Compensation Roles Can Include the Compensation Line Manager

8/10/2019 Compensation Roles Can Include the Compensation Line Manager

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Compensation roles can include the Compensation Line Manager, the Compensation Specialist

or a Human Resource Administrative Clerk A line manager may work in any area of the company. Typical tasks for the line managerwould include budgeting, compensation administration, reporting and evaluatingcompensation related data.

The compensation specialist develops and directs the implementation of compensationprograms, such as salary and bonus programs as well as long-term incentives. Thecompensation specialist has his/her own user menu that contains the tasks that he/shetypically performs.


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The Administrative Clerk performs all types of administrative tasks and data entry. Thecompensation data typically covered in their user role would include maintaining personnel

records, maintaining compensation data, performing pay scale changes and runningcompensation related reports.


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The Compensation Management component controls and administers your organization'scompensation policies. This component provides a centralized view of the compensation

policies as well as a control mechanism to administer these policies. You can also use it toperform compensation planning and budgeting and to perform decentralized compensation

administration. Compensation Management is made up of different areas Within Compensation Management, you can perform job pricing. Here you can store results

from external job evaluation systems and market surveys. You can use these results to generatesalary structures that you can then assign to the jobs and positions in your organization. You

can also use these results to determine the internal worth of your jobs and positions and to seewhether your salaries are competitive.

You can assign evaluation points to your jobs and positions and use this data for reportingpurposes.

Budgeting is used to plan and control how much is spent for compensation adjustments.Budgets are assigned to organizational units. You can create budgets both centrally anddecentrally. You can roll up your budgets over the organizational units.

Compensation Administration is used to distribute salary increases, shares, etc. to individualemployees according to guidelines that reflect a companys compensation policy.


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Job Evaluation Results

Definition

Job Evaluation Results Infotype (1050)This infotype stores the results of the job evaluation for the jobs/positions in your organization.

Link to a job or a position

You can link job evaluation details to a job or a position.

Subtypes for multiple evaluation systems

You can use Subtypes to differentiate among job evaluation programs such as a Hay Evaluationprogram and an In-house program.

Points determine relative worth of each job/position

You can specify the relative worth of a job/position using points

Benchmark job indicator

You can allocate the job/position to a specific grade.

You can specify that the job/position is a benchmark job. You can link your salary structures to your jobs/positions using the Planned Compensation

infotype (1005). The details for Basic Pay will default from this infotype when you assign an

employee to a job or a position.

UseUse the job evaluation results to determine the relative worth of each job and position in yourorganization. You can also use this infotype to indicate whether the job is a benchmark job

StructureThis infotype is divided into subtypes. Use the subtypes to represent different job evaluationsystems. This allows you to store different sets of job evaluation results.Subtype EV01 = Hay System


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Subtype EV02 = In-house job evaluation systemSubtype EV03 = John Smith consultants

Salary Survey Results

Definition

Salary Survey Results (infotype 1051)This infotype stores the results of the surveys. This includes information such as the averagebase salary and average bonus. Salary surveys allow you to convert the worth of jobs andpositions in your organization into dollars, pounds, euros, etc.

Link to a job or position

You can link salary survey results to jobs or positions

Identifies external market values

Use Subtypes to store the results of multiple salary surveys, such as a Local salary survey and aNational salary survey.

Subtypes for multiple salary surveys

You can store the average base salary and the average basic bonus for every job within a salarysurvey.

UseUse surveys to compare salaries in your organization to salaries paid for similar jobs in similarorganizations.

StructureThis infotype is divided into subtypes. Use the subtypes to represent different types of salarysurveys. This allows you to store different sets of survey results.


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Subtype SV01 = Survey comparing your organization with organizations in the sameor related businessSubtype SV02 = Survey comparing your organization with organizations in the samegeographical areaSubtype SV03 = Survey comparing your organization with organizations of a similarSize

The Job Pricing ProcessPurposeJob pricing provides the basis for generating salary structures from internal and externalinformation about the jobs and job functions within an organization.This process allows you to create compensation-related infotype records at the job and positionlevel. Job pricing currently uses the following infotypes:Job Evaluation Results Infotype (1050) [Page 24]Salary Survey Results Infotype (1051) [Page 25]Planned Compensation Infotype (1005) [Page 22]

PrerequisitesBefore you can store job evaluation results and salary survey data at the job level, you must

have:_ Jobs in the SAP R/3 System_ Salary surveys and job evaluation results

Process Flow1. Select the jobs you want to edit.2. Store the compensation-related at the job level, that is, create infotype records for the jobsand positions using the infotypes provided.3. Determine the internal worth of the jobs and positions in your organization based on internaland external data available.4. Associate the jobs and positions to pay grades.5. Generate your salary structures based on this data.

Job PricingPrerequisitesTo perform job pricing, the following must exist in the SAP R/3 System:_ Jobs and positions_ Organizational units, if you want to perform job pricing over the organizational unit

Procedure1. From the Compensation Management screen, chooseAdministration_ Job pricingThe Compensation Management - Job Pricing screen appears2. Decide whether you want to perform job pricing for all your jobs at once or perorganizational unit.3. Enter data as required and choose

The system displays a list of jobs together with the following information per job:_ Job name_ Number of positions associated with the job_ Evaluation group_ Benchmark job indicator_ Evaluation points_ Job code_Average basic salary4. To create and change the job pricing data, select the relevant jobs and chooseThe Compensation Management - Job Pricing dialog box appears. Each tab in the tab


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strip represents an infotype record.5. Enter data as required in each tab and scroll through the jobs selected by choosing or6. To create an infotype record for a particular job, choose and enter the relevant data7. To change data contained in an infotype record for a particular job, choose8. Once you are happy with the data, choose to exit the dialog box.

Result

You have now successfully completed job pricing and have entered all the necessarycompensation-related data for each job. You can now use this data to generate your salary

Figure 4.1 Job pricing process (SAP)

We will describe each job pricing step in details. Compensation Specialist use Portal screens since it

provides comprehensive functionality. It allows you to setup the Provider data, than import their data into

the system, followed by matching the jobs in the system to the jobs of the provider, then aging the data to

ensure relevancy, combining results from multiple vendors and create a composite result, then make salary

structure changes if required.
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Figure 4.2 Job pricing launcher

4.1.1 Job analysisJobs are created in the system based on the requirements of the company. Also the job descriptions are

created to define the job. This is an important task but there is a lot of debate on the how to define the job.One school of thought is to define it to the detailed level that exactly lays down the duties and

responsibilities of the job. Another school of thought is to define the job broadly. The reason is that we are

in a dynamic environment and jobs should be broad enough to be adaptable to this evolving environment.

We will leave this for the HR professionals to figure out. ECM provides the ability to capture it either way.

4.1.2 Select Survey provider

There are a lot of survey providers. There are survey providers that cater to specific industry or specific

location or specific jobs etc There are also larger providers that provide all kinds of survey. There is a

cost associated for buying these surveys and hence its important to figure out which ones do you want to
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buy. There are also special incentives that the survey provider gives if your company participates in the

survey itself.

ECM allows us to create and maintain as many survey providers as we want by selecting the Provider

Data link.

Figure 4.3 Create and maintain salary survey providers

The provider data screen displays data as you start clicking on the provider. It builds information based on

the selections.

Figure 4.4 More information on the Provider data screen

4.1.3 Receive Survey data

Survey provider provides you with the survey data. The data can include a lot of information including the

date of the survey (normally the year of the survey), the jobs surveyed, and the aggregate pay information

from the companies that participated in the survey at 10 percentile, 25 percentile, 50 percentile, 60percentile, 75 percentile and 90 percentile.

Once we receive the data, we would need to decide which one is still relevant for us to upload into the

system. We should validate the data at a high level to ensure that we are loading only what we need.

4.1.4 Import survey data

It requires some basic training to navigate the ECM Portal screens. There is a particular way in which the

portal works and need to be understood. Its very important to remember that till you dont make the

selections, you will not see the subsequent screens. The portal screen builds up dynamically as you make

your selections.
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Once we click on Import Data, we must select our Survey provider from our list. We can search all the

survey providersby entering * in the Search for field and hit Go. All the available survey providers will

be displayed and we can click on the one we want.

Figure 4.5 Import survey data selection screen.

Once you click on the left most columns that have the box, the next view adds into the frame. On selecting

one of the providers, we will get another screen that will guide us through the subsequent steps.

Figure 4.6 Import salary data upload options

Each provider provides their own proprietary formats to upload the file. There are a couple of parameters to

upload the file. We need 3 types of data files to import to complete the process. Before we can start

uploading the survey information, we need to setup the Survey catalog and the survey job description.
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The survey job catalog allows loading all the jobs related to the survey provider.

The Survey description allows loading all the job descriptions from the survey provider.

The survey market data allows loading all the market survey information from the survey provider.

Each of the file loading activity follows a process

Upload the file

Map the fields from the vendor to SAP

Import the data

4.1.5 Job Matching

Each survey has their job titles. They have to be deliberately matched to the job titles in the company. Same

titles dont guarantee that the jobs are the same. There has to be a due diligence that needs to be done

before the mapping exercise is completed and approved. After the data import is complete, the jobs from

company are matched to the jobs from the survey.

Figure 4.7 Job Matching

If you try to match the same job to multiple survey jobs, you could get the following error

Figure 4.8 Job matching error

In certain cases you might get a short dump when you try to un-match jobs. There is an SAP note Note

921064 that can help resolve the issue.

4.1.6 Import Job Market DataOnce the jobs have been matched, then next step is to import the job market data. This step ensures that the

data is correctly aligned to the actual jobs.

In certain cases, survey data upload doesnt store the 60th percentile. There is an SAP note Note 886465

that can help resolve the issue.
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Figure 4.9 Import Survey market data

Figure 4.10 Field assignments/ mapping

The final step is import the data.
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Eligibility

.

Path Description

Easy Access

MenuIMG > Personnel Management > EnterpriseCompensationManagement > CompensationAdministration > Eligibility

Define Eligibility Rules Variants

Define Eligibility Groupings

Define Eligibility Grouping Feature

Define Appraisal Rules

Define Eligibility Rules

Define Eligibility Rule Variants

You are creating the rules variants to be used later

in establishment with eligibility grouping to define

the rules attribute to determine eligibility.

Example: Annual Merit Increase, Bonus Eligibility,

etc.

Define Eligibility Grouping

You are creating grouping names to be used in a

decision tree later. Usually grouping will be a typeof employee group or category. Salaried,

Executive, Hourly, etc.

Example: For our example, we will use Salaried

Employees (SALR)


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Define Eligibility Grouping Feature

Using the grouping define earlier, you will now link them through a decision tree.

Example: The employee record has to be in Compensation Area US, with

employee group 1 Regularin their organizational assignment (infotype 0001),

to be pass in the eligibility grouping called SALR Salaried Employees.

You could base your decision tree upon various decision factors. Such as

Personnel Area, Personnel Sub-Area, Employee Group, Employee Sub Group,

MOLGA, Pay Type, Pay Area, etc. To keep it simple, most will use the first 5

from the

Define Eligibility Rules

This first screen of eligibility rules, we are linking

one or more groupings into the variant bucket.

We will be able to define individual rules

pertaining to each of the grouping.

Earlier you specified the employees has to be in

Compensation Area USand Employee Group 1Salariedto be part of the SALRSalaried

Employees grouping. Now you are specifying all

those SALR grouping belongs to this particular

variants.


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Define Eligibility Rules (Contd)

Minimum Service Criteria

How long the employee needs to be hired into the system prior to be

eligible

Salary Criteria

What Compa-Ratio ranges or % ranges of their salary against a salary

structure they need to be in to be eligible.

Other Eligibility Criteria

How many hours worked they have done to be eligible

Waiting Period

Base upon date off their infotype 0041, how many days, months, or

years they need to wait prior to be eligible.

When you create a compensation adjustment such as a merit increase, you can then specify who

qualifies to participate in the adjustment. If everyone in your company qualifies for the

adjustment you do not need to set up any qualifying rules.

If the compensation adjustment specifies qualifying criteria such as 3 months service you needto set up a rule.

Qualifying criteria includes data such as hire date or length of service, number of hoursworked and ranges for pay scale, pay grade, job, salary and performance details.

For individual employees for whom you make an exception concerning qualifying criteria, youcan use the Compensation: employee eligibility infotype (0381). For example you may

overlook the 3 months length of service for some new employees. You can use eligibility groups if you have differing criteria for some groups of employees. For

example to qualify for a bonus let us suppose that everyone must have 12 months service, with

the exception of Executive employees who only need to have 6 months service. In this caseyou set up 2 rules, one for the group Executive and one for the rest of the company.

When you define a group you use a feature to link the group to your employees. You can usethe organizational assignment details such as employee subgroup.

You can also employ user-defined criteria with a user exit.


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Guidelines

DefinitionGuidelines determine how compensation adjustments are calculated. Guidelines are values of arange for compensation. Ranges can be a percentage, an amount, or a unit.

UseCompensation adjustments are decided by the manager. Compensation Management allows youto set guidelines for compensation calculations, or set limits for the managers recommendations.

StructureSAP R/3 System contains three types of guidelines:_ fixed_ Matrix_ User-defined

Fixed GuidelinesCompensation adjustments are calculated using a fixed percentage, fixed amount, or a fixed

number.MatrixCompensation adjustments are calculated using matrices, or one or more criteria. Matrix

guidelines are one dimensional, two dimensional, or three dimensional.


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Path Description

Easy Access

MenuIMG > Personnel Management > Enterprise CompensationManagement > Compensation Administration > Guidelines

Define Guidelines Variants

Similar to define eligibility variant, you

are creating a bucket in which you will

later associate one or more grouping to.

Define Guidelines Grouping

Similar to define eligibility grouping, you are

defining groups of employees to

differentiating guidelines

Define Guidelines Grouping Feature


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Similar to define eligibility grouping feature, you are defining the decision

tree to associate the grouping for guidelines

Define Guidelines Proration Rules

When guidelines are applied to an individual, the proration rules will prevent

them from being able to receive full amount.

Example: The guideline suggest 5% increase. One employee was hired into

the company, but only worked 6 months. The system will prorate and suggest

only 2.5%

Matrix Guidelines


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Multidimensional guidelines allow the calculation of salary adjustments based on differentcriteria (maximum 3 criteria).

Criteria delivered with the standard R/3 release:

- Length of service- Position in the salary grade- Performance appraisal results- Age

User-defined methods are allowed.

Error control and monitoring are flexible

Calculation of individual salary adjustments are based on multiple criteria

Example:

1.An employee who is with the company for less than 6 months and who has a performanceresult of more than 80 points will get a merit increase of 3%.

2.An employee who is with the company for more than 6 but less than 12 months and has alsoa performance result of more than 80 points will get a merit increase of 4%.

Define Methods For Matrix Dimensions

You are defining what dimension(s) you will use to

base the guidelines upon (i.e., Age, Appraisal

Rating, Compa-Ratio, Length of Services,

Percentage Range, or MBO Appraisal)

Note: If the dimension involve Appraisal, there

are two version of appraisals you could use to


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configure. The basic version uses infotype 0025. The configuration for it is

located at

IMG > Personnel Management > Personnel Administration > Payroll Data >

Appraisals

Setting up a matrix guideline requires the following steps: Specify administrative matrix data: compensation area, name, validity period

Assign matrix dimensions

Specify the possible entry values (single values or ranges)

Specify the calculation variant Define dimension segments

Maintain matrix values


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Define Matrix Dimensions

At each of the Method of Dimensions youveidentified earlier, you will link those

to the matrix dimension you are creating here. Usually, you will use the same

description between the two.

In order to establish a matrix guideline, segments have to be defined for each dimension.


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Define Matrix DimensionsSegments

Using each of the matrixdimensions youve created,you are now defining the

values for that dimension.

For example, If the personperformance appraisal was aC, from a system

perspective, he falls between2.002 and 3.001 value.

Note: Segment field is a fourcharacters alphanumeric field


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Documents

Compensation Roles Can Include the Compensation Line Manager