Create Bonus Plans

Workday User Guide

Create Bonus Plans

Set up compensation components and grades.

Security: Set Up: Merit and Bonus
domain in the Advanced Compensation functional area.

You can create bonus plans to assign to employees. When Workday generates the bonus pool as part of a compensation review process, it takes into account the rules and target profiles in the bonus plan.

When creating bonus plans, consider how you want to:

Divide or consolidate bonus plans, by region, job level, job profile, or grade.

Set up targets for each bonus plan, such as no target, a single target, or multiple targets.

Access the

Create Bonus Plan

task.

In the

Details

section, consider:

Option	Description
Inactive	Select if the plan isn't available for use. Processes already using this plan will complete as normal.
Compensation Element	Select the element mapped to the payroll earning you want associated with this plan.

In the

FTE

section, consider:

Option	Description
Apply FTE%	For amount-based plans only. If selected, Workday prorates the bonus for part-time employees assigned to this plan based on their FTE. You can enable Paid FTE in the Staffing section on the Maintain Localization Settings task. If enabled, Workday prorates using the paid FTE override on the position. Otherwise, Workday calculates FTE by dividing Scheduled Weekly Hours / Default Weekly Hours when proposing compensation during these business processes: Offer . Employment Agreement . Hire . Change Job . Edit Position . Add Job . Start International Assignment .
Use Assigned Value in 100% Calculations	For amount-based plans only. This option doesn't apply to workers Managed by Basis Total (MBT). If selected, Workday uses the assigned amount on the plan as the fixed proration value and the 100% value in calculations. If not selected, Workday divides the assigned amount by the employee's FTE for 100% FTE calculations. Example: You assign a worker with 50% FTE amount-based Bonus Plan A for 1,000 and amount-based Allowance Plan B for 1,000. You select the Use Assigned Value in 100% Calculations for Bonus Plan A and None of the above for Allowance Plan B. The 100% FTE value calculated for Bonus Plan A is the assigned amount of 1,000. Workday doesn't divide this amount by the worker's FTE. The 100% FTE value calculated for Allowance Plan B is 2,000, which equals the assigned amount (1000) divided by the employee's 50% FTE (0.5): (1000/0.5 = 2000).
None of the Above	Workday doesn't apply FTE% and doesn't use the assigned plan value in 100% calculations.

In the

Award Calculation

section, consider:

Option	Description
Compensation Basis	Available if you select Percent Based Plan . Select the compensation basis Workday uses to determine the target amount for this plan. Workday doesn't exclude this plan when calculating the target amount for employees managed by a compensation basis. If you select a compensation basis that includes this plan, Workday excludes this plan when calculating the target amount. If you select a subtractive compensation basis, Workday subtracts the subtractive basis amount from the employee's Primary Compensation Basis before calculating percentage-based target amount. You can't change a compensation basis if the plan is part of compensation basis that has the Manage Basis Total check box selected.
Target Amount	Available for amount-based plans only. Enter the amount of the target bonus award. Workday uses the target amount when the employee: Doesn't have an individual target. Isn't eligible for any of the plan profile targets. Is eligible for more than 1 plan profile target.
Target %	Available for percent-based plans only. Enter the percent of the target bonus award. Workday uses the target % when the employee: Doesn't have an individual target. Isn't eligible for any of the plan profile targets. Is eligible for more than 1 plan profile target.
Reference Currency	Selecting the currency enables you to manage a bonus plan in a single currency but still accommodate employees who use other currencies.
Reference Frequency	Workday uses this frequency to calculate the actual cost of the award, plus or minus any currency fluctuations.
Company Funding Scorecard	Determines the funding of the target bonus pool. The compensation review process factors company performance into the bonus pool only if you add the scorecard to the bonus plan and you have qualifying performance scorecard results. The Company Funding Scorecard can't contain profiles. You can update results on the Manage Bonus Funding step of the compensation review process.
Plan Modifier Scorecard	If you want to modify the target, select a scorecard. The Plan Modifier Scorecard can contain profiles. You can update results on the Recalculate Pool and Awards task while the compensation review is in progress.
Time Proration Rule	Select a rule to prorate employees' target compensation for this plan according to time-based criteria such as leave of absence or time since hire.
Allow Target Override	If selected, you can override the default plan or profile target for an individual employee.
Hide Target from Security Groups	Select 1 or more security groups from which to hide funded plan targets. Workday hides the funded plan target beginning on the effective date of the plan. Reports that display plan assignments hide plan targets only when the plan is in effect. Workday doesn't hide funded plan targets during the Initiate Compensation Review Process or during the Offer or Employment Agreement business processes in the Task Consolidation context.

(Optional) In the

Plan Eligibility

section, select a

Waiting Period

A waiting period restricts eligibility until after the employee satisfies the waiting period criteria. By using a waiting period, you can assign the plan at any time and rely on the waiting period to control eligibility.

If the waiting period is still in effect as of the

Process Period End Date

configured on the compensation review process, Workday:

Includes the employee as an exception.

Sets the suggested target percent (and prorated target increase percent, if applicable) to zero.

The pool doesn't reflect the employee target and managers can override a target value of zero.

In the

Process Eligibility

section, consider:

Option	Description
Include Active Employees Assigned Plan During Process Period	Indicates that employees assigned to the plan at any point during the process period, but not currently assigned the plan, are eligible for an award. Workday determines the related target from: The individual override as of the date the employee was last assigned the plan. The plan profile as of the compensation snapshot date. Target Changes in Period if selected on the proration rule.
Include Active Employees in Waiting Period	Select if you want to include employees assigned to the plan and in a waiting period included in a compensation review process. Workday doesn't calculate the employee target amounts, which display as zero.

(Optional) Select 1 or more

Coverage Date Eligibility

rules.

If configured, Workday:

Displays editable

Coverage Start Date

and

Coverage End Date

columns for bonus plans during compensation reviews.

Applies coverage dates to bonus awards resulting from the compensation review event. Coverage dates become visible in Workday Payroll and Payroll Integration when the compensation review completes.

Coverage dates enable Workday Payroll or Payroll Integration to associate dates with the bonus for US Fair Labor Standards Act (FLSA) reporting requirements.

In the

Performance Factors

tab, consider:

Option	Description
Compensation Matrix or Compensation Matrix for Individual Performance Factor	Identifies the compensation matrix used to calculate the individual target amount during the compensation review process.
Use Matrix as Reference Only	Available when you select Bonus Plan with Compensation Matrix and enter a compensation matrix. Select if you don't want Workday to calculate the individual target or pool amount using the selected compensation matrix. Workday displays only the percentage when proposing the employee award.
Apply Net Attainment	If selected, Workday uses net attainment as a multiplier for the bonus target or bonus amount during compensation reviews. Example: If a discretionary target with a weighted matrix is equal to 2000, a Net Attainment Percent of 50% reduces it to 1000.
Weighting	The total weight between all compensation matrices and scorecards must equal 100 percent.
Compensation Scorecards	Enter 1 or more scorecards. Workday uses them to calculate the bonus award.
Modifier	If you want to modify an individual performance or performance scorecard award amount, select a scorecard.

Enter a

Tranche

number and

Tranche Percent

for each tranche.

You can define bonus plans distributed in predefined portions or installment amounts. Workday calculates the portions or installments by prorating the overall bonus target using a tranche percent.

In the

Deferred Bonus

tab, consider:

You can configure the bonus plan to divide the deferred payments into an initial cash award, followed by a stock plan disbursement.

Option	Description
Deferred Bonus Eligibility	Select eligibility rules.
Default Calculation	Select a calculation created on the Create Deferred Bonus Calculation task.
Deferred Bonus Profiles	Select an Eligibility Rule , Calculation , and Stock Plan for subgroups of the employee population defined by the Deferred Bonus Eligibility rule.

Workday uses the

Default Calculation

and

Default Stock Plan

for employees that either meet none or meet more than 1 of the deferred bonus profiles.

During compensation review processes with bonus awards, Workday uses these eligibility rules and the associated calculations and stock plans to determine how to divide deferred bonus awards.

You can override deferred bonus values if your compensation review grid configuration includes

Deferred Bonus Amount

Deferred Bonus Percent

, or both as editable columns.

For percent-based plans, Workday multiplies the basis amount by the target percent to derive the target amount. For amount-based plans, Workday simply adds the targets for the employee. Workday then sums these employee target amounts to derive the organizational bonus pools and the overall bonus pool for the process.

For Bonus Plan Modifiers, Workday calculates individual employee target amounts:

Compensation Basis * Target Percent or Target Amount * Individual Performance Scorecard Results

If you use modifiers, Workday automatically adjusts the pool and employee award amounts.

For tranches, Compensation Administrators are responsible for rolling out the correct number of bonus events and tranches for the bonus period. To base the final true up bonus on the difference between the true up target and completed payments, use the

Complete Future Payment True Up Bonus

task.

If an employee:

Earns 100,000 per year.

Has an overall bonus target of 40%.

The target for the first tranche is 12.5%.

The employee is eligible to receive a 5000 bonus for the first tranche (100,000 * 0.4 * 0.125 * 1). If the manager proposes a bonus for the employee, the suggested target bonus is 5000 or 5%.

You can:

Assign (roll out) the plan to employees on the

Rollout Compensation Plans to Employees

task.

Add the plan to a compensation package on the

Create Compensation Package

task.

Access the

Bonus Plan

and

Bonus Plans

reports.

Access the

Edit Bonus Plan

task.

Hide the compensation plan type from specified groups of workers using the Worker Data: Compensation Plan Type
domain in the Core Compensation functional area.

Example: Use this security domain to hide the compensation plan type on the

Compensation Plan Assignments

report for workers in Germany. Workers can still see the plan name.