Analyzing Compensation Requirements


After completing this lesson, you will be able to:

  • Create a compensation plan analysis.
  • Name the steps of the process flow of a compensation plan.

Compensation Plan Analysis

A compensation plan is an object that contains a set of rules that specify how to compensate each payee. The compensation plan contains many different components and elements. Using these rules, the compensation plan determines how transactions and orders are allocated, and how incentive earnings are calculated and paid out to the participant. 

We’ve seen how Organization Data is created with participants, positions, and titles. We’ve also seen that a Position Assignment is the assignment of a participant to a position.

A Compensation Plan is typically assigned to the title as shown in the following diagram, although you can also assign a plan to an individual position. Data is always calculated in the context of a Position Assignment. This means for any given calculation, the system is looking at a single Position Assignment, and can access data from any of these objects. As a result, we can create a rule that pulls the Base Salary from the participant record, the position group from the position Record, or a Generic Attribute from any of these.

Typically, an organization will have multiple compensation plans that pay titles differently. For example, your organization may have different compensation plans for Sales Representatives, Sales Managers, Regional Directors and Account Executives. However, this doesn’t mean that everyone on the plan has to be compensated in exactly the same way! As we go through this lesson, you’ll see how you can add flexibility to a plan, so that payees can share a plan as long as they all use the same basic compensation structure.

Preparing the Design of a Compensation Plan

As with any development project, development begins with careful planning and documentation. As we go through the various components of a plan, you will see how the records and objects we have created work together to create the desired outputs.

Let’s start with the basic steps to create a plan.

  1. Identify the needed outcomes of the plan.
    • Work backwards from Incentive to credit to identify these needs
    • Document which values, conditions and formulas are needed.
  2. Create the plan in the user interface.
  3. Assign the plan to a Title.
    • This will link all Position Assignments under the Title to plan.
    • More efficient processing and easier to manage.
  4. Build rules from Credit to Deposit based on identified needs.
  5. Assign Rule Elements to Variables

Some questions to ask when getting started are:

  • How will transactions be differentiated?

    Use Event Types to differentiate types of transactions

  • Are credits going to roll within the organization?

    Credits that will roll from one payee to another should have the rollable attribute checked on the credit rule.

  • Will credits roll only through the reporting hierarchy, or will custom roll relationships exist?

    If you are creating custom roll relationships (relationships not associated with the reporting hierarchy), create a new roll type and define the relationships before creating the credit rule.

  • What Business Units are needed?
  • We recommend always using at least one Business Unit, even for smaller organizations.

  • How will transactions be credited to the payees?
  • Transactions can be credited to a payee already indentified on a transaction, using a territory, or using a custom condition.

  • Will payees receive commissions, bonuses, or other types of incentives?
  • Each of these types of incentives will be defined in the incentive rule.

Exercise: Create and Assign a Compensation Plan

Business Example

In this exercise, you will create the plan that will calculate compensation for Bikes in Motion Sales Representatives, and assign the plan to the Sales Representative Title.


  1. Create a Compensation Plan called 2023 Sales Representative Plan.

    1. From the Plan Data icon, select Plans Wizard.

    2. Select the Add icon.

    3. Accept the default effective dates and select OK.

    4. Type 2023 Sales Representative Plan in the Name field.

    5. Select Create.

  2. Assign the Plan to the Sales Representative title. 

    1. From the Manage Organization tile, select Titles.

    2. Select the Sales Representative title.

    3. Select the Edit icon.

    4. In the Plans, select 2023 Sales Representative Plan.

    5. Select Save.

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