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Variable Compensation Does not Use Annual Rate As Of Effective Date in Plan (Doc ID 1908828.1)

Last updated on SEPTEMBER 26, 2019

Applies to:

PeopleSoft Enterprise HCM Human Resources - Version 9.1 to 9.2 [Release 9]
Information in this document applies to any platform.


Variable Compensation calculates a person's eligibility for a plan. It will prorate based on their time in plan. However, when calculating an award, it only uses the annual rate effective on the last date of the plan. So, for example, I have 2 plans, PLAN A and PLAN B. The requirement for PLAN A is being in DEPT A and the requirement for PLAN B is being in DEPT B. During the Plan Year, an employee is transferred from DEPT A to DEPT B with a salary increase. Therefore she should get awards in both plans with prorated awards. For the 1st part of the year, in PLAN A/DEPT A she was making $25k a year, then in PLAN B/DEPT B she was raised to $30k/yr. When the system calculates the awards it is using $30k/year for both PLAN A and PLAN B. It should use $25k for PLAN A and $30k for PLAN B.

The current logic isn't correct. Functionally, anyone would want to use the salary which was in effect when the person was in the position for which they are eligible for the plan. That is what effective dating brings you. This ignores effective dating and uses salary as of the plan end date. So if the person wasn't even in the plan on plan end date, but was during the plan, it is using an erroneous salary amount. I'm asking that this be reviewed by strategy and development. VC is not a widely used product, but with its inclusion into eComp Manager Desktop it will be used more, and this type of thing is something that will come up over and over again. It should be address and the code modified to use the salary that was in effect when the person was in the plan.

Current Logic obtained from Communities and Development forum found:

When using VC Plans with groups and proration, the Determine Eligibility Process (VC_ELIG_PRO) will determine eligibility by checking if the employee existed in the group build results for each proration period defined and calculate a proration factor. The PeopleBooks have examples of how the proration factor is calculated. Basically, it will allocate a certain number of days for each period the employee was eligible and divide it by the total number of days eligible. The Determine Eligibility Process does not perform any award calculations, it is only determining eligibility.

The Determine Allocation process (VC_DET_ALLOC) calculates the following (from PeopleBooks):

  The target award for each plan member, without making any adjustments for proration, performance, or funding.
  The minimum and maximum awards for each plan member, if specified in the plan, without making any adjustments for proration, performance, or funding.
  The organization attainment factor, if the plan uses organization-weighted goals.
  The group attainment factor for each group, if the plan uses groups and group-weighted goals.
  The sum of target awards for each group in the plan if the plan uses groups.
  If the plan uses funding, it enters these payouts on the Allocate Group Funding page.
  The sum of minimum awards (if specified in the plan) for each group in the plan, if the plan uses groups.
  The sum of maximum awards (if specified in the plan) for each group in the plan, if the plan uses groups.

The Determine Allocation process uses the Pay Formula configuration to perform the calculation of the target award. When it retieves the Job Data information for something like JOB.ANNUAL_RT, it retrieves this job information as of the Plan Period End Date being processed. In VC_DET_ALLOC Section LDRTCD Step RUNRCSQL and RUNRCSQ2, there is SQL that shows the max effective date logic for Job Data using %Bind(PRD_END_DT).

The Calculate Awards process uses the following information from the previous VC processes to calculate awards:

  Target, minimum, and maximum values computed by the Determine Allocation process.
  Group and organization performance factors computed by the Determine Allocation process.
  Proration factor computed by the Determine Eligibility/Proration process.
  Funding amounts entered on the Plan Funding and Allocate Group Funding pages.

There is more detail in the PeopleBooks on all the steps performed, but at the core it performs the following calculations against the Target Value:

  No proration or goals: Target Value
  Proration: Target Value × Proration Factor
  Weighted goals: Target Value × Performance Factor
  Weighted goals and proration: Target Value × Proration Factor × Performance Factor
  Matrix goals: Value of the payout from the Payout Schedule
  Matrix goals and proration: Value of the payout from the Payout Schedule × Proration Factor

Based on the behavior described by the customer, everything seems to be working based upon how the logic is coded. I did not see anything in the PeopleBooks that indicate that job information is retrieved differently when the employee is prorated. So I would have to say that everything is working as originally designed.

Based on the existing function of each VC process, I think we are looking at an enhancement to manage the customer's specific scenario. The Determine Allocation process is separate from the Determine Eligibility process. It's not even looking at the employee proration factor or any group build information when it retrieves the job information to calculate the target award.


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