Defining external metric pay components

Use this procedure to define pay components that are based on external metrics.

  1. Select Compensation > Set Up > Incentive Compensation.
  2. On the Pay Components tab, select Actions > Create External Metric Component.
  3. On the Main tab, specify this information:
    Effective Date
    Specify a date when the pay component is effective. This date should be on or before the compensation program version to which you are attaching this pay component.
    Pay Component
    Specify a short and long description for the pay component. For example, Revenue Component or Key Performance Indicators Component.
    Active
    Select this check box to indicate that the pay component is active.
    Category
    Use this field to further categorize or describe the component.

    If this field is specified, then it is defaulted on the compensation program pay component. From there it is displayed on the employee compensation program and on the enrollment summary form for the resource.

    Narrative For View By Resources
    Specify any information that the resource can view about the compensation program. For example, what is being measured, how it is attained, or when it is paid out. This narrative is viewed by the resource on their Resource Compensation view for Employee Spaces.
  4. On the Payout Rules tab, specify this information:
    Compensation Schedule
    Select a compensation schedule. This determines how frequently the pay component is calculated and paid out.
    Compensation Table

    Select a compensation table. The table defines the payout calculation based on levels of attainment.

    Prorate Option
    Select whether compensation is prorated for partial compensation periods. For example, a compensation period is quarterly and a resource becomes eligible after the period starts. Select Prorate to prorate the compensation for that period. Select None for the resource to receive the full amount.

    Proration is based on eligibility dates. If you select Prorate in this field, then use the Prorate Method and Nearest Point fields to determine how the proration works.

    Prorate Method
    If you selected Prorate in the Prorate Option field, then select the method that determines whether the calculation uses months or days in determining the amount to be prorated.
    Nearest Point
    If you selected Prorate in the Prorate Option field, then select whether the proration starts before or after the entry point. For example, a compensation period is from January 1 to March 31, with the proration method is months, and a resource becomes eligible February 15. Select Before to prorate the amount from February 1. Select After to prorate the amount from March 1.
    Rounding Method
    Select the rounding method.

    If you select Normal, then the number rounds up if the last digit is five or greater. It rounds down if the last digit is less than five.

    If you select High, then the number rounds up.

    If you select Low, then the number rounds down.

    Round To
    Specify the rounding precision. For example, type 0.01 to round to two decimals.
    Pay Code
    Optionally, specify a pay code.

    This field is for information only and can be interfaced to a payroll application.

    Payouts Exceeding Target
    Select the option that determines how the application handles payouts that exceed an resource's target compensation. If you select Payout Calculated Amount, then the application creates the payout even if the payout exceed the target compensation.

    If you select Target Compensation, then the application creates the payout up to the target compensation.

    If you select Do Not Create Payout, then the application does not create a payout and a warning is sent to the compensation analyst.

  5. Click Save.
  6. Add the pay component to a compensation program.
    See Defining a compensation program.