Author: Jen Bremner, Senior Consultant
Prior to the introduction of the clawback commission rule inside of Xactly Incent™, users were resorting to uploading negative transactions in order to achieve a clawback result. However there were a few downsides to doing this; the inability to track clawbacks, decide who would be affected, and whether the quota would be affected by the negative transactions uploaded.
The clawback rule has provided Xactly users, including sales reps and administrators, with additional visibility into what is making up periodic commissions. When working with sales commissions, this is always one of the main priorities; to provide sales reps with as much visibility into their paycheck as possible.
A clawback can result from a number of different circumstances such as a deal that went south, the customer being unhappy, or whatever the case may be that results in commissions that have been credited to a rep being recovered. This recovery can be done in full or in part, in accordance with the Plan Document and company policy.
Clawbacks use the following information to determine the particular historic commission rate to use in processing the current credit:
- The related order from the order item
- The person for which the commission clawback is being calculated
- The type of credit being processed
Calculated commission: $100 credit x 5% = $5
Minimum commission: $10
Resulting commission: $10
In this case, the clawback uses the calculation rate (5%), resulting in a clawback of $5
of the $10 originally paid.
For a quick tutorial on how to go about setting up clawback rules inside of Xactly Incent™,
Setup a new direct credit rule or add a condition to an already existing direct credit rule
There are two options when setting up credit rules that will focus on your clawback orders. You can either setup a new direct credit rule or you can use existing direct credit rules that are in place.
Step 1: Setup a new direct rule
Use this option if you would like to see the clawback results show up with a unique commission result name separate from the original commission result name.
Set up a direct credit rule with a unique order type that you would like to use for clawbacks. In the example above, “Booking Clawback” is used and the condition is: Order Item > Order Type = “Booking Clawback”.
- This will ensure that when the uploaded data is marked with the unique order type (“Booking Clawback” in this example), the credit type chosen in the result section in Step 3 of 3 will generate a credit only when this order type is found.
- If a clawback order type is not already present in your instance of Xactly Incent™, you can create this order type by going to the setup section and selecting Configure > Order Type and create a new order type for clawbacks.
- Next you will scroll to step 3 of 3 and define the results that will see once the conditions are met in step 2 of 2.
- Important: You will need to select the credit type of the original order that you are looking to clawback. If there are multiple credit types, then a new direct credit rule will need to be utilized for each credit type that you are looking to clawback.
- The value that is being used here = (OrderItem.SplitAmount) created under Plan Design > Formulas.
- Save the result and save the rule and your direct credit rule is ready to be attached to the pay plan.
Step 2: Setup a commission rule with a rule type of commission clawback.
- The commission clawback rule type will tell the system to go back to the original order and take back the commissions at the original rate paid.
- Choose the rule conditions. Remember to link the credit type from the direct credit rule you created to the commission rule. In this example we are using “Tennis Credit”.
- Also remember to add the order type that you created to load clawbacks. This example is using “Booking Clawback”.
- The last step in setting up your commission rule is to choose the result name that you would like to see. This can be used in analyzing clawbacks as the result will be different than the original order created. This is the benefit of using clawbacks rather than uploading negative transactions to the existing rules.
- Choose the value unit type, result classification, payment fx, maximum and earning group as well. It is an option to choose the quota that you would like to pull from if you would like to decrease quota attainment as well.
- Find the commission rules that relate to the credit type linked to the rule condition in your clawback commission rule and ensure that you add a condition to exclude the clawback order type created above.
- Don’t forget to add the commission rule to the pay plan.
Step 3: Upload the clawback orders.
- Ensure that you are using a unique order code and item code when creating your upload template.
- Utilize the order type that you created to track clawbacks (i.e. “Booking Clawback”)
- Commissions will not generate unless the "Incentive Date" is later than the "Original Order" to ensure that this is updated prior to uploading.
- Related order code and related item code will both need to match the original order.
- The person will need to be assigned using their employee ID and split amount entered as 100 if the (OrderItem.SplitAmount) formula is being used as noted above.
- If the direct credit rule is marked as “Rollable” the indirect credits gaining the rollup from underlying positions will get the affect of the clawback upload as well.
Step 4: Calculate your batch through Incentives and check your results.
- Now you will be able to track clawbacks with your unique commission result name that was created.
Add a condition to existing direct credit rules
If you choose this route, your commission result name will be the same as the original order result name. Find all direct credit rules that have the credit types you would like to clawback and add a condition for the clawback order type. You will need to use or:
Follow the steps above for adding commission rules and order uploads.
In conclusion, the clawback rule is a great addition in order to gain some visibility into commission payments for reps and administrators. The vast difference between using already existing direct credit rules and adding new direct credit rules is really the effort involved and the visibility in tracking the clawback results separately. Adding new direct credit rules will allow for more visibility and tracking of clawbacks. Also, some key notes…don’t forget to use a subsequent incentive period when uploading or you will not see results, the credits will rollup to managers if not adjusted on the indirect credit rules on the manager plans and if adding new credit rules, add a condition that will exclude the new clawback orders or you will get undesired results.
If you would like to discuss the creation of clawbacks as part of your incentive plans in Xactly Incent™, or have any problems getting them working, help is just a phone call away! Contact Canidium at 1-877-651-1837.
Happy plan building!
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