Incentive Rules

Objectives

After completing this lesson, you will be able to:

  • Create incentive rules.
  • Create a per-credit commission incentive rule.

Incentive Rules

Incentive Rules calculate earnings, based on achievement or other company defined objectives. Typically, when the system processes an Incentive Rule, it compares Measurements to attainment targets, such as Quotas for each Position Assignment.

Incentive Rules tend to be complex because they contain most of the business logic. As a result, there are many ways to configure these rules. Let’s start by going over the basic types of Incentive Rules.

Types of Incentive Rules

A Basic or Aggregate Incentive Rule calculates commissions using either a fixed or sliding rate. This type of rule uses the Measurement as the input and generates the commission amount based on the Measurement, using a Rate Table, Fixed Value, Lookup Table or Formula.

The Bonus Incentive Rule is ideal for calculating a bonus or other incentive that is not a commission. We generally define a Bonus incentive rule as one that doesn’t calculate the amount of the incentive based on the Measurement. 

A Per-Credit Commission Incentive Rule evaluates the value of each Credit to produce individual commission amounts for each credit. The rule then aggregates these amounts to yield total Commissions in the form of an incentive.

Exercise: Create a Commission Incentive Rule

Business Example

In this exercise, you will create a rule that calculates a monthly commission using the Rate Table created in a previous exercise. 

Steps

  1. Select Incentive Rule.

  2. Select Create New Rule.

  3. Enter the following options:

    1. What kind of Incentive rule do you want to create? Aggregated Incentive Rule.

    2. Name: IR_Monthly_Sales_Commission.

    3. Enter a description (optional).

    4. Leave the Calendar and Effective Dates at the default.

  4. Select Next.

  5. Leave the Condition field blank and select Next.

  6. Follow the steps below to create the Incentive Output:

    1. Select Create New Incentive Amount.

    2. Select An incentive that calculates an amount based on a rate that needs to be calculated.

    3. Select Next.

    4. Select Measurements associated directly to the rep.

    5. Under Choose your Measurement select the drop-down menu and select PM_Total Sales_Revenue.

    6. Leave the period at month, the period offset at 0 and select Next.

    7. Set the Commission rate to Stepped rate based on an individualized rate table.

    8. Select the Rate Table Variable RTV_Comm_Rates.

    9. Select Next.

    10. Is the rate based on target attainment? Yes.

    11. Define the target as the Fixed Value Variable for the Quota that we created in the previous lesson.

      In the Target Source field, type ref and select Reference: Fixed Value.

      Type FV and select FV_Quarterly_Sales_Quota.

    12. Set the Period Level to Quarter.

    13. Select Next.

    14. For the Commission Amount, select Take commission rate and apply it to the source.

    15. Change the Output Name to IO_Monthly_Sales_Commission.

    16. Change the Display Name for Reports to My Monthly Sales Commission.

    17. Change Unit Type to USD.

    18. Leave the Period Type at Month.

  7. Select Next, then Finish.

Per-Credit Incentive Rules

Basic Incentive Rules calculate Incentives directly from the aggregated Measurement. If the amount of commission paid out for each individual credit is required, the Incentive Rule should be changed to a Per-Credit Incentive Rule.

Per-Credit Rules measures the value of each credit against a rate table or a flat rate to produce individual commission amounts for each credit. This allows you to apply different rates to specific transactions in a period. The rule then aggregates these amounts in an Incentive.

Per-Credit Rules require more processing time but provide the results detail of commissions calculated for each credit. This type of rule doesn’t produce different results than a basic incentive rule. A limitation of the per-credit commission rule is that it can only be tied to a primary measurement rule. It will not work with secondary measurement rules.

Organizations choose to use per-credit commissions for reporting purposes when rates for each product are different. Secondly, they may choose to use it, if there are special commissions for single credits over a specified amount.

The following diagram shows an example of the difference between an aggregate and a per-credit Commission Incentive Rule, even when the output value is the same.

Keep in mind that the measurement is still needed when creating per-credit incentive rules, because it is used to calculate the attainment. This is particularly important when using a rate table. To create a per-credit incentive rule:

  1. Create a new incentive rule.
  2. On the Rule Basics tab, select Per-Credit Incentive Rule.
  3. On the Source tab, select the measurement.
  4. The rest of the rule is created just like a basic incentive rule.

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