‘Targeted percentage rate with growth targets’ mechanism

Description

A mechanism where the earnings are a percentage of transacted value, but the size of this percentage depends on the level of transaction growth achieved.

For this plug-in, growth relative to baseline can be expressed as a number of units, as an amount of money, as a percentage that is calculated using transaction units, or as a percentage that is calculated using transaction value.

Example

A program line for which the earnings are 1% of transactions if transacted value growth is less than $500,000, 6% of transactions if  growth is greater than or equal to $500,000 but less than $750,000, or 8% of transactions if  growth is greater than or equal to $750,000.

Configuration approach

You will be required to:

• Select a mechanism type (for this example Target % (Growth).
• Configure one or more target bands, with a transaction target and a percentage rate for each (where the  target reflects the user’s selection for growth target type and the rate is always a percentage rate), as illustrated below for a program line where the growth target type is % by value:

• Select one or more items for each dimension that has been configured for you as included items for the program line.
• Enter baseline figures for transacted value and transacted units.

Enable selects matching transaction lines for the program line, based on:

• The trading partner to which the program line belongs.
• Your dimension item selections.
• The start and end date of the program line.
• The currency of the parent trading program.

To calculate an earnings result for the program line as a whole, Enable will use whichever of the following is appropriate given your growth target type selection to determine which target band, and therefore which earnings amount, applies:

• The difference between the total for transacted value across the matching transaction lines and your entry for transacted value if the growth target type selection is Value.
• The difference between the total for transacted units across the matching transaction lines and your entry for transacted units if the growth target type selection is Units.
• The ratio of the total for transacted value across the matching transaction lines to your entry for transacted value if the growth target type selection is % by value.
• The ratio of the total for transacted units across the matching transaction lines your entry for transacted units if the growth target type selection is % by units.

To calculate an earnings result for each matching transaction, Enable will multiply the percentage rate that applies to the program line as a whole by the entry for transacted value that applies to the transaction line.

Optional settings

You will be able (but not required) to use the ‘Mechanism details’ area of the program line configuration page to:

• Tick the Fully retrospective? tick box when Retrospective? is also ticked.
• Tick the Separate target and earning transactions? tick box.
• Enter a value in the Discount % box.
• Select one or more program lines as deduction program lines.

Fully Retrospective vs Retrospective vs Non-Retrospective

For a program line that uses the Targeted percentage rate with growth targets plug-in, both the Retrospective? and Fully retrospective? boxes are ticked by default. When both of these boxes are ticked, the earnings will be calculated with the achieved rate applied retrospectively, or ‘back to zero’.

If the Fully retrospective? box is unticked, Enable will instead:

• Perform a partially retrospective calculation that involves applying the achieved rate ‘back to baseline’ rather than ‘back to zero’ if the Retrospective? box is ticked.
• Perform a non-retrospective calculation that involves applying each of the achieved rates to the transaction that ‘belongs’ to the corresponding target band if the Retrospective? box is unticked.

Consider for example a program line that has a growth target type of ‘% by value’ with target bands as follows:

If for the above program line the total for included transactions is $2,350,000 and the baseline value is $2,000,000 (such that the % growth by value is 2,350,000 / 2,000,000, or 117.5%), Enable will calculate the earnings as:

• 3% x $2,350,000 = $70,500 if the Fully retrospective? box is ticked.
• 3% x ($2,350,000 - $2,000,000) = $10,500 if the Fully retrospective? box is not ticked but the Retrospective? box is ticked.
• 2% x $2,000,000 x (115% - 110%) + 3% x $2,000,000 x (117.5% - 115%) = $3,500 if the Fully retrospective? and Retrospective? boxes are both unticked.

The above example shows how the program line level result for earnings would be calculated for a partially retrospective or non-retrospective program line that uses the Targeted percentage rate with growth targets plug-in. To calculate an earnings result for each of the included transactions for such a program line, Enable will use:

• The entries for transacted value from the matching transactions to apportion the program line level result for earnings and derive an earnings result for each of the matching transactions if the growth target type is Value or % by value.
• The entries for transacted units from the matching transactions to apportion the program line level result for earnings and derive an earnings result for each of the matching transactions if the growth target type is Units or % by units.

Separate target and earning transactions?

For a program line that uses the Targeted percentage rate with growth targets plug-in, the Separate target and earning transactions? tick box is unticked by default.

When the Separate target and earning transactions? box is unticked:

• You will be required to configure a single set of dimension items as included items for the program line, where the set of included items contains at least one item for each dimension that has been configured for you.
• Enable will:
• Use the set of included dimension items, in conjunction with the start and end dates of the program line and the currency of the parent trading program, to select a single set of matching transactions for the program line;
• Use the set of matching transactions, in conjunction with the target bands that have been configured for the program line, to calculate the earnings.

When the Separate target and earning transactions? box is ticked:

• You will be required to configure two sets of dimension items — one for target transactions and one for earning transactions — where each set of included items contains at least one item for each dimension that has been configured for you.
• Enable will:
• Use the two sets of included dimension items, in conjunction with the start and end dates of the program line and the currency of the parent trading program, to select two sets of matching transactions for the program line — one for target transactions and one for earning transactions;
• Use the target transaction lines to determine which target band, and therefore which percentage rate, applies to the program line;
• Use the earning transactions to calculate the earnings for the program line;
• Assign earnings to all of the earning transactions and none of the target transactions.

Discount %

For a program line that uses the Targeted percentage rate with growth targets plug-in, the discount percentage is set to null by default to indicate that there is no (i.e. zero%) discount percentage.

You will have the option of taking no action to accept the default null value for Discount % or typing a numeric value (to a maximum of 3 decimal places) to specify a discount percentage.

Please note — you should enter the percentage value, e.g. 2.5 as opposed to 0.025 for a 2.5% discount.

The expected scenario is one where a user enters a positive percentage (e.g. 2.5) to reduce the qualifying transactions, although the user may enter a negative percentage to inflate the relevant transactions. You will not be allowed to enter a percentage that is greater than 100% or less than -100%.

When a non-zero value is entered into the Discount % box a Discount deducted from setting becomes visible.

For a program line that uses the Targeted percentage rate with growth targets plug-in, both of the following influence how the Discount deducted from setting operates (and this in turn determines how the discount percentage is applied):

• Which option has been selected for the growth target type setting.
• Whether the Separate target and earning transactions? box is ticked.

If the growth target type is Units or % by units:

• The Discount deducted from entry is set to (and fixed as) Earning transactions, regardless of whether the Separate target and earning transactions? box is ticked.
• Enable will:
• Use a program line level total for transacted units that has not been adjusted for the discount percentage to determine which target band, and therefore which percentage rate, applies;
• Use transacted value that is net of the discount percentage when applying a percentage rate to calculate the earnings (for the program line as a whole or for the included transactions).

If the growth target type is Value or % by value and the Separate target and earning transactions? box is unticked:

• The Discount deducted from entry is set to (and fixed as) Target and earning transactions.
• Enable will use transacted value that is net of the discount percentage both to determine which target band applies and to calculate the earnings.

If the growth target type is Value or % by value and the Separate target and earning transactions? box is ticked:

• The Discount deducted from field will allow you to select from options of:
• Target and earning transactions (the default);
• Target transactions;
• Earning transactions.
• Enable will apply the discount percentage to:
• Both target and earning transactions if your Discount deducted from selection is Target and earning transactions;
• Target transactions only if your Discount deducted from selection is Target transactions;
• Earning transactions only if your Discount deducted from selection is Earning transactions.

Deductions

When using the Targeted percentage rate with growth targets plug-in, no program lines will be selected for the Deductions setting by default.

You will have the option of taking no action to accept this default selection or selecting from a list of the program lines that have been configured for the parent trading program.

If you accept the default option, Enable will calculate both transactions and earnings for the ‘deduct from’ program line in the normal way without referring to the earnings from any other program lines.

For a program line that uses the Targeted percentage rate with growth targets plug-in, both of the following influence how the Deductions setting operates:

• Which option has been selected for the growth target type setting.
• Whether the Separate target and earning transactions? box is ticked.

If the growth target type is Units or % by units and one or more program lines have been selected for the Deductions setting, Enable will:

• Sum the total program line earnings across the selected deduction program lines to derive a grand total for deducted earnings.
• Calculate the total for transacted value across the included transactions for the ‘deduct from’ program line (for earning transacted value specifically if the program line has separate target and earning transactions) and subtracts the grand total for deducted earnings from this total to derive an adjusted total transacted value for the program line.
• Use data on transacted units that have not been adjusted for the deducted earnings to determine which target band applies.
• Use data on transacted value that have been adjusted for the deducted earnings to calculate the earnings.

If the growth target type is Value or % by value and the Separate target and earning transactions? box is not ticked, Enable will use transactions that are net of the deducted earnings both to determine which target band applies and to calculate the earnings.

If the growth target type is Value or % by value and the Separate target and earning transactions? box is ticked, a Deduct earnings from setting will be displayed.

When the Deduct earnings from setting is available:

• You will be required to select from options of:
• Target transactions;
• Earning transactions;
• Target and earning transactions.
• Enable will deduct the earnings from the deduction program line(s) from:
• Both target and earning transactions if your Deducted earnings from selection is Target and earning transactions;
• Target transactions only if your Deducted earnings from selection is Target transactions;
• Earning transactions only if your Deducted earnings from selection is Earning transactions.

For a program line where one or more program lines have been selected for the Deductions setting and a non-zero discount percentage has been entered, the discount percentage is applied first. That is, the relevant percentage discounts are applied before the earnings from the deductions program line(s) are subtracted.