Set up Rules for Target Based Commission Calculation

Objective

This tutorial demonstrates how to create Commission Templates that can be assigned to an employee, using a 'Commission' Wage Type record. Commission Rules are applied to a Commission Template, then, to an employee Wage using the 'Commission' Wage Type. The system will calculate the exact amount that an employee is entitled to, based on a sales Achievement.

This tutorial will show you how to create Commission Templates for Target Based Commission Rules.

In Target Based Rules, a target value is pre-determined, and from each percentage of the target, the employee receives an amount. For this type of commission calculation, the HR Manager sets a Target value, and when the employee reaches a certain percentage of this target, he/she receives a defined amount.

For example, if the Target is €100,000, then for the first 1-50% the employee may be awarded 1% of the value earned, for 50-99% the employee may be awarded 2% of the value earned, and for 100% or more the employee may be awarded 3% of the value earned.

You can find the setup tutorial for Value Based Commission Rules here.

Prerequisites

  • You are HR Manager

Click Through

  • Start in HR HUB
  • In the lower left corner, switch from Overview to Settings
  • Under Compensation, select Commission Templates
  • Click on + New
  • Add the Name
  • Save
  • After saving the record for the first time, the 'Commission Rules' table is available.
  • Under 'Commission Rules' select + New Commission Rule
    • Depending on the zoom settings of your browser, this option may be hidden behind the three dots in the top right corner of the table
  • Enter a Name for the Commission Rule
  • Select the Commission Category
    • Type 1 and Type 2 are placeholders which can be customized to your organization's needs
  • Select the Level Definition Target Based
  • Add the Target Amount
  • Choose the preferred Currency
  • Save
  • Go to the tab Commission Calculation
  • Click on + New Commission Level
  • Select the Commission Calculation Method
    • Commission Amount per % Point
      • Specify an amount employees receive as commission for each % (or % range) of the target reached
    • Achievement x Commission %
      • Total Commissions = Sales Achievement in Currency value x Commission %
  • Check if the Currency is correct
  • Add the % of Target From
  • Add the % of Target To
  • Add the respective Commission amount
  • Save & Close
  • Repeat this until all your commission rules are covered in the Commission Levels
  • When you're done, you can Save & Close the Commission Rule

Hint

  • The system contains as default two Commission Types (type 1 and type 2), those are only place holders, and you can customize their names, and add more types into the table
  • Once the Commission Template is outdated, you can select it and Deactivate it (button on the ribbon)

Result

Below, you can see what a filled out Commission Template for Target Based Commissions looks like.
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HR