Oracle Fast Formulas - Chapter 45: Fast Formula for Bonus Calculation Based on Performance Rating

 

Chapter 45: Fast Formula for Bonus Calculation Based on Performance Rating

Overview:

This formula is designed to calculate an employee’s bonus based on their performance rating. It applies a bonus percentage mapped to each rating category.

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Business Logic:

• Define performance ratings (e.g., Excellent, Good, Average, Below Average)

• Map bonus percentages:

  • Excellent → 20%

  • Good → 15%

  • Average → 10%

  • Below Average → 0%

• Bonus = Annual Salary × Bonus Percentage

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Inputs Required:

• ANNUAL_SALARY: Employee's annual salary

• PERFORMANCE_RATING: Text input of the employee’s rating

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Sample Formula:

plsql
DEFAULT FOR ANNUAL_SALARY IS 0
DEFAULT FOR PERFORMANCE_RATING IS 'Average'

INPUTS ARE ANNUAL_SALARY, PERFORMANCE_RATING

IF PERFORMANCE_RATING = 'Excellent' THEN
  BONUS_PCT = 0.20
ELSE IF PERFORMANCE_RATING = 'Good' THEN
  BONUS_PCT = 0.15
ELSE IF PERFORMANCE_RATING = 'Average' THEN
  BONUS_PCT = 0.10
ELSE
  BONUS_PCT = 0.0
ENDIF

BONUS_AMOUNT = ANNUAL_SALARY * BONUS_PCT

RETURN BONUS_AMOUNT

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Use Case Example:

• Annual Salary: ₹10,00,000

• Performance: Excellent
  → Bonus: ₹2,00,000

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Best Practices:

• Always validate that the PERFORMANCE_RATING is consistent with HR inputs.

• Use this formula in Bonus Payroll Elements for Annual Processing.

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Practice Quiz:

1. What happens if no performance rating is given?

2. Can we include more rating bands?

3. How is the bonus calculated for “Below Average”?