Bonus Caps examples in Variable Pay

[xavierlegarrec]

Introduction

Bonus capping is a lesser-known feature of Variable Pay which can automatically cap employees' final calculated payouts in worksheets, thereby reducing the time spent on data consistency checks in Executive Review before bonuses are published back to Employee Central and then to Payroll.

They can be combined with a custom override field at the summary level where Comp Administrators can enter the value of their choice as Final Payout.

Two capping options are available (Plan Setup > Set Bonus Calculation) : "By Bonus Plan" or "By Employee" and each of them can only be used if the standard Final Payout field (columnID = finalPayout) is used at the summary level of the Variable Pay template.

 

 

 

 

Examples

 

Let's take a look at how each of these options impacts the final calculation in the case of an employee who was promoted (and was hence on 2 different Bonus Plans) during the Fiscal Year (credit Guillaume Bouillette, former SAP Support Engineer) :

 

 

 

 

 

Configuration

 

How are Bonus Cap Percentages imported in both cases ?

For both "By Bonus Plan" and "By Employee" options, the percent must be loaded in the Bonus Plan CSV Import file as per the screenshot below (the full file from my demo environment can be downloaded here).

 

 

However, for it to work correctly in the "By Employee" setup, all bonus cap percentages must be imported as the same number for all bonus plans (my above screenshot would work in the By Employee option for that matter).

Once the file has been imported, a Run Bonus Calculation Job must be triggered for the system to apply the correct cap to the payouts.

The recording below provides some insights on the administration of Bonus Caps in the Admin UI of a Variable Pay template :

 

https://youtu.be/Wh8I0T4KiaA

 

 

 

 

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All the best,

Xavier

 

 

 

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[franciscopol]

Thanks a lot Xavier for the explanation of a barely documented feature.

 

But the by employee option only seems to work when we have same cap for everyone

 

However in my past implementations I always had the same situation:

 

• Employee has in CI (or Job Info) 2 custom fields: target % and Max %


• Goals are added (imported for Business) or from forms for team and individual


• Target amount (salary * target % * prorate in each assignment) is calculated.


• Based on goals results we get goal results payout % and goal results payout amount


• total goal result added up from all segments should be calculated as % of assignmentTargetAmount (which could be calculated using salary at year end in some customers or as per assignment in others, I've done both).


• Total payout / salary (either salary year end of sum of all assignments) is the final % (some extra calculations are needed since we need to un-prorate amounts). And this should then be compared with Max % and do the cap if needed.

system currently is not doing that.

 

How do you suggest system calculate the cap on an individual level as explained (tried to 🙂  ) above?

 

Cheers,

Francisco

[xavierlegarrec]

Hi Francisco, for this particular case you would probably need to build something custom at the summary level instead of using the standard Bonus Cap feature. Maybe you could get the value for capping for each user from an MDF object then comparing it with the values in the different sections and use custom formulas for the capping.

All the best,

Xavier

[franciscopol]

Thanks xavierlegarrec

I hope you don't mind I add this here, so people reading this with the same doubt I have, can upvote the idea 🙂

https://influence.sap.com/sap/ino/#/idea/271648

 

Cheers,

Francisco

[xavierlegarrec]

Hi Francisco,

I read the influence request but I don't think the workaround is that complex using custom fields.

At the summary level you already have the final target amount and the final calculated payout fields.

So all you need to do is a custom calculated column with an if-then rule to determine what the final payout will be after capping.

If you need to add a percentage in the equation in a situation where you want the payout to be capped at a certain percentage of the employee's Target Amount and the percentage varies by employee, then you need to have that percentage for each employee coming from an MDF object (better than lookup table I would think for this use case).

Does that make sense ? I am not sure an enhancement request to add a new feature for this makes sense. In 10 years, I've never had a customer asking for this setup.

Thanks !

Xavier

[franciscopol]

Thanks as always for your super fast response xavierlegarrec

Yes, I agree with you (and this is how I've done it in the past), the problem is that you end up with a custom payout field instead of the standard one, which used to be ok in the past when I've implemented this too, but now, with the compensation profile, these chart displays only standard fields

 

(this is displaying only business goals), but it is pretty much the same  with you have individual goals and team goals too, as soon as you end up with a custom field for capping, this funtionality is useless. Was there when I started to get the request from customers to have both, standard cap calculation AND this..  (Unless there is a way of using custom fields here in that case I'm all ears )

 

Cheers,

Francisco

[xavierlegarrec]

Yes I think the enhancement request should be more about enhancing the Compensation Profile to allow it to display custom fields than adding new standard fields in Design worksheet.

 

[franciscopol]

True, but not being able to cap with standard also messes up the forecasting since it basically will bring whatever we enter.. Cap should apply there too.

[Altamash_SF]

Thank you xavierlegarrec ,

 

I was exactly looking for this and found your blog here. Thank you so much for sharing this.

Regards,

Altamash