Developing Budgets for the Compensation Plan


After completing this lesson, you will be able to:

  • Configure a budget
  • Configure budget calculations
  • Configure budget rules to handle budgets that fall outside preconfigured amounts
  • Group information by specified parameters for display purposes only
  • Add budget groups


Budget can be defined as the money set aside to be used for different compensation components, such as merit, lump sum, adjustments or stocks. Budgets can be calculated per user, planner, group or template.

There are many different ways budgets can be configured depending on customer requirements. Commonly used is the Bottom Up budget in which a percentage of salary is summed up by employees across the organization.

Total budget amounts are displayed from the budget panel.

  • What is displayed depends on which sheet is active, as well as the configuration.

  • The boxes show assigned budget, total currently allocated, and amount remaining to be allocated.


The budget for the Stock sheet is displayed in units and not currency.

Considerations for Budget Configuration

Budget and how it is calculated should be included in all Compensation component discussions.

Leading Practices

Only use a split budget if there is a driving business need (such as no sharing across countries) versus just a display issue. Splitting budgets can also impact aggregate reporting, making it appear "busy".

Budget proration should be consistent with type. For example, if merit is prorated, then prorate merit budget. If adjustment is not prorated, don’t prorate adjustment budget.

Budget Settings

Additional information about budgets is found in the relevant sections of the SAP SuccessFactors Compensation Implementation Guide.

Budget Settings Overview

Budget settings are divided into three parts:

  • Budget Calculation: refers to how budget amount is calculated per employee, template, group or planner.

  • Budget Rule: determines how the system behaves when recommendation exceeds budget.

  • Budget GroupBy: refers to separating budget panel by currency code or custom field. This is different from budgets based on group.

Budget Calculations

Let’s look at how to configure different budget calculation options.

Selecting Add or Edit Budget Calculation opens a pop-up window that allows the setting of the different budget calculation options.

From this pop-up, you can select:

  • Mode

  • Use For

  • Components

  • Budget Value

  • Based On

  • Advanced options

  • Language

  • Budget Label

Budget Calculation Options: Mode

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


  • The system uses employee salary as the base amount.
  • This method is easiest to configure.

Percent of Target (Merit/Lumpsum/lumpsum2):

  • The budget base is an amount uploaded in the user data file.
  • Not used frequently; used by customers who would like the base amount to be different from salary.


  • The budget base is calculated from a custom field, typically using a lookup table.
  • Most flexible and yet hardest to configure.
  • Can only be used in the Salary tab.
  • Cannot be used for cascading budgets.

Direct Amount

  • Used for cascading budgets.
  • Used for Stock budgeting.
  • Budget amount can be updated using Update worksheet..
  • When used for cascading budgets, the budget amount is specified on the Budget Assignment page. Assign budgets to the top level of the cascading budget.


  • The system uses the total of the calculated default guideline as base amount.
  • When this mode is used, basedOn field is ignored.
  • Typically used for Stock budgeting. May also work in a scenario where the client wants the worksheet to calculate the ideal recommendation and pre-populate that for all planners. Planners could then make alterations to the system recommendations.


  • Budget base will be calculated from current salary plus or minus the amount indicated in Budget Value.
  • For example, budget value –5000, the merit budget will be total salary minus 5000 for each user.
  • Not commonly used.

Budget Calculation Options: Use For, Components

Use For is the worksheet tab where the budget will be displayed.

Components are the fields which get to spend the allocated budget.

You can include multiple standard fields or custom fields. However, you cannot combine standard and custom fields in one budget calculation. If customers have this requirement, create a new custom field that adds the required standard and custom fields, and use that new custom field as the budget component.

Budget Calculation Options: Budget Value, Based On

Budget Value – Depending on the mode selected, this can be a percentage or an amount. This is the value which the base amount will be multiplied with.

The Based On menu specifies how budget percentage will be determined:

  • User: The budget percentage is taken from the user data file. The value referenced in the importKey supersedes the number entered in the Budget Value box. Budget changes can be reflected automatically if the field is set to reloadable.
  • Group: The budget percentage is taken from group percentages created by the administrator. Number entered in Budget Value is ignored. Budget changes can be reflected on forms by using Update Worksheet.
  • Template: Budget Value entered will be used as budget percentage for entire plan. All worksheets generated from the template will have the same budget percentage. Changes on budget require launching of new forms.
  • Planner: The budget amount is granted to each compensation planner, using the Budget Assignment tool in Manage Worksheets.

Budget Calculation Options: Advanced Options

Supplementary budget configuration is available in Advanced Options.

  • Include Ineligible: Determine if ineligible employees should be included in the budget allocation.
  • Family Name: Used only for budgets where Group was selected from the Based On dropdown menu.
  • Prorating: Allows the budget to be prorated based on either date or percentages. Only applicable if basedOn is "user" or "template".
  • Hide Percentage: Hide the display of the budget percentage, showing only the budget amount.
  • Import Key: Imported field name containing the budget percentage to be used for basedOn=User.
  • Base Custom Field: Column id of the custom field containing budget value to be used for the PercentofCustomField mode.
  • Allocation Columns and the Use Final Payout for VP Budget fields: refer to SAP SuccessFactors Variable Pay.
For more details, refer to the Set Up Proration section of the SAP SuccessFactors Compensation Implementation Guide.

Budget Calculation Options: Language and Budget Labels

Column and row headers and language in the budget panel can be configured and relabeled in different sections of Compensation Home.

  • Column budget headers and language can be relabeled within Budget Calculation.
  • Row budget headers are relabeled within Design Worksheet.

Configure Budget Calculations

Business Example

You need to modify the budget calculation.

Delete any test worksheets that are active at this point. The system won't allow any changes to the budget when there is an in-progress worksheet.


  1. Create a budget base for Adjustment.

    1. In the Design worksheet, create a custom formula with the following details:

      Form tab


      Column Name

      Adjustment Budget


      Column Type



      if ((curRangePenetration<=10&&pmRating>=4),0.015, if((curRangePenetration<=10&&pmRating>2&&pmRating<4),0.005,0.00))*curSalary

      Other Options

      Reportable, Calculate Total

    2. Save.

    3. Take note of the column Id.

  2. Create a budget calculation for Adjustment.

    1. Navigate to Plan DetailsBudget.

    2. Select Take ActionEdit for the Adjustment budget.

    3. Select See advanced options

    4. In the Base Custom Field, enter the column Id used earlier.

    5. Click Save.

Budget Rules Configuration

A budget rule tells the system how to handle a budget that falls outside of the preconfigured amounts.

Budget Rules Configuration

Can be set to Allow, Warn or Disallow. Leading practice recommends setting a soft limit (warn) at planner level and use aggregate reporting to view at higher levels.

Budget groupBy

The budget panel typically displays total amounts in functional currency. However, a planner may have multiple employees paid in different currencies and displaying budgets on 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 for display purposes only and amounts can be displayed and grouped using the following:

  • Local currency code – the only standard salary field supported
  • Read only, Reportable and String type Custom Salary field

  • In the example in the figure below, Lump Sum and Merit budgets amounts are segregated per currency.

Budget Groups

Employee populations are sometimes segregated into groups for budget or guideline purposes. These groups are called budget groups or compensation groups.

Budgeting by Groups - Example

Consider the following use case: A company has a presence in multiple locations, and it follows a different budget strategy for each country.

  • The budget for the U.S. is 5%, for Canada is 6%, and for the UK it is 4%, and they have a manager who has employees across all locations. In such a scenario, the budget will need to be calculated by location and then added up to create the budget pool for that manager.
  • To simplify calculation, you can use compensation groups. Create one compensation group for each country:
    • All US-based employees will be grouped under the US compensation group

    • All Canadian employees will be grouped under the Canada compensation group

    • All UK-based employees will be grouped under the UK compensation group

  • These groups can also be used for guidelines.

Creating families and groups for budget purposes is not the recommended approach. Consider using a custom field and lookup table to assign different percentages to different employee populations.

Adding a Group

Adding a group (overview):

  1. Navigate to Actions for all PlansGroup AssignmentsManage Families and Groups.

  2. Create a Family List or if a family is already available, create a group within the family. The family name will be referenced within the budget calculation page.

Add Employees to Group: Using Filters

One method of adding employees to groups is by using filters:

  1. Navigate to Group AssignmentsAssign Employees to Group.

  2. Select the desired employees using the Select and filter options. You can also assign employees one at a time by clicking Assign individual users to a group and searching for the individual employee.

  3. Indicate the name of the group you want the employees assigned to using Target Group.

  4. Click Assign to target group.

Add Employees to Group: Using CSV Files

A second way to add employees to groups is by creating a simple CSV import file. The file should have two columns, as follows:

  • The first column is USERID which is the unique identifier for each user and must match exactly the USERID in your core user data file.

  • The second column is GROUP – that is the group name that you want to assign to the employees (this can be anything you like).


All "like" values should be the same.

If you are using groups for guidelines, match the group names exactly to the group names expected in your guideline matrix.

After the file is created, import it into the system.

  1. Navigate to Group AssignmentsImport Group Assignments.

  2. Browse to the file.

  3. Select the import options desired.


    You can update the existing groups by adding employees to the existing group assignments or you can replace all previous group assignments for all active users.

  4. Select Import Groups.

After group members are assigned, you can now:

  1. Create budget for the group.

  2. Enter the budget value and any holdback amount or percent.

  3. You can also apply proration as appropriate.

  4. Add budget calculation and use the group as appropriate.


Budget Value on this page is ignored. The budget value created for the group will be used in the calculation.

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