Defining and Creating Guidelines for the Compensation Plan

Guideline matrixes or tables can be created in the Admin Center. Navigate to Plan Setup→Plan Details→Guidelines→Create New rule.

Guidelines can also be edited offline using the import / export functionality.

The Guidelines page contains a list of existing guideline rules.

• Each one of these rules applies to a different compensation program (Type)

• Within each rule are a series of formula

• Each rule has its own criteria and settings

It is possible to create a guideline model to fit a target budget. A topic on compensation modeling is discussed later in this unit.

• Each formula requires a unique name.

• Guideline rules requires a criteria. In this example, it's job level. It means the minimum-maximum amount of stock to be recommended depends on employee’s job level.

• Guidelines support five data points (minimum, low, default, high and maximum). Min, Def, Max are required by default.

• Low and High can be used as soft limits.

These values can be edited directly in the Admin Center. However, they can also be created in a CSV file and imported.

This is how the same rule4stock looks in a CSV file. As you can see, all of the same elements are there. Importing details are in the SAP SuccessFactors Compensation Implementation Handbook.

Adding guidelines is done by first adding a rule and then adding formulas to that rule.

In the Admin Center, complete the following steps:

1. Navigate to Plan Setup→Plan Details→Guidelines.

2. Select Add New Rule or click the Rule Name to modify an existing rule.

• Type: Select the appropriate options for Type from the dropdown menu. It lists the different compensation programs for which you can create guidelines, including:
  • Merit
  • Promo
  • Extra
  • Extra2
  • Lumpsum
  • Lumpsum2
  • stockUnits
  • stockOption
  • stockOther1
  • stockOther2
  • stockOther3

• Rating: Employee's performance rating is considered during the calculation.

  Note

  To differentiate unrated from too new to rate, use -1971 as the rating value in the guideline formula.

• Benchmark Guideline: Based on the employee's range penetration or compa-ratio.

• Job Level Current: Job level affects the guideline.

• Pay Grade: Current pay grade affects the guideline.

• Budget Group: Guideline applies to a specific compensation group.

• Custom Field: A maximum of five custom fields can be created to be used as a guideline. Custom fields must be created in the same worksheet tab where the guideline type is located.

  Example: Promo type is on the Salary tab; the custom field must also be created in the Salary tab of the Design Worksheet/Column Designer.

  Commonly used criteria are Performance Rating, Location, and Range Penetration. Rating is typically used for merit. Use of Range Penetration (benchmark) is common to recommend more dollars to lower paid, higher performing employees.

• Mode: Determines how the value is going to be calculated – Amount or Percentage. Amount is generally for stock allocations, percent is generally for merit, promotion, and so on.

• Hard Limit:

  • If Yes - the manager cannot go outside the values defined

  • If No - the manager is allowed to set a value that is not within the range, but a warning will be issued

• Prorating:

  • If Yes, guideline values will follow how proration was set up in the system.

    Example: Karen Smith‘s job level normally has a merit guideline range of 2-8%; however, she was hired half-way through the year and is subject to 50% proration. As a result, her guideline will be prorated as 1-4%.

  • If No, in the example above, the guideline range for Karen remains at 2-8%.

  • Prorating is commonly used for merit and not for other components.

• Force Default on Rating Change: Applied when a performance rating is changed.

  • If Yes, the custom field acts as a driver for change, much like forcing the default upon a performance rating change, the default guideline will populate the worksheet.

  • If No, the guideline value will remain the same even if the custom field is updated. The same concept as selecting this option for forcing the default after a rating change.

• High/Low Action: If set to warn, high and low values will be required in the formula guidelines. Planners will receive a pop-up message when they reach the high-low values. When using high-low, typically the min and max values are not displayed in the worksheet.

After the guideline settings are saved, click the new rule name to add the formulas.

Remember that formulas can be added manually in the Admin Center (using Add New Formula) or by importing a CSV file.

Consider this example: The customer has merit guidelines based on performance review rating and business units.

• Employees in the retail division have a merit scale of 4% to 6%.

• Employees in the sales and marketing division have a merit scale of 5% to 7%.

In this example, you would create a group called "Retail" and another group called "Sales and Marketing".

Compensation groups do not update dynamically when an employee changes groups. For example, if an employee transfers from one division to another, their compensation group would not automatically update. For this reason, compensation groups can be an administrative challenge to manage. The administrator should update group memberships often if they plan to update data throughout the compensation cycle.

At this point, create guidelines based on the attributes of Performance Rating and Budget Group.

A catch-all formula is usually created to ensure employees that do not fall into the preceding criteria still gets a guideline range. The order in which you arrange your formulas is important. The tool goes through the list starting with the first formula. Once the first formula is met, it will not go through the remaining formulas. This makes the position of the catch-all formula at the bottom/last all the more important.

Create guidelines without gaps in the ranges:

• Make the numbers for the top of the range and bottom of the range for next guideline the same to ensure there are no gaps.

• The system calculates out to more than one additional decimal place.

• TRUE means the guideline includes the number, and FALSE means that it does not include that number.

When companies use all five data points (min, def, max, low, high), the common practice is to set low and high as soft limits. Hard stops on min and max.

• No default is better for small teams where all members are on single page

• Default is better for large teams

Complete guideline configurations are in the SAP SuccessFactors Compensation Implementation Guide.

The second warning message also includes a warning message for force-comment.

For example, a customer might want to:

• Model the cost of incorporating salary survey information on competitive market increases by country, industry, and job classification.

• Have firm targets in place from a works council, union, or the finance department.

• Measure the impact of adjusting pay guides or updating exchange rates.

An integrated modeling and planning helps customers with a number of benefits, such as:

• They can eliminate the need for Microsoft Excel spreadsheets.

• They can get access to your organization’s wide data for more holistic planning.

• They can drill-down and roll-up at desired level of granularity.

• They can also create new compensation templates based on the best chosen model.

Prerequisites:

1. Enable the Enable Generic Objects and Enable Attachment manager options in Provisioning.

2. Enable the relevant role-based permission for Comp Admin.

1. Select any compensation source plan and select Copy.

2. Enter the name and new dates for the copied plan. The system will use the new plan as the base template for the modeling program.

3. From the newly created plan, click Guideline modeling.

   

4. Click Add new model.

5. Select the field from the dropdown (these are the existing guideline rules in the template).

6. Enter a name and description. Click Next.

   

   The system will use the compensation source template for rating information, and the new plan template for eligibility rules, pay guides, guidelines, currency and exchange rates.

7. Set total targets.

   • Targets can be set as a benchmark for the overall guideline cost, and also for individual targets for the overall plan. You can set target by amount or percentage.

   • When you mouse over on the target information, you get details on the base amount, total amount, actual and assigned amount.

   

8. Individual targets: This must be one of the guideline attributes in your new plan template. For instance, if guidelines are based on country, position in range, and rating, then you must select one of these three attributes for individual targets.

   

9. Click Create.

The guideline model system displays the following:

1. Areas that require attention such as a guideline exceeding the target, employees below the range, and so on

2. Recommendations

3. Guideline matrix with corresponding costs

Once the model is created, you can review and change your guideline model setup and also adjust individual values.

The system will suggest ways such that the guidelines can be aligned with the targets.

When you accept the system recommendation, the guideline values on the affected rows are increased or decreased proportionately.

When targets are met, you can push any model to a live template.

1. Navigate to Admin Center.

2. In the Tools Search field, type Go to Compensation Home.

3. Click Guideline Modeling from compensation home.

4. Select any model and click Push to Live Template. If you select push to live of a program that has already been published, all guidelines will be overwritten.