The setup for the Bonus Manager is potentially quite complicated, but you only need to do this once. Once the setup is done correctly, a single click of a button will calculate all of the different bonuses each month. Setup is divided up among a number of tabs; here's a summary of what each of the tabs contain:
General Settings: What you call bonuses, whether bonuses are department based or for the job as a whole, when your program starts, how paid jobs must be to qualify, and how long a job must be complete before calculating bonuses.
Effect of Job Source: Whether job source affects bonus amounts, and if so, how the job source categories are grouped.
Job/Departmental Rules: Here you define the rules that determine what bonuses to pay.
Employee Eligibility: Whether employees are eligible for bonuses, whether bonuses apply to employees who have left, and whether employees can have custom bonus rules.
Highlighting: What percentages are exceptional, acceptable, need improvement, and unacceptable for departments on time, documents on time, activities on time, customer satisfaction, and calendar event usage.
Job Feedback & Satisfaction: Which survey(s) contain customer satisfaction and how negative feedback should affect bonuses.
Labor % Calculation: Whether labor burden should be factored into calculations when seeing if labor rate percentage qualifies for a bonus.
Overrides to Calculated Amounts: Whether someone calculating bonuses can override the amounts calculated, whether they must give a reason for the override, and what the stock reasons are.
Each of these setup tabs are explained in more detail below. To be able to see change the settings screens, you must meet CommissionReportSetup security context.
The General Settings tab in the Bonus Manager Settings looks like this:
Term you use for Pay Incentives: Enter Bonus, Commission, Incentive, or whatever you call the incentives. The report and various options within it will be renamed based on what you enter here.
Department vs Job Bonuses: Indicate whether you calculate bonuses separately for each department or for the job as a whole. We strongly recommend separate bonuses for each department since different departments usually have different profit and labor rates. For example, the gross profit you expect on a construction job is quite different from what you expect on a water damage job. Bonuses for the job as a whole are slightly simpler to initially set up, but they are only useful if every department has identical profit and labor rates.
Bonus Program Start: Enter the start date for your bonus program. This prevents Chronicle from trying to calculate bonuses on many years worth of past jobs. You may want to put in a start date of a few months before you actually begin, however, so you can test your rules for a month or two before you actually begin.
Calculate Bonuses when Departments are: For rules that require the department be paid, you are indicating what percentage has to be paid to be close enough. While we believe that it's best practice to have jobs paid before paying bonuses, sometimes a job gets mostly paid, but has a small percentage of the job unpaid while you quibble with an adjuster over minor amounts or while you try to collect the last $100 of deductible from the customer. Since these final amounts sometime take months to resolve, putting something less than 100% here lets employees get their bonuses in a more timely fashion once the job is mostly paid.
Departments Become Eligible for Bonuses: For bonus rules that require a department to be completed, invoiced, or paid, you are determining how long the department has to be completed before being eligible for the bonus. We recommend 30 days to allow time for expenses to be entered in QuickBooks, to allow for any customer callbacks that might occur, and to allow for time to get any final customer feedback.
Effect of Job Source
Some work comes in without much effort; other work requires ongoing effort by your employees to bring the new work in. Especially for employees who are responsible for bringing new work in, you can offer higher percentages on work sources that require more effort to bring in as opposed to work that comes in without much effort on their part. (For example, companies that distinguish between program and non-program work often pay a higher bonus on non-program work because this requires more employee effort, and expanding this work expands the business.) In addition, some businesses have work from particular sources that tends to be less profitable. (Work from property management companies is often in this category.) If work is less profitable, you simply can't afford to pay high bonuses on that work. If you make a distinction between different job sources,
The Effect of Job Source tab in the Bonus Manager Settings looks like this:
Impact of Job Source: Indicate whether job source can affect bonus rates.
Job Source Bonus Plans: If you pay different bonus rates for jobs from different sources, enter a description for each different rate scheme. (A company with 20 different job sources probably only has a few basic payment schemes; rather than creating 20 rules, one for each actual source, this lets you create a rule for each bonus play. Program work and Non-program work are the most common rate distinctions.
Indicate which plan applies...: Once you've defined the different plans that affect bonus rates, indicate here which plan each job source is associated with.
The rules tab will be named Departmental Rules if you indicated on the General tab that rules are department specific; it will say Job Rules if you indicated on the General tab that rules apply to the job as a whole. This tab looks like this:
This screen lists all of the rules that you've created so far. The buttons at the top let you add, copy, edit, or delete rules.
When you add or edit a rule, you see a screen like this:
Department/Role: Pick the department and role that the rule applies to. For the roles, you will see hourly labor and the roles from the Job Roles tab in the main setup that can apply to employees. (If you see roles in this list that overlap or that you don't use, we recommend cleaning up the job roles list. You don't want employees to miss bonuses because an incorrect role was applied on a job.) Also indicate whether this rule applies to any employee in that role or only to one specific employee. Some companies have agreements with specific employees that require custom bonus rates.
Applies to jobs: Indicate whether the rule applies to jobs from any source or only from one particular source. The different job source plans are defined on the Effect of Job Source tab.
Pay % of: Indicate what to pay a percentage of.
Pay this after...: Indicate when to pay the bonus. In most cases, we strongly recommend not paying a bonus until you have been paid, that is, after the money is collected. Even if a job was well-done, unless you can collect the money for it, you didn't actually make any profit. Bonuses for sales/marketing are an exception to this: sales bonuses may be paid when the job is added or completed.
Based on: the bonus can be based on either the gross profit % or labor rate. Most commonly, salaried employees bonuses are based on gross profit, and hour employees are based on labor rate.
Calculate... based on: Calculate the bonus based on invoiced or paid (collected) amount.
Percentages and rate to pay: Enter rates based on what you want to pay. You can add additional tiers by having bonuses that begin/end at something other than 100/0. For example, if you have a positive gross profit bonus that shows 100-65, if you changed that to 75-65, Chronicle would automatically add another tier that shows 100-75.01. Similarly if you changed 75-65 back to 100-65, chronicle automatically removes the higher tier. For guidelines on what percentages to use for each type of employee, see the Sample Bonus Percentages below.
Once done, click Save Rule to continue.
The Employee Eligibility tab lets you determine whether employees are eligible for bonuses, whether bonuses apply to employees who have left, and whether employees can have custom bonus rules. The right click menu on an employee let you open the employee file and/or employee journal.
Eligibility of Former Employees: If a job is due for a bonus that a former employee was responsible for before he/she left, indicate whether the employee is still eligible for the bonus. Different businesses have different agreements with employees on whether you still must pay. Double click on the bonus percentage to change to not eligible.
Employees with a reduced bonus %: We recommend the default setting of calculate the amount the employee would have gotten, and adjust it in the "Override" column since this shows the employees what they would have gotten at 100% and gives employees an incentive to meet the conditions for getting the full bonus.
Use Custom Bonus Rules for this Employee: Double-click this column to toggle between No and Yes for any employee. If you set an employee to use custom rules, that employee will ONLY get bonuses from rules specific to that employee; general bonus rules will no longer have an effect for that employee.
The Highlighting tab lets you determine what percentages are exceptional, acceptable, need improvement, and unacceptable for departments on time, documents on time, activities on time, customer satisfaction, and calendar event usage:
Change any percentage as desired. (If you change percentages, the values in adjoining columns will adjust if needed.) This highlighting doesn't change the amount of any bonus or prevent a bonus for unacceptable values; it simply highlights the corresponding values so you can decide whether to override the bonus Chronicle calculated based on the financial figures.
Job Feedback & Satisfaction
The Job Feedback tab lets you indicate which survey(s) (if any) contain customer satisfaction and how negative feedback should affect bonuses:
If you have set up a rated survey to track customer satisfaction score, click One Survey Tracks Satisfaction... and indicate which survey that is. If you have separate satisfaction surveys for each department, click Separate surveys... and select the appropriate survey for each department. (For a survey to be scored, the survey must have Rating questions. These rating questions are added on the Survey tab in the main setup. Once you've defined the rated questions, the survey is automatically scored whenever someone fills it out. If unrated questions are mixed with rated questions, the unrated questions have no effect on the score.)
Labor % Calculation
The Job Feedback tab lets you indicate whether labor burden should be factored into calculations when seeing if labor rate percentage qualifies for a bonus.
Hourly employees are best evaluated on labor rates since efficiently getting labor completed is the only part of the job they have control over. In evaluating labor rates, Chronicle can calculate labor rates with or without labor burden. Labor burden is the cost to carry your labor force not counting salary or hourly pay paid directly to them. Burden includes the benefits and taxes your company pays on behalf of your employees; it includes costs like:
- Payroll Taxes (Federal and State)
- Retirement/Pension Costs
- Health Care
- Life/AD&D Insurance
- Worker’s Compensation Costs
- Long-Term Disability Insurance
- Short-Term Disability Insurance
- Sick & vacation time
Calculating labor rates without labor burden is simpler because you don't have to calculate the labor burden for each department; evaluating labor rates including burden may more accurately reflect your true labor costs. Labor burden is typically from 30 to 40% depending on the benefits you offer and how much of those benefits the company pays. (Your accountant would typically tell you what your labor burden is for each department.) You need to periodically reevaluate burden rates because of changes in tax law, health coverage, etc. Labor burden is entered on the Production Department Labor Settings tab within the Labor/Budget tab of the main setup. You would use different labor rates for bonus rules depending on whether you include burden. See the sample labor rates below for suggestions differences.
Overrides to Calculated Amounts
The Overrides to Calculated Amounts tab lets you indicate whether someone calculating bonuses can override the amounts calculated, whether they must give a reason for the override, and what the stock reasons are. This only affects those who have the authority to run the Bonus Calculation report; employees who can just review bonuses after they are calculated can't ever change amounts.
We recommend allowing overrides: one should be able to raise a bonus for exceptional handling of the job and exceptional feedback from the customer; one should be able to lower the bonus if the job file was badly managed or if the employee's action directly caused a customer to be dissatisfied. If needed, add additional reasons for why a bonus might be changed.