Bonus Calculation Equations in Variable Pay

In this recording we provide a deep dive on Bonus Calculation Equations in Variable Pay using an employee with the same employee history to see how the calculation differs between multiplicative and additive formula (the latter being leading practice).

We focus on the two most used Equations :

  • Multiplicative formula : Base X Business X Individual
  • Additive formula : Base X (Business + Individual)

Please note that we should avoid equation number 1 (Base x Business) for the reasons below :

  • It does not allow the display of the budget tab.
  • In case ABR is on it will lead to an error message when opening worksheets (ABR requires the individual component in the equation even if it is not used in the final payout calculation).

Key takeaways of this recording : 

  • Variable Pay always works with monetary amounts rolling up to the entry level, percentages are not native to the module (they are the outcome of the division before two monetary amounts). Because of that we should always pay attention to the number formats especially when using the multiplicative formula (as per the recording example)
  • Variable Pay always works from the assignment level to the entry level.

All the best,