Bonus Custom Modifiers: A Great New Way to Fine Tune Calculations
Workday delivered a great addition to bonus calculation functionality in 2022R2. If you’ve been challenged with complex bonus calculations that have prevented you from using Workday’s Compensation Review process, it is worth your time to understand this new functionality to see if it can solve those challenges.
At the highest level, the new Compensation Review Custom Modifier functionality provides a systematic way to incorporate employee-level modifiers into an employee’s bonus calculation. Several use cases immediately came to mind when I started exploring:
- Time since Hire proration is applied to the bonus plan, however, a handful of mid-period hires have negotiated a full bonus.
- Bonus plan has a 3-month waiting period however, the amount earned in the waiting period is added to the employee’s bonus in the next cycle.
Of course, the above scenarios can be handled by manual calculation and uploading of employee awards. But the upside of using a Custom Modifier instead is providing planners visibility into Workday’s calculation math via the Rounded Total Bonus Target Amount Advanced grid field and in the View Bonus Calculation task. Workday also includes Custom Modifiers in the View Bonus Calculation task.
Configuration of the functionality is a light lift:
- Use the Maintain Compensation Review Custom Modifiers to create the types of Modifiers you need. This task is secured by the Set Up: Compensation Management domain so roles with modify access on this domain will have access.
- Update the Participation Rules tab of your Compensation Review Options for your preferred behavior when a Custom Modifier is updated during the Complete or Review Employee Awards steps.
Important considerations when using the Custom Bonus Modifier:
- Modifiers can only be added during the following steps in the Compensation Review process: Configure Pools, Complete Employee Awards, and Review Employee Awards.
- If Parallel Events are enabled for your process, loaded modifiers will be removed from an employee when a parallel event occurs. This is because Workday associates a modifier with a specific segment and a parallel event will most likely create new/additional segments.
- The most complex consideration is choosing how you load the modifiers into Workday. If you only need to add modifiers for a handful of employees, use the UI task. If there are too many to add manually, there are EIBs you can use (Get Employee Proration Segment Details and Import Employee Proration Segment Details) which I’ll come back to.
The UI task, Maintain Compensation Review Custom Modifier for Employee, is straightforward to complete. In this task, select your process, employee, and bonus plan(s). On the screen, you can add one or more Modifiers to one or more segments.
Now – let’s get back to the EIBs. While there is the Get Employee Proration Segment Details, I’ve found using a custom report is easier than using the Get web service. To use the Get web service you have to modify the Request XML, build Launch Parameters and figure out how to utilize the output. The custom report I use is built on the All Compensation Review Bonus Payments Data Source and includes the below fields.
|Field||Business Object||Required on Import EIB||Notes|
|Employee ID||Compensation Review Employee Adjustment||Yes||LRV from Adjustment For to Employee|
|Employee||Compensation Review Bonus Payment||No|
|Bonus Plan||Compensation Review Bonus Payment||No|
|Bonus Plan Reference ID||Bonus Plan||Yes|
|Effective Date||Bonus Proration Segments||No||This is the Proration Segment Start Date|
|Segment End Date||Bonus Proration Segments||Yes|
The remainder of the data needed on the import EIB is either standard EIB data (e.g. Header Key, Line Key, Row IDs) or data specific to this EIB (Custom Modifier Name Reference ID, Custom Modifier Percent, or Clear Modifier).
There is one final benefit of using this new functionality that is important to note. When a custom modifier is added, adjusted, or removed, Workday will automatically increase or decrease budgets eliminating the need to load updated budgets.
For any organization with unique bonus calculation requirements that fall outside of what Workday can accommodate, this new functionality is definitely worth looking at!