Human Capital Management Structures

Objectives

After completing this lesson, you will be able to:

  • Describe the differences of the enterprise, personnel, and organizational structures within HCM

Human Capital Management Structures

An HCM system enables you to set up three integrated structures, the enterprise structure, the personnel structure and the organizational structure.

You must be able to evaluate and report on employee data from all enterprise-specific organizational aspects. Every employee is included in the structure of the company.

Integrated HCM Structure

The three structures in HCM are:

  • Enterprise structure
  • Personnel structure
  • Organizational structure

The allocation of employees to the structures in their enterprise is of the utmost importance in Human Resources. In a Personnel Action, the first step is to enter the data for these three structures in IT0001 Organizational Assignment.

The employee is assigned, for example, to a company code, a personnel area, and a personnel sub area. You also assign employees to positions, which results in the employee's assignment to an organizational unit, a job, and a cost center.

Enterprise Structure

The enterprise structure for personnel administration is determined by the client, company code, personnel area, and personnel subarea.

An employee’s assignment to the enterprise structure results in the employee being assigned to the following elements:

  • Client

    A client is a self-contained unit within the system. It can either be valid for a company code at the smallest level, or for the entire corporate group. You should consider the following points before you decide to set up a client:

    • There is usually no exchange of data between clients.
    • If an employee changes clients, you must create the personnel number again.
  • Company code

    A company code is a self-contained unit in legal terms, for which you can draw up a complete set of accounts. Legally required financial statements, such as balance sheets and profit and loss statements, are created at the company code level. The company code is the highest level of the company structure and is defined in Accounting.

  • Personnel area

    A personnel area is used exclusively in personnel administration. Each personnel area must be assigned to a company code and represents a subdivision of the company code. The individual personnel areas in a company code have 4-digit alphanumeric keys.

  • Personnel subarea

    A personnel subarea is a further subdivision of the personnel area. The organization of the most important subareas of personnel administration takes place at this level. The principal organizational aspects of human resources, such as the pay scale and wage type structures, and the planning of work schedules are controlled at this level. The personnel subarea is assigned a 4-character alphanumeric key.

Personnel Structure

An employee’s assignment to the personnel structure results in an assignment to structures specific for personnel administration. These assignments include the employee group and employee subgroup. Employees are also assigned to a payroll area. These assignments are also relevant for time management and payroll.

Employee Group

An employee group is a general division of employees. The group defines the relationship between an employee and a company based on how the employee contributes to the company in terms of work. Active employees, pensioners, and early retirees comprise the main employee groups in personnel administration.

The following are the principal functions of the employee group:

  • It can determine the default values for the payroll accounting area or basic pay.
  • It is used as a selection criterion for reporting.
  • It is one unit of the authorization check.

Employee Subgroup

An employee subgroup is a division of an employee group according to contract conditions. Wage earners, salaried employees, and non–pay scale employees are examples of subgroups within the active employee group. All control features of the personnel structure are defined at the employee subgroup level.

The following features are some of the most important customizing settings for time management and payroll calculation:

  • The employee subgroup for the payroll allows you to define different payroll procedures for different employee subgroups. For example, you can specify whether an employee’s pay should be accounted on an hourly or monthly basis.
  • When entering data, you can define default values using the employee subgroup, for example, for the payroll accounting area.

Payroll Areas

The payroll area represents a group of employees used for running payroll. All employees who have their payroll run for them at the same time and for the same period are assigned to the same payroll area.

Payroll accounting is generally performed for each payroll area. The payroll area provides the payroll driver with two pieces of information, the number of employees to be accounted for and the dates of the payroll period. The number of employees to be accounted is determined using IT0001 Organizational Assignment, which stores the payroll area.

Infotype 0001 Organizational Assignment

Assignments to these HCM structures are reflected in the IT0001 Organizational Assignment for the employee. This infotype is one of the mandatory master data infotypes that must always exist for every employee. There can be no gaps or overlaps in the validity period for this infotype, and each record must be unique.

Information on this infotype is important for data entry, payroll, and time management. If this master data infotype does not exist, the employee is not set up in the HCM structure, so time management and the payroll component cannot be used.

Watch the video which explains the main areas of an organizational assignment record in HCM, including enterprise structure, personnel structure, and linking employees to organizational plans. 

Update of an Organizational Plan

Organizational Management is based on the concept that every element of a company constitutes a unique object with individual attributes. You create and maintain each object individually, and you create relationships between the various objects to form a framework for your organizational plan. This gives you a flexible basis for personnel planning, previewing, and reporting.

Organizational units, jobs, positions, cost centers, and persons are examples of objects that you use as part of Organizational Management.

Objects

Once you have created a structure using objects and relationships, you can assign additional characteristics to the objects.

Objects consist of three parts:

  • Object Infotype – includes the ID number, a short and long text, and the validity period.
  • Relationship Infotype – contains the relationship(s) between this and other objects.
  • Other Infotypes – contains the object characteristics, for example Account Assignment.

All data for an object (existence, relationships, and additional characteristics) is created in the form of infotypes. You define particular characteristics for an object in each infotype.

Not all infotypes are absolutely necessary. Some infotypes can be maintained for all object types, for example, the object and relationship infotypes. Others are only relevant for particular object types, such as the vacancy infotype, which is only relevant for positions.

Organizational Plan

An organizational plan is described by the following characteristics:

  • A comprehensive and dynamic model of the structural and personnel environment in your enterprise.
  • Created using organizational units and positions.
  • Depicts the organizational structure of a company.
  • Depicts the individual positions and the reporting structure in the organization.

You portray hierarchies within your organizational plan. The organizational structure shows the hierarchy that exists between organizational units. This structure is created by creating and maintaining organizational units and relating them to one another. Your organizational plan maps the line structure and the reporting structure (chain of command) of your enterprise.

An organizational plan can include the following objects:

  • Root and subordinate organizational units.
  • Jobs – templates for positions.
  • Positions.
  • Cost centers.
  • Persons.

Organizational Units

Organizational units describe the various business units that exist in your company.

Organizational units can be classified generally (for example, by function or by region) or specifically (for example, by project group). The way in which organizational units for your company are classified depends on how your company is structured.

You must relate organizational units with one another in an organizational plan. The hierarchical relationships that exist between the organizational units represent the organizational structure of your enterprise. Organizational units can be linked to cost centers from Accounting.

Job Templates

Jobs are general classifications of tasks that are performed by employees. Each job represents a unique classification of responsibilities in your organization. When you create jobs templates, you should consider what specific tasks and requirements are associated with individual positions.

The job template is used to define the specific positions, with the positions inheriting the job characteristics.

Jobs can be used in other HR components, for example:

  • Shift Planning
  • Personnel Cost Planning
  • Personnel Development

Positions

Positions are individual employee assignments. Positions are held by employees.

Multiple positions can be based on one job. After you create a job, you must specify the number of corresponding positions required in the company. A position inherits a job's tasks; however, you can also define additional tasks that refer specifically to one position. Positions can be completely filled, partially filled, or vacant.

As a rule, each position represents one employee. However, a position can be occupied by more than one employee, each working less than full time. For example, one employee can hold 60% and another employee 40% of a position.

Cost Centers

Cost centers can be assigned to organizational units and positions. Cost center assignments are inherited along the organizational structure and are maintained in Controlling. This hierarchical inheritance can be interrupted, when cost centers are assigned to organizational units or positions at lower levels.

Persons

Persons are objects that hold positions within the organizational structure. Persons generally represent employees in your company.

Infotypes for persons are maintained in Personnel Administration and are linked to an organizational plan through their position assignment, for example IT0001 Organizational Assignment, IT0002 Personal Data, IT0007 Planned Working Time.

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