Compensation Modeling allows you to perform complex calculations and analyze how base salary and equity should be awarded to employees across locations, performance levels, position in range, and so on.
For example, you 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 you with a number of benefits such as:
- You can eliminate the need for Microsoft Excel spreadsheets.
- You can get access to your company's wide data for more holistic planning.
- You can drill-down and roll-up at desired level of granularity.
- You can also create new compensation templates based on best chosen model.
If your guidelines include an individual rating, you must use an existing template with worksheets created. If, for example, you’ve never had a planning cycle and want to perform modeling, you must create a compensation plan, generating worksheets with a base guideline with an individual rating. Then a copy of that template must be done.
Creating a New Model
Using an existing template, use the copy feature. Select the copy icon in the upper right-hand side.
Note
This template is your new base template for the modeling program and should also be the template used once your modeling exercise is complete. Once this template is created, you can create a new model. To do this, select the Modeling Icon for the template.
This action will bring you into the modeling section. Here you can create or edit existing models. To create a new model, select the plus (+) icon on the top right of the screen.
Make sure to select the correct field for modeling. Most common is merit. 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.
Setting Targets
Targets can be set as a benchmark for the overall guideline cost, and also for individual targets for the overall plan. The individual targets 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.
Once you select the field and enter the details, you can now set budget target for guidelines. You can set target by amount or percentage by selecting Set Target tab.
When you mouse over the target information, you get details on the base amount, total amount, actual, and assigned amount.
You can set the overall amount and adjust your groups to this total amount by toggling or entering the total value. The system will convert salaries to the selected currency by using the exchange rate table selected in the compensation plan.
This action kicks off a background job which can be tracked via the Compensation Job Monitor, accessible from Compensation Home.
After the background job has been launched, you can review and change your guideline model setup as well as adjust individual values.
The guideline model system displays the following:
- Section 1: Areas that require attention such as guideline exceeding the target, employees below the range, and so on.
- Section 2: Recommendations.
- Section 3: Model details, matrix setup, and cost in selected currency for each guideline. You can also refresh
and recalculate 
the guideline.
After reviewing the results, you can then add, change, or delete guidelines. Then review the new results of those modifications.
Note
When you add a new guideline to a model, you have to rerun the model to update the guideline assignments and costs.
When you change the guideline order, the user assignment to the affected guideline will also be changed. This change is because the system processes the guideline assignments from least to most restrictive; if a user matches a higher level guideline, their assignment will change, which changes the guideline cost.
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.
For example, if the system recommendation is to decrease all guidelines for a rating by 5%, the min, low, default, high, and max values will all be decreased by 5%.
Note
When you accept the system recommendations, the changes are immediately reflected in the model and you don't need to rerun the model.
Once the results of the model are acceptable, the model can be published back to the template. This action is done by selecting Publish to Live Template and then selecting the model(s) to be published.
You can push multiple models to live within one plan, and they will be added to the system as long as they are of a different type. If you publish a model of a program that has already been published, all guidelines of the previously published model will be over written.
Note