under the Bike Products and Accessories categories and assign Amy to that territory.

Compensation Plan Elements, or compensation elements for short, are reusable objects that can be built into compensation rules or other calculations to return a value. Compensation elements make it easier to create and maintain compensation plans.

Access to any compensation element is available from the Compensation Elements icon on the Manage Plans action card. Each type of element has its own workspace. Keep in mind that a compensation element only contains data. It is not used in calculating compensation until it is associated with a Rule, Variable, Title, Plan, or Position.

A few advantages of using Compensation Elements are:

• Compensation elements allow you to encapsulate data in distinct objects rather than storing everything in a large, complex compensation plan.
• Compensation elements, such as Rate Tables, have special abilities that allow specific tasks that can only be accomplished using this object type.
• Most compensation elements are effectively dated, making managing change in a plan easier. Let’s take a look at each type of compensation element:
  • Territories
  • Fixed Values
  • Rate Tables
  • Look-up
  • Tables
  • Formulas
  • Quotas

A Territory is a named object defined by groups of categories and classifiers that is used to filter input to credit and primary measurement rules.

Territories filter transactions based on how they are classified. They can be used for several scenarios, but a common one is to allocate credit for a transaction to a payee based on some criteria, such as the location, product, or customer type.

Consider the scenario we saw earlier. Amy receives credit for any sales transaction for a bike product in the US states of California, Nevada, or Arizona. Let’s add another criterion: the transactions must also be for sales of bike products or accessories, not repair services.

Amy’s territory would be defined using the data in the category hierarchy we saw in the previous topic and would look like (Bike Products OR Accessories) AND Western Region.

Fixed Values store static period-specific or no periodicity numbers associated with a unit type such as currency, percentage, quantity, or another relevant integer. The periods can be associated with a calendar period, so you can create a fixed value with a different value for each month or quarter, for example.

The Benefits of Fixed Values:

• Easier to manage change.
• Change the Fixed Values or create a new Effective Version without having to make a change to the compensation plan.
• Fixed values can have a Period Type that allows the Administrator to preset values for different periods in the same Fixed Value object.
• Can be referenced from other objects such as formulas, rules, rate tables, or look-up tables.
• Are typically used to store rates, accelerators, multipliers, and bonuses.
• Are reusable in multiple rules.

A Rate Table is a special-purpose table used to calculate incentive compensation for a commission, in which a transaction is paid at different rates when it crosses rate threshold tiers. Rate tables can only be used in incentive rules.

To understand rate tables, it’s helpful to understand what Attainment means in this context. Attainment is achievement as a percentage of quota or target. For example, if a sales quota is $100,000 and a payee achieves total sales of $104,000, the attainment is 104%. The rate table then holds a list of rates for ranges of attainment.

In the image shown, the rate table has two attainment tiers. The first tier shows that if attainment is less than 100%, the commission is 3%. If attainment is 100% or greater, the rate increases to 5%.

Rate tables are generally used in Incentive Rules. The rule can calculate attainment and look up the rate, based on that attainment, in a rate table.

Look-up Tables are more flexible than Rate Tables.

They allow organizations to create a table of values based on multiple sets of criteria where the stored values represent the intersection of multiple dimensions.

They are also known as Multi-Dimension Look-up Tables and locate values due to the intersection of multiple dimensions or axes. Look-up Tables can be customized to return any values based on many types of input criteria.

Let’s look at this Look-up Tables figure above as an example. In this case, Sales Status, Region, and Product Line are the Dimensions. Within each dimension are Indices.

The Look-up Table in this image returns a value of 6% when the sales status is Silver, the region is Americas, and the Product Line is Bikes.

Formulas are reusable objects that contain an expression, such as a mathematical equation. A formula can be used in compensation rules, rate tables, look-up tables, and other formulas.

Formulas can reference many other objects, such as fixed values, look-up tables, values from data fields, and other formulas. They can produce many outputs, including numeric types such as currency or percent, dates, string, and Boolean values.

Formulas are not required in the rules to calculate compensation. The rules have enough logic built into them to calculate simple outcomes. Formulas provide the means of calculating more complex results.

Formulas include several pre-set functions that can be used to perform specific tasks. These work much like the functions in Microsoft Excel ®: each function requires certain inputs displayed in the Editor and must be populated before the Formula can be saved. Some examples of common functions you may use when calculating compensation include:

Concatenate Two Strings (string1, string2):

• Combines two text strings into a single string.
• Output type: string.
• Example: Concatenate Two Strings (Participant.First Name, Participant.Last Name).

isNull (string):

• Test if a field has no value.
• Output type: Boolean.
• Example: isNull (Transaction.Channel).

Fiscal Date (Period Type, Period Offset, Start Date or End Date):

• Returns a fiscal period's start or end date, such as a month.
• Output type: date.
• Example: Fiscal Date (Month, 0, End Date).