Compensation rules basics

The compensation rules are used to calculate the person’s new compensation, based on three factors:

$CurComp$ - The person’s current compensation.

$NewComp$ - The person’s calculated new compensation, after applying all previous rules.

$TarComp$ - The person’s target compensation, based on the person’s calculated value contribution.

Rules

Rule: Keep Current Compensation

The Keep Current Compensation rule will ensure that the person’s new compensation is not lower than the person’s current compensation.

$NewComp = max\{CurComp, NewComp\}$

Rule: Add Amount

The Add Amount rule will add a fixed $[Amount]$ to the person’s new compensation.

$NewComp = NewComp + Amount$

Rule: Add Percentage

The Add Amount rule will add a fixed percentage $[Percentage]$ of the person’s current compensation to the person’s new compensation.

$NewComp = NewComp + (CurComp * Percentage)$

Rule: Ensure Amount

The Ensure Amount rule will ensure that the person’s new compensation is at least some amount $[Amount]$ higher than the person’s current compensation.

$NewComp = max\{NewComp, CurComp + Amount\}$

Rule: Ensure Percentage

The Ensure Percentage rule will ensure that the person’s new compensation is at least some percentage $[Percentage]$ higher than the person’s current compensation.

$NewComp = max\{NewComp, CurComp + (CurComp * Percentage)\}$

Rule: Fairness

The Fairness rule runs across the whole group of persons that are part of the run, and will work to ensure that the person’s new compensation is maximally fair, based on the person’s calculated value contribution and the fairness level of the group.

The rule identifies the largest $[Ratio] = \frac{NewComp}{TarComp}$ that every person in the group can be raised to, using the available budget or the configured maximum budget the rule can use, if set.

Note:

1. The rule will not raise any person’s $NewComp$ above their $TarComp$, so if the rule was able to raise every person’s $NewComp$ to their $TarComp$ (i.e. $Ratio = 1$), it will leave any remaining budget unused.
2. The rule will also not lower any person’s $NewComp$, even if it is above their $TarComp$.

$NewComp = max\{NewComp, Ratio * TarComp\}$