Detailing the Plan

Objective

After completing this lesson, you will be able to set up a compensation budget and establish eligibility for compensation programs.

Budget Main Concepts

Every compensation plan must contain a budget, a means for determining who are eligible for what compensation, guidelines for planners to follow, and a way to display performance rankings to help planners determine appropriate compensation. In the SAP SuccessFactors interface, these details are accessed under the Plan Details navigation.

Budgets

Each compensation form displays budget numbers which planners use in allocating compensation for their group. The budget amount is calculated by the system as a result of budget configurations done in the Compensation Plan. As planners allocate compensation, their decisions are displayed in the Total row.

Depending on an organization’s business requirements, budgets may be reconfigured for each compensation cycle. The most common budget and the easiest to manage is the one that applies a percentage increase across the board. It is easy to configure and easy to test.

Budget Calculations

SAP SuccessFactors Compensation is flexible and offers ways to set up budgets including custom fields, lookup tables, and families and groups. Organizations have different ways of determining budget, but the most common is bottom-up budgets, where a percentage of salary is summed by employees across organization.

For complex budget calculations, ask your SAP SuccessFactors consultant for guidance. At minimum, budget calculations are composed of:

  • The budget value
  • Components
  • The type of budget, known as mode
  • The entity that the budget is based on

Budget Value

The budget value is the multiplier used in budget calculation. Budget value multiplied by the budget mode will result in the final budget amount.

Budget Mode

The budget mode determines the amount that will be used as budget base.

Different budget modes include the following:

  • PercentOf uses standard compensation fields. PercentOfCurSalary means the system uses employee salary as the base amount. UDF Target columns are used to enter the amounts for PercentOfMerit/Lumpsum/Lumpsum2/Bonus.
  • Guideline uses the amount from the default value in guideline configuration. You cannot use guideline mode if default value is set to zero.
  • Direct Amount is used for stock budgeting and cascading budget (also called Based On Planner budget).
  • PercentOfCustomField means the budget base amount comes from a custom field. The base custom field must be identified.
  • DeltaOfCurSal is the +/- increment of current salary.

The manner on how budget percentage will be applied is referred to as Based On.

  • User – Budgets based on user denotes the percent value will vary for each employee. The budget percent is entered in the user data file referenced by an import key. If no percent is defined in the user data file, the system will use the budget value entered in the main Budget calculation page. Based On=user can use all budget modes.
  • Group – Budgets based on group denotes the percent value will vary for each group created, hence, employees’ budget will depend on which group they belong to.

Example

A company has a presence in multiple locations and it follows a different budget strategy for each country. The merit budget for the U.S. is 5%, for Canada it's 6%, and for the UK it's 4%. They have a manager who has employees across all locations. In such a scenario, a budget will need to be calculated by location and then added up to create the budget pool for that manager.

Group membership and budget percentages are defined in Actions for All Plans→Group Assignments. You can assign employees consequently to newly created groups. Employee transfers are manually updated which makes it administratively taxing.

  • Template – Budgets based on template denotes only one percentage will be used for all employees.
  • Planner – A budget amount is granted to each compensation planner. A budget assignment page will be visible under Manage worksheet where the administrator can configure the budget amount for each planner. With proper permissions, planners can also manage how much budget they can trickle down to the planners in their reporting chain.

Budget Components

Components are the attributes which get to spend the budget fund.

For example, if Merit is funded separately from Promotion, then the admin would create two budget calculations, one with a Merit component and another with the Promotion component.

If the budget funds both merit and promotion, then the admin would select Merit and Promotion components in the same budget configuration.

A budget calculation can include multiple standard or custom fields, but it cannot contain a combination of both standard and custom fields.

The bonus and stock worksheets each have only one component, although the bonus component is no longer being used.

Budget Advanced Options

Additional features are made available through Advanced Options. The commonly used options are Include Ineligible and Prorating.

  • Include Ineligible – Will allow for amounts allocated for ineligible employees to be added as part of final budget amount.
  • Prorating – Can be used to prorate the budget in case the employee was hired midway during the year. The leading practice is to be consistent with type. If merit is prorated, then prorate merit budget. If adjustment is not prorated, don’t prorate adjustment.
  • Base Custom Field – Used only for PercentOfCustomField mode. This field refers to the column Id where the budget basis should be pulled from.
  • Family name is used only with budget groups. This field refers to the family where budget group is associated.
  • Allocation Columns and Use Final Payout for VP Budgets are for Variable Pay.

Budget Enforcement

Add a Budget Rule configures the system with two methods to enforce the budget. One warns (soft limit) or disallows planners (hard limit) from exceeding the budget.

The warning message is customizable.

The leading practice is to have a soft limit at the planner level, then use aggregate reporting to view at higher levels.

Budget panel typically display total amounts in functional currency; however, a planner may have employees paid in different currencies and displaying budgets in local currencies may be required.

The groupBy function addresses this need. This function should not be confused with calculating budgets based on groups, where the budget percentage varies per group. The groupBy function is used for displaying the budget panel into groups.

Budgets can be displayed by grouping it into:

  • Currency code – The only standard salary field supported
  • Any Read only, Reportable, and String type Custom Salary field
The details of the Budgets screen including different currency budget totals is displayed.

Budget

Each compensation form displays budget numbers which planners use in allocating compensation for their group. The budget amount is calculated by the system as a result of budget configurations done in the Compensation Plan. As planners allocate compensation, their decisions are displayed in the Total row.

Depending on an organization’s business requirements, budgets may be reconfigured for each compensation cycle. The most common budget and the easiest to manage is the one that applies a percentage increase across the board. It is easy to configure and easy to test.

Eligibility Main Concepts

Compensation eligibility will allow you to distinguish who among your employees are qualified to receive merit raises, salary increases, promotions and other compensation related programs. When you created the new plan, one of the setting you had to decide on was your eligibility starting point. The rule for eligibility will depend on this starting point setting. Rules can be configured in the User Data File or within Eligibility engine.

Eligibility in Compensation can be at one of three levels:

  • Form/Plan Inclusion Level – will a user be included on the Planning Worksheet.
  • Component/Tab Level – will a user be included on salary and/or stock tab, but with entire row grayed out.
  • Field Level – will a specific planning field (Merit, Lumpsum, Adjustment) be grayed out for a user.

The Eligibility engine makes it easy to create business rules that work as filters to determine who is included or excluded from merit raises, salary increases, promotions, and other compensation-related programs.

Note

When cloning plans, administrators have the option to copy eligibility rules from the source template.

Caution

Uploaded eligibility values supersede the eligibility engine. Therefore, if an employee’s program eligibility is defined in the employee data file, then the program eligibility rule is not applied to that employee.

Note

Your Professional Services consultant will advise you on whether or not the Eligibility Rules apply to your configuration. If your configuration manages eligibility through the employee import file, these screens will not apply to you. For example, the COMPENSATION_ELIGIBLE flag in the data import file will override any selections made in the Eligibility engine. The imported eligibility flag must not be used with the eligibility engine discussed in this section.

Eligibility Rule CreationProvide the following values when creating rules:

  • Rule Name: Unique identifier of eligibility rule
  • Conditions: Parameters used to filter the employee population
  • Program level eligibility: The yes and no column would depend on your starting point setting. If the starting point is All employees are eligible, then exclude employees by marking the NO column. When starting point is No employees are eligible, then include employees by marking the YES column.

In this example, employees with review rating of less than or equal to 2 are not qualified for merit and promotion recommendations.

A rule is set to exclude employees with a low review rating.

Conditions can be based on standard or custom fields. Standard fields which can be used are as follows:

  • Department
  • Division
  • Location
  • Hire Date
  • Job Family
  • Job Role
  • Salary Grade
  • Job Level
  • Job Title
  • Job Code
  • Review Rating
  • Custom fields

You may define up to 20 custom fields for eligibility rules. This definition allows for specific formulas to be used as a criterion. For example, it is common that customers will base budgets on percentages of custom fields which may take eligibility into consideration. Prior to being able to use custom fields you would have to implement complex workarounds to calculate the budgets.

To add Eligibility Flags to UDF, use these steps:

  1. Go to Compensation Home→Choose a template→Plan Setup→Design Worksheet
  2. Select Click a custom form field on the left
  3. On the right side, under Other Options, select Enable Rules Eligibility and Reportable.. The options for enabling a custom field for eligibility is highlighted.
  4. Ensure that a custom field is useable for eligibility rules – marking the field as Reportable is also required.

To create an eligibility rule with a custom field, proceed as follows:

  1. Go to Compensation Home→Choose a template→Plan Setup→Plan Details→Eligibility.
  2. Select Add Rule.
  3. Under Population, is eligible for: find the custom field(s) to define eligibility.

After creating the rules, select Apply in order for the rules to take effect.

Note

Administrators can work on eligibility rules in their test instance and export/import into production once complete!

In the Eligibility screen, rules are used to exclude employees from various compensation models.

The exported file is a CSV which allows the administrator to either keep as intended and follow through with the import or modify rules as needed.

Employee Eligibility ImpoAnother method for defining eligibility rules is through an import of the UDF. Importing eligibility may be preferrable when there are lots of exceptions to employee eligibility. Instead of creating rules, you can directly flag employees in the user data file (UDF). They may be marked as TRUE or FALSE in the respective UDF columns. Whether you flag a user as eligible for TRUE or FALSE depends on your eligibility starting point.

  • If eligibility starting point is marked as all employees eligible, you would use the flag FALSE to remove eligibility.
  • If eligibility starting point is marked as no employees are eligible, you would use the flag TRUE to add eligibility.

To add Eligibility Flags to UDF, use these steps:

  1. Go to Plan Setup→Design→Eligibility Fields→Worksheet→Add Eligibility Column
  2. Select the appropriate standard eligibility columns to be used.
    • Compensation (compensationEligible) column is used as overall compensation planning flag. Setting a FALSE flag at this column will exclude user at all levels of planning.
    • Salary(salaryEligible), Bonus(bonusEligible) and Stock(stockEligible) Tabs are used to define eligibility at the component level.
    • Merit(meritEligible), Lumpsum(lumpsumEligible), Promotion(promoEligible), Units(stockUnitsEligible), Stocks(stockStockEligible), Options(stockOptionEligible), and so on are used to define eligibility at the field level.
  3. Enter the import key corresponding to the UDF Eligibility flags. If the UDF Eligibility flags haven't been created, the import key entered here will create a new custom column in the UDF.
  4. Export the UDF only if the flags have not been created previously.
  5. Enter TRUE/FALSE in the respective columns. If starting point is All employees are eligible, users are included by default set eligibility flags to FALSE. To make the individual eligible again you can remove the FALSE flag.
  6. Import UDF (if there are in-progress worksheets, select Update Eligibility option).
  7. Create worksheets to test the eligibility flags.

Note

UDF flags will overwrite eligibility settings made in the Eligibility Rules engine.

Summary

  • Every compensation plan must contain a budget, a means for determining who are eligible for what compensation, guidelines for planners to follow, and a way to display performance rankings to help planners determine appropriate compensation.
  • Each compensation form displays budget numbers which planners use in allocating compensation for their group. The budget amount is calculated by the system as a result of budget configurations done in the Compensation Plan.
  • SAP SuccessFactors Compensation is flexible and offers ways to set up budgets including custom fields, lookup tables, and families and groups.
  • The budget mode determines the amount that will be used as budget base.
  • Add a Budget Rule configures the system with two methods to enforce the budget. One warns (soft limit) or disallows planners (hard limit) from exceeding the budget.

Learning

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