Explaining the Variable Pay Plan Components

Objectives

After completing this lesson, you will be able to:
  • Explain the Variable Pay plan structure.
  • Define the various Variable Pay data sources.
  • Import data Into SAP SuccessFactors Compensation.
  • Explain the configuration options.
  • Describe the guidelines and eligibility used for Variable Pay.

Plan Structure

A single Variable Pay template can contain multiple Bonus Plans. Each Bonus Plan can contain multiple Business Goals and their weights. Each Business Goal contains details of payout. Business results can be added or multiplied by the Individual and/or team goal results. A Bonus Plan calculation can have three components (sections): Business Performance, Individual Performance, and/or Team Performance. The sections can be added (additive formula) or multiplied (multiplicative formula) to determine the final bonus payout for each employee.

This diagram shows an example of a Variable Pay plan structure with key components.

Variable Pay Data Sources

SAP SuccessFactors Variable Pay requires five separate data sources. All these data sources are interconnected for bonus calculation to work.

  • The User Data File (UDF): Stores the unique identifier of each employee (userId); the userId is used to identify the employees in the Employee History Data (EHD) file.
  • Employee History Data (EHD) File: A list of bonus-eligible employees. Each assignment row will have the inclusive dates of the assignment and bonus target amount, which will be used as part of the bonus calculation.
  • Eligibility File: Identifies which bonus plan the employees in the EHD belong to.
  • Bonus Plan: The incentive program the company is offering. There can be multiple incentive programs in one Variable Pay plan.
  • Business Goals: The objectives laid out by the company typically measuring profits and revenues against a given target.
  • Goal Weights: A weight assigned to each business goal that indicates how goal payouts will be calculated. Some goals are more important than others.

Importing Data Into SAP SuccessFactors Compensation

Data integration between SAP SuccessFactors and your Human Resource Information System (HRIS) or payroll system allows single source updates for your employee data. You will decide how to map SAP SuccessFactors fields with your current database during implementation.

User Data File

The User Data File (UDF) must be configured to upload into SAP SuccessFactors. This file contains the demographic data as well as compensation data. However, compensation data requirements vary widely. Your SAP SuccessFactors implementation consultant will review the standard fields with you to determine which are relevant to your requirements.

Note

For customers using Employee Central or an API, the data will be mapped to fields differently.

Currency Conversion

SAP SuccessFactors can display bonus information in local currencies. The exchange rate is set through currency conversion tables imported into the system.

There are three different currency views:

  • Functional currency (i.e., all forms will be displayed in the same currency for all users)
  • Local currency (i.e., a form will display salary and other information for an employee in that employee’s currency)
  • Planner currency (i.e., all employees’ salaries and other information will appear in the local currency of the compensation planner)

An option to toggle between any other currencies can also be added.

Exchange rates must be included for all possible currency combinations. For instance, a manager in Great Britain (GBP) planning for a team in the Eurozone (EUR) must have the exchange rate for the pound sterling and the euro. Use only one rate for each pair of currencies – the system will calculate the inverse rate as needed.

Configuration Options

SAP SuccessFactors has a set of standard functions that support the majority of implementations. Complex configuration is possible if required.

Basis Calculation

Bonus calculation starts with determining the employee’s bonus target amount or basis. Options include:

  • Imported from Employee History Data: When target amount or target percent varies between assignments
  • Imported from User Data File: When target amount and /or target percent is the same for all assignments (MBO)
  • Custom: The bonus target amount is calculated by the system using the fields created in the background section of the data model.

Bonus Payout

Bonus calculation formula determines how the total payout is derived. Payouts can be based on the overall company performance, employee’s individual performance, and/or team performance. Only one formula can be used per plan.

Note

You'll be able to work with your consultant to figure out the best option for your organization.

Rating Sources

Rating source is used to determine the individual and team performance. Rating sources include:

  • Performance Management
  • Employee Profile
  • Import through UDF
  • Import through History data file
This screenshot shows the configuration options for bonus calculation.

Note

You'll be able to work with your consultant to figure out the best option for your organization.

Guidelines

Guidelines are available for the Individual and Team bonus components.

Every guideline formula provides the minimum and maximum amount that recommendation planners can give based on certain criteria.

Guidelines can be configured to have a hard stop. This way, planners will not exceed the maximum allowed recommendation, or it can be configured to allow planners to exceed the maximum. Still, they will be forced to add a comment and justify the additional increase.

This screenshot shows the options for Variable Pay guidelines settings.

Eligibility

There are two types of eligibility for SAP SuccessFactors Variable Pay:

  • Manager Form Eligibility: this eligibility rule dictates which employees are displayed on the Variable Pay form. It can be configured to display the names of employees, though they are not included in the bonus plan cycle.
  • Bonus Plan Eligibility: this dictates which bonus scheme the bonus-eligible employees belong to.
This screenshot shows the admin page to manage eligibility rules.

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