Explaining Bonus Plans

• Bonus Plan: defines the incentive program structure. Includes the weights that are allocated to each section and bonus plan caps.

• Eligibility: a set of rules which defines how the system matches an employee to the appropriate incentive program.

• Business Goals: group of goals set at the company level typically geared towards profit, sales, and/or company values. The file includes goal targets, payout percentages, and lookup rules on how the system can cascade the goal to an employee.

• Weights and Mappings: contains the weight structure of business goals for each incentive program.

The bonus calculation can be calculated at bonus plan level, manager level, or employee level.

Individual Preview is another report which can confirm if the overall calculation is working. While other validation reports help verify any inconsistencies in the import file, Individual Preview helps to visualize how the form looks.

Search for any employee using the filters and choose Edit.

An amount displayed as a business payout is a good indication that the calculation is working.

This is also a good way to check if goals have cascaded properly to employees.

The bonus plan can be imported as a CSV file or created directly within Compensation Home.

If creating using a CSV file, the following items must be defined:

• Bonus Plan Name (required)

• Eligibility Rule (required)

• Bonus Cap Percent

• Business, Individual, Team Section Weights (percent)

• Business, Individual, Team Section Allow Weights Edit (y/n)

• The Eligibility Rule column refers to the Rule ID column in the eligibility data file.

• The Bonus Plan column refers to the Bonus Plan Name column in the weights and mappings data file.

• Enables admins to create/edit bonus plan within the Admin Center.

• Plans can be edited to include eligibility rules, section weights. However, it is important to remember that bonus caps can only be set using a CSV file.

Eligibility is a set of rules which define how the system matches an employee to the appropriate incentive program. The eligibility import assigns bonus plans to eligible employees.

• A rule can use multiple lookup values, or columns, to match in the employee history data file.

• An employee only has to satisfy one rule to be assigned to the plan. However, employees can have multiple plans assigned to them.

• Required Field

  • Rule ID

  • Field – employee history data file field column header

  • Value – actual value of the specified field in the employee history data file

• Relationship Field

  • Rule ID column pertains to the eligibility code in the bonus plan

  • Field column pertains to an Employee History Data column

  • Value column pertains to an entry in the Employee History Data column

The diagram in the following figure, Eligibility and Employee Data, describes how the eligibility file is acting as a conduit to the bonus plan and employee history data.

• Save the eligibility file as a CSV file.

• Select Browse, select the file, then select Import.

To create a more robust bonus plan eligibility, MDF business rules engine can be used. This is discussed later in this course.

There is another eligibility in Variable Pay that must be considered, called manager form eligibility. Do not confuse this with the previous information. Bonus plan eligibility is a rule which defines the employees that are eligible for an incentive program. Manager form eligibility is a rule which defines who is included in the Variable Pay form.

This means that employees with no bonus plan can still be displayed on the manager form unless you create a rule to exclude them. This configuration is the same as Compensation, where you determine the starting point of manager form eligibility.

In the example provided in the following figure, the starting point is All employees are eligible. That means that Vik Stokes, who is not eligible for an incentive program, is still visible on the form unless a rule to exclude him exists.

Manager form eligibility is copied over to the new plan when variable pay plans are cloned.

Business goals are a group of goals set at the company level, typically geared towards revenue/profit, sales and/or company pillars. Each business goal includes the following elements:

• Performance targets and achievement payouts

• Payout function types in case business results fall in-between targets

• Lookup rules for system to cascade goals to employees

Business goals can be created in a CSV file or directly in Compensation Home.

1. Navigate to Plan Setup → Manage Plan Details → Business Goals.

2. Type the Goal Name.

3. The Eligibility lookup field dropdown displays fields from employee history data.

4. Type the field value.

5. Type the performance result (forecast and forecast2 if needed).

6. Choose the payout function type.

7. Choose the number of performance data points to use.

8. Type Performance Amount and Payout.

Created business goals can be copied, edited, exported, or deleted.

A CSV file can be used to mass upload business goals. As the business goal file does not have any headers, you must understand the order of the columns.

• Main Fields

  • Plan ID (for example, 8001) – Refers to the Variable Pay goal template ID

  • Business Goal Name

  • Employee Lookup field and Value

  • Result

• Relationship Fields

  • Name column relates to Business Goal Name in the weights and mappings data file.

  • Lookup Field column relates to the column header in the employee history data file.

  • Lookup Value column relates to the field entry in the employee history data file.

Important: Must be uploaded or created before the weights and mapping data file.

• Columns A and B: always put OBJECTIVE and USER_ID, respectively.

• Column C: Goal Owner (pick any user and use the same user ID for all goals. This user account receives all goal import notifications, best to create a dummy account which is not deactivated.)

• Columns D, E, and G must remain blank.

• Column F: the Variable Pay Program Business Goal Name ID.

• Columns H and I: always 0 and Business, respectively.

Every two columns are grouped with the header on the left, value on the right.

• Name – business goal name

• Metric – amount, percent, or number

• Lookup Field – employee history data file column header

• Lookup Value – employee history data file value of the lookup field

• Forecast – achievement amount or goal used for forecast budget (can be used lowest projection)

• Forecast2 – achievement amount of goal used for modeling budget (can be used for highest projection)

• Result – the actual achievement amount

• Performance (Min, TargetLow, Target, TargetHigh, Max) – the achievement amount used for interpolation and step calculation – usually loaded from lowest amount (min) to highest amount (max)

• Achievement amounts (metrics) can also be loaded in reverse order

• Use Case – the goal is to reduce the number of customer complaints (metrics can be loaded as: performanceMin=150, performanceTarget=100, performanceMax=50)

• Payout Performance (Min, TargetLow, Target, TargetHigh, Max) – the achievement payout percent used for interpolation and step calculation

• Payout Function Type – interpolate, step, or direct

• Notes – reason for using direct payout

• Direct Payout Percent – Achievement Payout Percent when Payout Function Type is set to direct

The weights and mappings or goals weights file contains the weight structure of business goals for each incentive program.

Goal weights are not always the same. An incentive program for high-level managers might put more emphasis on revenue and profit. Hence, a bigger weight percentage compared to an incentive program for individual contributors.

• Required Fields

  • Bonus Plan Name

  • Business Goal Name

  • Goal Weight (Percent)

  • Display Order

• Relationship Fields

  • Bonus Plan Name column pertains to the incentive program name. This must be the same as the name indicated in the bonus plan file.

  • Business Goal Name column pertains to the goal name indicated in the business goals file.

Weights and mappings can only be created through import.

• Save an eligibility CSV with the customer specified eligibility rules.

• Navigate to Plan Setup → Manage Plan Details → Import/Export Business Goal Weights.

• Sample templates are available to download.

• Check the Delete all existing records prior to importing new data checkbox for a full file replacement of goal weights. It is generally recommended to select this box.
• After importing goal weights, it can be updated by navigating to the bonus plan.