Target Agreements 

Definition

By defining target agreements it is possible to determine the periodic remuneration of a commission contract partner on the basis of the business targets that the partner has met. 

Use

Many organizations pay out commission or incentives on the basis of target agreements that are agreed upon with their commission contract partners. Target agreements in SAP Incentive and Commission Management (ICM) supports this accepted practice of sales control in businesses.

The general targets are usually defined by company management, whereas the commission contract partner may also be involved in defining their individual targets.  The agreed targets are evaluated for a certain period of time and remunerated accordingly.

The functions of target agreements in ICM encompass the periodic evaluation of the target agreements and the resulting valuation and remuneration, as well as all the structures and processes that are required to determine the periodic remuneration.

Note that you can only define target agreements in ICM for a specific period.

Integration

In target agreements, you define target types for similar commission contracts. You can combine these target types with target values, actual values and correction values, that are specified for the commission contract, period, subobject and triggering method.

On the basis of the defined actual values, target values and target correction values, the system calculates the level of target achievement which is subsequently used to determine the target remuneration and to post the commission document.

For the remuneration to be processed, commission cases have to be generated through the commission contract at set periods. This process is handled in a standard agreement for target agreements by the commission case trigger that is assigned to a complex target type.  You have to store the information required for triggering the periodic process in the agreement of the individual commission contract. Here it is determined which commission has to be created with which result objects, such as information on the period under review and the criteria.

The trigger to calculate the result (commission case trigger), that you have to schedule yourself, is activated at the end of the period of the additional commission case.

Finally, the commission documents that are created as a result of the target agreements are settled with the commission contract partner and paid out in a disbursement system.

You can create your own remuneration types for target agreements as you do for the remuneration types for performance-related remuneration. The valuation of target types is generally handled through the complex valuation . Target type-specific components of the valuation are handled through the logical service.

For more information on the settings required to configure a commission application with target agreements, see Sample Configuration: Commission Application with Target Agreements.