Utilizing Advanced Fusion Compensation Features Effectively

Bhavin Shah

Specialist Master

Human Resource Transformation

3/2/2015

Contents

Introduction

Merit Plan

• Merit Matrix

• Compensation Statement

• Security

LTI Plan

• Bonus Target Assignment

AIP / MIP Plan

• Worksheet Upload

Introduction

Bhavin Shah – Fusion HCM Specialist at Deloitte Consulting LLP.

Over 16 years Oracle HCM systems implementation experience

Has led 15+ full cycle Oracle HCM implementations in areas such as Core HR,

Benefits, Compensation, Talent and HR Analytics

About Omnicare

• A fortune 500 company headquartered in Cincinnati, Ohio

• Market-leader in professional pharmacy, related consulting and data management

services for skilled nursing, assisted living and other chronic care institutions

• Approximately 13,200 employees

Fusion Landscape:

• Implemented Fusion HCM Core HR (Release 4) during Phase 1 of the project

• Implemented Fusion Talent Management and Compensation (Release 7) during

Phase 2

• Recently upgraded to Fusion HCM release 8

Omnicare’s Compensation Process

Omnicare implemented Fusion Workforce Compensation in January 2014 with Deloitte as the implementation partner

Omnicare has 4 different Compensation Plans that are processed annually

• Merit

• Annual Incentive /Management Incentive Bonus Plan (AIP / MIP)

• Discretionary Bonus Plan

• Long Term Incentive Plan (LTI)

These plans have different levels of complexity. We used several creative solutions to configure these plans as per Omnicare’s business requirements

Merit Plan

Merit Plan

Plan Details

• All employees are eligible for the plan

• Eligible salary is calculated using a fast formula based on number of months a person is employed

• Budget is calculated as a percentage of employee’s prorated eligible salary

• A Merit recommendation is displayed on the worksheet based on employee’s Performance and Salary Quartile

• A single compensation statement generated for all plans

• HR Business Partners have access to the compensation details of employees that they support

Merit Matrix Business Driver

• System should display Recommended Merit increase based on employee’s Performance and Salary Quartile

Rating

Low

Range

Rating

High

Range

Below

Range

1st

Quartile

2nd

Quartile

3rd

Quartile

4th

Quartile

Above

Range

4.5 5 a% a% b% b% c% c%

3.5 4.49 a% a% b% b% c% c%

2.5 3.49 a% a% b% b% c% c%

1.5 2.49 a% a% b% b% c% c%

0 1.49 a% a% b% b% c% c%

Merit Matrix Solution

• Step 1: Define a dynamic column to calculate the recommended increase based on the Merit Matrix

Merit Matrix Result

• Merit recommendation is displayed for every employee based on his / her salary quartile and performance rating

• Helps foster pay-for-performance culture across the company

• Improves decision making process for Managers; serves as a benchmark for entering merit increases

• Streamlines the compensation process, managers can use the Apply Targets feature to allocate the merit based on the recommendations

Compensation Statement Business Driver

• Employees are given a single Compensation Statement which includes total compensation payout for the year. This includes Merit, Bonus and LTI payouts which are configured as separate plans

• The Compensation Statement is tailored to display the payout information for the components an employee received e.g. If an employee did not receive a bonus, the bonus section is not displayed.

Compensation Statement Solution

• Step 1: On the Merit worksheet, add custom columns to display the payout details for the Bonus and LTI plans. Configure the default value property for these columns by cross referencing the payout column of other plans. This will synch the payout information for other plans into the Merit plan

• Step 2: Create compensation statement templates with logic to suppress sections based on the payouts for various plans

• Step 3: Upload the compensation document to the Merit Plan

Compensation Statement Solution

• Step 1: On the Merit worksheet, add custom columns to display the payout details for the Bonus and LTI plans. Configure the default value property for these columns by cross referencing the payout column of other plans. This will synch the payout information for other plans into the Merit plan.

Compensation Statement • Step 2: Create compensation statement templates with logic to suppress sections

based on the payouts for various plans

Compensation Statement Step 3: Upload the compensation document to the Merit Plan

Compensation Statement Result

• One stop shop for managers to generate compensation statements for all plans

• Significant reduction in administrative effort needed for manually generating different variations of compensation statement using mail merge

Security Access Business Driver

• HR Business Partners should have access to Merit planning data for employees and managers in the departments / locations that they support

• HR Business Partners should not be able to update the Merit planning data

Security Access Solution

• Step 1: Define HR Business Partners for a location or department using the Area of Responsibility functionality

• Step 2: Create data roles using the Compensation Manager job role and custom person security profile to allow HR Business Partners to only view data for employees managers in the department or location they support

• Step 3: Configure access restrictions to grant read only access to the compensation area to the newly created data roles

Security Access

• Step 1: Define HR Business Partners for a location or department using the Area of Responsibility functionality

Security Access

• Step 2: Create data roles using the Compensation Manager job role and custom person security profile to allow HR Business Partners to only view data for employees in the department or location they support

Security Access

• Step 3:Configure access restrictions to grant ready only access to the compensation area to the newly created data roles

Security Access Result

• HR Business Partners are able to get read only access to the Compensation data for the employees and managers they support

• Use of the Area of Responsibility functionality led to reduction in maintenance required for maintaining the HR Business Partner relationship

• Use of custom person security profiles, reduced the need for creating multiple security profiles for each location / department

• Allows HR Business Partners to track status of the compensation plan by run reports based on their data security privileges

LTI Plan

LTI Plan Plan Details

• Only certain key job are eligible for the plan

• Each job has a target bonus % and participation rate (controls the % of incumbents who can get the bonus). E.g. the job Senior VP has a target of 50% with a participation rate of 75%.

• Budget is calculated as the Annual Salary * LTI Target * Participation Rate

Bonus Target Assignment Business Driver

• The Target and Participation rate should be easy to maintain as they change every year

• The budget should be automatically distributed based on the Eligible Salary, Target % and Participation Rate

Bonus Target Assignment Solution

• Step 1: Store the LTI Target % and Participation Rate at the job level (DFF) and allow it to be overridden at the assignment level where needed

Bonus Target Assignment • Step 2: Use Fast Formula to derive the LTI Target and Participation rates for the

eligible employees

Bonus Target Assignment Business Outcomes

• Standardized LTI Target and Participation Rate for most jobs with the exceptions of few key employees

• Simplified the calculations for Managers allowing them to easily make recommendations

• Reduction in manual effort required for maintaining spreadsheet for administering the plan and calculating the Targets and Participation Rates based on job changes throughout the year

AIP / MIP Plan

AIP / MIP Plan Plan Details

• Only certain key jobs are eligible for the plan

• Each job has a target bonus %, defined at the Job level. E.g. the job Senior VP has a target of 50%

• The actual bonus payout is calculated based on employee’s performance against various financial measures (up to 6) applicable for the individual employee. Each measure has a weight and depending on the individuals performance the weighted result is calculated

• The budget to be distributed automatically. The Budget is calculated as Eligible Salary * Target % * weighted result of the various measures achieved by the employee.

Worksheet Loader Business Drivers

• Automate administration of the AIP / MIP Plan. The plan has 20+ columns for which the data is derived from the financial systems. There should be easily way to load this data

• Plan configuration should allow the budget to be calculated automatically after the plan has been started and financial data is uploaded. Budget is calculated as Eligible Salary * Target % * weighted result of the various measures achieved by the employee

• System should calculate and display the weighted summary for various financial measures

Worksheet Loader Solution

• STEP 1: Configure the plan to display various metric columns on the worksheet. Define access for the columns to only allow the administrators to update the column values

• STEP 2: After the plan has been started, the administrator can download the worksheet and upload the data for various financial performance measures

• STEP 3: Administrator can then run the Refresh program to re-calculate the dynamic columns. This will force the system to re-calculate the weighted result of various financial measures and the budget

Worksheet Loader • STEP 1: Configure the plan to display various metric columns on the worksheet.

Define access for the columns to only allow the administrators to update the column values

Worksheet Loader • STEP 2: After the plan has been started, the administrator can download the

worksheet and upload data

Worksheet Loader • STEP 3: Administrator can then run the Refresh program to re-calculate the

dynamic columns. This will force the system to re-calculate the weighted result of various financial measures and the budget

Worksheet Loader Business Outcomes

• Full automation of the AIP / MIP plan. This was earlier implemented using complex excel worksheet that was distributed to every manager

• Significant reduction in administration and maintenance effort

• Formalized the approval process

• Flexibility to upload data to worksheet, allows administrators to upload data for various fields at one go

• Allows managers to view all plan related calculations within the system

Questions

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