Create a variable compensation plan
In Dynamics 365 Human Resources, variable compensation makes up an employee's irregular pay, such as bonuses or stock awards.
The calculation of variable compensation amounts for your employees can be based on several factors, including employee performance, compensation, and department performance.
Create compensation types
Variable compensation types are required components of a variable compensation plan. Variable compensation types let you describe the types of variable compensation that your organization awards. They also let define whether the compensation is given in cash or in a nonmonetary form, such as stock.
To set up a compensation type, follow the steps below.
Go to Human resources > Compensation > Variable compensation > Variable compensation types.
Select New in the Action Pane.
Enter values for Variable compensation type and Description. For example, Bonus, Stock option, or Stock award.
In the Type field, select if the variable compensation is Cash or Non-cash.
Select Save.
Set up vesting rules
Optionally, you can set up vesting rules, which define how the variable award should be allocated over time. For example, a vesting rule might state that the employee receives 25 percent of the total award every year for the next four years. Vesting rules are informational only.
Go to Human resources > Compensation > Variable compensation > Vesting rules.
Select New in the Action pane to create a new vesting rule.
Enter values for Vesting rule and Description. You can also add notes as needed to each of your vesting rules in the Notes field.
Select Save.
Set up a variable compensation plan
The variable compensation plan contains the rules, calculation methods, and default values for the calculation of variable compensation for enrolled employees.
Watch the video to learn how to create and set up a new variable compensation plan.