HR Data in Incentive Compensation Management

The root of any organization is the people and their information. The importance of HR data is generally overlooked resulting in incorrect insights associated with an organization’s performance. Further, the HR data becomes even more important when it is related to financial reckoning within any organization’s incentive management.

With the increasing urge towards accurate data-driven results/commissions, we have listed down the HR information that plays an important role in Incentive Management and hence should be asked from the client as part of their HR data to ensure the correct calculation of Incentives.

Users: Any organization must identify the people who should be present in the system and have access to it. The user information also allows one to have a quick view of the list of employees and decide who should not have access to the system which helps to restrict unwanted logins.

People Information: The people information linked to users is used to define and maintain information about people who will receive incentive compensation. There are a few key fields and optional fields which are attributed to people’s information:

Relevant Dates: The dates play a significant role in defining the payees’ alignment to a role/plan and hence their commissions.

  • Start Date: When a payee’s alignment starts in the system.
  • End Date: When a payee’s alignment ends in the system.

Name: The information of a rep’s name. This information may not be unique between multiple reps and hence cannot be assumed to be a single key field driving the data.

ID: The ID defines the unique identity of any payee in the system. No two payees should have the same ID.

Target: The target defines the dollar value (above their base salary) set by the company at the payee level. This can be unique for each employee or same across a role or position based on the company’s needs and ease of defining.

Salary: Salary is generally the fixed amount that the payee is entitled to. Targets are set in accordance with the salary to have a logical and fair incentive number.

Currency: An organization can be multinational and hence are its employees. Each payee receives the incentive in their native currency. This is helpful for the payees to understand the commission in their daily currency. Hence the correct currency information and the conversion factors between various currencies play an important role. The conversion factors need to be updated after every period based on the real-time market and conversion changes.

Business Group: Business Groups are used to identify a group of payees having a similar locality/region/country or likewise. Business groups help in various ways:

  • Calculating incentives for a group with a unique plan.
  • Releasing payroll with a common date which is different from other business groups.

Hierarchy: A ladder/tree in simple words, hierarchy is useful to define positional ranking or assignments between employees. In Incentive Management, hierarchy is useful in the below ways:

  • Rolling up credit from base-level payees to higher-level managers.
  • Reporting and visibility of a certain group of payees to higher managers in a particular region.
  • Managers have direct visibility of their subordinates, which helps them to understand their performance and take appropriate measures to boost sales and motivate the reps to perform better. 
PositionParent Position
AB
BC

This way B has access to all information of Rep A and C has access to all information of reps A and B.

Hierarchies can be vertical or horizontal in nature, i.e., vertical hierarchies focus on assignments between different positions based on ranks within the organization, and horizontal hierarchy is used for passing on credits at the same level/position within the organization.

Titles: Titles are defined based on a role in the company. This varies from organization to organization. Example: Account Executive, Account Manager, Account Manager VP. In certain special scenarios, an organization can have dummy titles too, to be used in a hierarchy and roll up the credits.

Optional Data

Hire Date: The hire date shows when a person got hired by the company. This information can be used to prorate data values and have a logical calculation.
The hire date is not linked to a payee’s Incentive Start Date for a particular plan alignment.

Termination Date: The termination date shows when the payee is no longer part of the company. The calculation in the system freezes after the termination date.

Region: Region shows information about the area a person deals in. This might change from time to time and transfer. Based on region the currency is assigned and the plans are designed. The region also helps in defining the taxation reports which vary from state to state.

Status: Status is used to show a payee’s spot with the company. Example- Active, Terminated, Hold. These are some examples that can be used by the system to decide when a calculation needs to be performed/stopped.

Description: The description is usually in particular for a payee. This helps to keep track of special scenarios for a person.

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