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Hello,

This quarter we have great news for compensation planners. SuccessFactors Compensation Management is getting to the next level in simplifying the lives of managers and supporting fair decisions with innovative functionalities. In this blog I’ll share with you the key things you should know about the August 2013 release for Compensation, and why you should immediately start using it.

What is one of the key challenges of compensation planning?

The data itself is the problem. Or better said: the complexity of total compensation information and the challenge of understanding it quickly to make fair management decisions on an employee level – that’s the problem. And we have solved it with the August release with a new, highly visual support for planners called “Compensation Profile”. Now let’s go back to the complexity of managing compensation information. You, as a comp manager, have to be able to digest a lot of data, and create an additional set of data on a regular – generally yearly – basis on top.  I am talking about the compensation history, the current compensation information and the final total compensation of an employee. The time dimension is absolutely key in the process. In addition to this, there is a component dimension, as the total compensation can be itself divided into various blocks, going from base pay, to MBO bonus to variable pay elements related to individual or company goals.  As a matter of fact, compensation managers are not comp experts, but they have to make important comp decisions. These managers do potentially have access to a lot of data on their employees to support their decisions, but not in a consumable way. This means, that they potentially make decisions based on partial or not well understood information. With the August 2013 release, we’ve fixed that problem, bringing both the time and the comp components dimensions together, and giving compensation managers a one stop shop for compensation information and actions. They can get a very accurate view on an employee’s contribution over time, and not only as a snapshot. And equally important: they can take action from the Compensation Profile, like adjusting a salary, or even giving someone a promotion.

How can the Compensation Profile help with this comp data challenge?

The Compensation Profile is divided into 4 parts: employee information, compensation history, salary positioning, and recommendations. The employee information displays just the necessary data: his or her picture, the organizational assignment, the manager and the hire date.

The compensation history enables managers to see the evolution of the salary progression over time, versus a snapshot of the current data. The visual part provided by the chart view (see Fig. 1) best supports the decision. Should the employee have stocks, options or another component, those would be displayed as well in the history.  The manager can switch between tabular or chart view for those as well.

1. History.pngFig 1. Compensation History (click to enlarge)

The next decisive part of the profile is the Salary Positioning. This part of the profile shows the current salary grade of the employee (Figure 2). The compa-ratio and the position in range put the salary grade of the employee into context, and give the manager a clear understanding of where the employee is standing versus his peer group. This helps identify potential misjudgments like underpaid top performers or employees overpaid relative to their performance, a performance review form that is just one click away in the application SuccessFactors Performance and Goals. Directly below (Figure 3), the manager can “promote” the employee (see figure 3) to a new job. He will get access to selectors like “New global Job Family”, “New Job title Grade” and “New salary grade” to do so. Here again, the solution guides the manager who will automatically get a warning if the entry is not respecting the company guidelines, like a maximum of 10% of total increase.

2. Salary Positioning.png

Fig. 2: Salary Positioning

3. Recommandation Salary.png

Figure 3: Salary Positioning / Promotion

The last part of the profile is called “Recommendations” and is indispensable. The manager wants to take action after promoting an employee and adjust his or her salary with compensation components such as merit increases, promotion, or lump sum. Those compensation fields are entirely configurable to fit the customer’s requirements. In that recommendation process, the manager is entirely guided along his compensation decision with information like budget availability, soft or hard validations, guided. If the employee has been granted a bonus or stocks, the solution provide the same support to make the necessary adjustment, as per figure 4 for bonuses. With this, the management can simply go “Next” or “Back” to the other person on the team and go through the same process.

4. Recommendation Bonus.png

Fig. 4: Recommendations / Bonus

We’ve seen how the Compensation Profile can help planners better manage the compensation process, bringing all the necessary transactional and contextual information in one single place. The consumer grade user experience will support company with implementing and adopting compensation management faster. This will not only help them retain the top performers, and avoid overpaying people with an average performance. But more importantly, SuccessFactors Compensation Management is the best companion for every origination that wants to implement and live up to a “pay for performance” culture, as it is the angular stone of a working environment that is running for the best performance.

You can find more resources on SuccessFactors Compensation Management here:

·     http://www.successfactors.com/en_us/solutions/bizx-suite/performance-cloud/compensation.html

These resources are updated regularly so be sure to save them as favorites in your browser.

Follow me on Twitter: @ypeterschmitt

Follow SuccessFactors: @successfactors

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5 Comments

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  1. Luke Marson

    Great blog Yannick and it’s good to see the new enhancements. Compensation planners will definitely see value from these features.

    Best regards,

    Luke

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    1. Yannick Peterschmitt Post author

      Hi Luke

      thank you for your feedback. Yes, Compensation Management is about to be the angular stone of talent management when offered as part of a suite like this We have great things coming with 1311 and beyond to make it a solution that truly support business decisions.

      best regards, Yannick

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  2. Sudhir Gupta

    Hi Yannick,

    Thanks for this blog Mate. That’s one important piece if Talent management piece for clients. And they will be very happy to see step towards bridging this gap. Often a direct comparison with SAP on premise solution is imminent and screenshots ain’t looking bad either 🙂

    Regards,

    Sudhir

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    1. Yannick Peterschmitt Post author

      Hi Sudhir,

      thanks a lot for your feedback, much appreciated. I fully agree with you on the importance, and i personally see compensation is the angular stone in talent management. Beside this, compensation has a pivotal role in bridging talent and hr core processes. We have great things coming up. Now regarding good looking applications: I cannot wait to show you the amazing UX improvements of the comp worksheet planned for the November release. I’ll post some screenshots as soon as we are allowed to. I look forward to reading your feedback on those improvements as well.

      Best regards, Yannick

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  3. Katsia Barshchynskaya

    Hi Yannick,

    Thanks for an exciting insight into the SF Compensation solution! Am definitely looking forward to the UX updates. Some comments/questions below:

    – With the promotion tools readily accessible to the manager (fig. 3) it seems like line managers will get much more hands-on involved in the core OD domain with tasks such as position evaluation and indirectly workforce/succession planning – potentially unaligned with HR function’s own guidelines and/or unaware of broader implications of such promotion decisions. I wondered if you have any feedback from customers on this feature and potential change management impact.

    – How does the “total comp” view (fig. 1) take into account country differences in using either base or total annual salary wage types as the base for salary review? As an example, certain allowances and pension contributions would be considered as a part of review base in India or UAE but typically not in Northern Europe. How does the Compensation Profile view facilitate a comparable picture for a manager of a team where employees are located in different countries, without diminishing country-specific differences?

    Thanks in advance for your consideration.

    Kind regards, Katsia

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