Defining the Plan Setup

Variable Pay program is configured during the initial implementation. To prepare for the next cycle, the administrator first copies the previous period’s planning template and renames it to the current period. Then he or she updates the source data including rating sources, business goals, bonus plans, eligibility rules, budgets and guidelines. Most important, he or she should import employees’ history data.

Creating a new plan ensures that review functions will contain data specific to the cycle and keeps historical data from prior years intact.

Copying the Plan

To copy a plan, click on the copy icon located in the Plan list. Provide the necessary changes such as new plan name, new program dates, and data files.

Compensation worksheet eligibility (form eligibility), Performance Rating Source for Individual and/or Team Performance can be copied during the cloning process but can be modified in the Set Bonus Calculation section.

When copying a plan admins can also update lookup table references, if any.

Cloned program settings can be updated from Plan Setup→Settings. Below are the setting definitions:

After saving the program properties, additional program-specific configuration can be set on Plan Setup.

Display settings allow administrators additional flexibility on how patterns are displayed in the worksheet.

Sort employee names by First Name or Last Name and by Ascending or Descending order.

Determines if budget panel will be displayed. If not selected, budget panel will not display even if there is budget calculation configured in plan.

Setting which determines if column total will be displayed or not. If not selected, even custom fields configured to show column total will not be displayed.

Determines how performance ratings will be displayed: text, numeric or number-text. Leading practice recommends using text to have more meaningful impact at steering rewards than simply numeric.

Determines Individual and Team guideline display pattern on. Can use the following keywords: min, low, def, high and max.

This setting enables a dashboard view of the plan payout.

Freezes the employee column pane to always be visible when scrolling.

Specify the order of employee assignment records.

Space for instructions or notices which need to be displayed on the form.

Also called Form Template Settings, Advanced Settings control the functionality of all forms created from this template and distributed to users. This is where the route map can be associated to the Variable Pay plan.

This setting will allow you to export the compensation plan template, i.e. to copy plan from production to staging environment. The exported file will be in XML format.

In Advanced Settings you will also find a configuration option which allows the template to be translated similar to the performance review templates that are translated. When this option is checked, the system will allow translations based on the language packs installed. Not only does this feature allow for the template translation, but it also has an impact when creating worksheets. With this option configured, the template name will be used as the worksheet name when you create worksheets. This will also be the name used for the rollup report.

In this section, you can manage your bonus calculation structure. You cannot make any modification when a form has already been launched.

Default | None | Multiple

• Default will display all business goals in one calculation section
• None if bonus calculation does not include any business goal component
• Multiple will display business goals in multi-layer sections, rarely used

Variable Pay supports additive and multiplicative bonus structure, where the components are either aggregated or multiplied.

Bonus calculation has 4 components which determine final payout.

• Base - refers to the bonus target amount.
• Business performance (optional) – refers to the calculated result of the business goal section
• Team performance (optional)– refers to the result of the team goal section commonly sourced from SAP SuccessFactors Performance Management
• Individual performance – refers to the result of the individual goal section commonly measured sourced from SAP SuccessFactors Performance Management

Team and Individual performance can pull data from the following sources:

• Performance Management (PM) – Most common. Template selection and rating type is available to be added
• Employee Profile – Rating type and effective date need to be selected
• Import by employee – Ratings can be imported via master user file (UDF)
• Import by Assignment History – Ratings can be imported via History data

This refers to the Objective variable pay template configured during implementation. This template defines the structure of the Business Goals file. Whenever the plan is copied, a new objective variable pay template is created in the back-end and reduces consulting/ticket maintenance.

Basis which refers to the bonus target amount can be determined using the following options:

• Imported column from User Data File – Used for point in time calculation. Typically variable pay target amount is calculated on base pay on each assignment. However, many companies due to business process or certain country regulations, calculates their base target amount as of a particular date instead of assignment effective date. Example, year-end salary is the base target amount no matter how many assignments and salary changes the employee had during the year.
• Imported column from Employee history data file – Used for calculating effective-dated base target amount.
• Custom formula – Base target amount is calculated within the system, using numeric fields that were created in Succession Data Model.

This section manages the rating sources that will be used for the plan.

• Is this Bonus Program based on Assignments? Assignment-Based Rating allows you to assign different performance forms per assignment and calculate the bonus payout based on the different employee's assignments during the year. Additional settings are required if ABR is selected.
• Individual– Defines the data source to be used for Individual Performance Rating
• Performance Management – ‘Overall Rating’ (overallCompetency | overallObjective | overallPerformance | overallPotential) is commonly used when SAP SuccessFactors Performance Management is implemented in the system.
• Employee Profile – Refers to scorecard created in Employee Profile
• Import by Employee – Ratings can be imported using UDF
• Import by Assignment History – Ratings can be imported using Employee History Data File
• By Employee – So that the total payout amount for the employee cannot exceed a pre-configured percentage of the sum of the prorated target amounts for the employee

Guideline rules provide the minimum and maximum recommendation planners can give to employees based on single or multiple criteria. For variable pay, guidelines can be set to be used on either Individual or Team sections by choosing the appropriate guideline type.

Guideline rules are copied during the cloning process, but can be modified in Plan setup→Manage Plan Details→Guidelines. Guideline criteria can be one or a combination of the following:

• Rating: Employee's performance rating is considered during the calculation
• 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 5 Custom fields can be created to be used as guidelines

Additional settings are available such as:

• Yes, the manager cannot go outside the values defined
• No, the manager is allowed to set a value that is not within the range, but a warning will be issued

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

• This setting will reset the default guideline value when changes are made to Ratings or custom field.

• This action sets up a notification prompt for planners when guideline formula includes High/low data point.

Guidelines - Force Comment

When the Performance Percent field is set to editable, planners are given discretion on payouts for the Individual section on the worksheet.

A force comment feature can be added to trigger a justification comment if payouts are outside the defined guidelines. When configured, a bubble icon displays. If an amount outside the guideline is entered, the bubble turns red.

Forced Comments can be configured in admin interface by navigating to Plan Setup→Design Worksheet→Define Standard Validation Rules.

In the example in the figure below, the max guidelines is set to 90%, but the planner has entered 100%.

At this time, the planner can still save the form but cannot send to the next step of the route map.

To enter a comment, select the comment bubble icon and enters the comment in the pop-up window. Choose Save and Close to finalize.

Once entered, the comment may be edited or deleted.

Guidelines Using Editable or Formula Based Fields

Calculated or editable fields can be used as criteria for defining Guideline tables including the standard fields.

Only editable or formula-based columns of string, percent, or amount type are supported. The following example uses user entered data (Manager selects whether employee has been reviewed or not), a group of employees and a custom formula (Total Paid Previous FY).

When creating the formula you may now choose criteria that is static (Guideline Group) or non-static (Reviewed) data as well as formulas (Total Paid Previous FY).

Budget in Variable Pay is optional and used to track the discretionary component of the payout. When used, you can choose different ways to calculate for the budget base amount.

Budget Modes – Specify how the budget base amount will be calculated. SAP SuccessFactors Variable Pay supports the following modes:

• Direct Amount
• Percent of Custom Field
• Budget by Guideline (Individual & Team)
• Percent of Calculated Forecast (Forecast Business Achievement)
• Percent of Calculated Forecast 2 (Forecast 2 Business Achievement)
• Percent of Calculated Results (Actual Business Achievement)

The budget percentage can be determined using the following approach:

• User – The budget percentage is defined at user level, imported from UDF
• Template – The budget percentage defined at variable pay plan level, specified budget value will be followed for the entire plan
• Group – The budget percentage is defined at group level, specified in group assignments

There are three kinds of budget that can be displayed in SAP SuccessFactors Variable Pay:

• Forecasting
• Forecasting 2
• Results

Forecasting and Forecasting 2 are used only for building budget scenarios, when the final results are in, Results budget type is used.

Budget spent calculation is affected by the bonus equation being used in the Variable Pay program. For additive formulas, budget spent only uses the discretionary portion of the payout. For multiplicative formulas, budget spent includes business calculated amount.

Budget Example 1:

Formula 3 (Additive): Using percentOfCalculated mode

Budget amounts are calculated as follows:

• Budget = Sum of Individual Target amount* Budget Percent
• Budget Spent = Total of Individual Target amount * Individual Percent

Budget Example 2:

Formula 2 (Multiplicative) - Using percentOfCalculated mode

Budget amounts are calculated as follows:

• Results Budget = Sum of Results Calculated Target Amount * Budget Percent
• Result Spent = Total of Results Target amount * Individual Percent

• Forecast Budget = Sum of Forecast Calculated Target Amount * Budget Percent
• Forecast Spent = Total of Forecast Target amount * Individual Percent

• Forecast 2 Budget = Sum of Forecast Calculated Target Amount * Budget Percent
• Forecast 2 Spent = Total of Forecast Target amount * Individual Percent

Budget Display Grouping

The Budget panel typically displays total amounts in functional currency. However, a planner may have multiple employees paid in different currencies; in this case, displaying budgets in different currencies may be required.

The groupBy function addresses this need. This should not be confused with calculating budgets based on groups. groupBy is used to display budgets separately but still using one budget calculation. groupBy can use the following attributes to display budgets:

• Local Currency Code – the only standard field supported
• Custom Field – requires field to be read-only, reportable, and string type