Understanding SuccessFactors Pay Scale Structure and its related features

This blog is co-authored by Gobinder Sandhu  (https://people.sap.com/gobi.sandhuFormer Memberand Stéphanie Bourgault-Mongeau (https://people.sap.com/stephanie.bourgault)

Overview

Employees under collective bargaining agreements or hourly employees can be compensated based on a pre-define pay structure following specific rates of remuneration. In SuccessFactors, it is possible to implement the pre-defined remuneration structure using the Pay Scale Structures Objects and auto-generate the employee Pay Component Information accordingly.

The Pay Scale Structure concept is well known in the SAP HCM world but we found few reference of it for SuccessFactors. Hence, in this blog entry, we will define the pay structure objects, explain how to configure the auto-assignment of employee’s compensation based on pay scale structure using business rules and highlight how general increase can be manage using the Adjust Employees’ Compensation to Tariff Changes transaction in SuccessFactors.

This blog entry can be useful for existing and future SuccessFactors implementations providing the understanding around handling Pay Scale Structures in SuccessFactors (and understanding how it can ease the data entry and facilitate data accuracy in the system). Moreover, this blog will mostly be useful for the consultants in explaining how to achieve Pay Scale Structures configuration in SuccessFactors in detail.

Pay Scales versus Pay Grade and Pay Range

Before we dive in into Pay Scale Structures, we want to state that Pay Scales are not to be mistaken with Pay grade or Pay Ranges.

Pay Grade Structure are defined together with pay or salary ranges and frequency, which determines the pay to the salaried employee placed on a particular job or function. The pay range will have minimum, maximum and mid or reference value as well assigned with the pay frequency.

A Pay Grade structure thus will have a pay grade, pay range and frequency
Pay Scale Structure are defined together with pay scale type, area, group and level. The pay scale defines pay rate based on the skill, area of work, time spent on a particular job, generally in a unionised environment.
While the pay grade/ranges are determined by the market pay studies, the pay scale structure is determined as per agreement during collective bargaining with the unions. Both type of structures are used to define the base pay of an employee.

Process for implementing Pay Scale Structure in SuccessFactors Employee Central

The steps to configure and used Pay Scale Structure are:

1. Configure and Maintain Pay Scale Objects
2. Configure and Maintain Pay Scale Structure fields on position and employee
3. Configure the Business Rules to assigned the Pay Components Information on employee based on their Pay Scale Level
4. Manage General Increases

STEP 1: Pay Scale Objects

Pay Scale related objects are Generic Object in SuccessFactors using the MDF framework. As all MDF object, they are configurable via Configure Object Definition. In this blog, we will uses screenshots of the standard configuration of these objects but keep in mind that it is possible to add custom fields according the organizational needs.

Pay Scale Structure Relationships

Pay Scale Type:

Pay Scale Type is usually used to define a the type of collective agreement. The field can be used to clearly differentiate between different collective agreements within an organisation.
Example of Pay Scale Type:

For integrating with SAP Payroll: Keep in mind that for the integrations with the SAP payroll, the code for pay scale type should be restricted to 2 alphanumeric characters.

Pay Scale Area:

Pay Scale Area is usually used to define the applicability of the pay scale type by geographical area or by any specified criteria.
Example of Pay Scale Area:

For integrating with SAP Payroll: Keep in mind that for the integrations with the SAP payroll, the code for pay scale area should be restricted to 2 alphanumeric characters.

Pay Scale Group:

Pay Scale Group is linked to a pay scale type and pay scale area and is used to group the pay scale levels of each specific job that follows a pay scale structure in the organization.
Example of Pay Scale Group:

For integrating with SAP Payroll: Keep in mind that for the integrations with the SAP payroll, the code for pay scale group should be restricted to 8 alphanumeric characters.

Pay Scale Level:

Pay Scale Level are multiple “pay steps” attached to pay scale groups that defines for each step the pay component(s) their values for employees being in a level.
Example of Pay Scale Level:

For integrating with SAP: Keep in mind that for the integrations with the SAP payroll, the code for pay scale level should be restricted to 2 alphanumeric characters, preferably a numeric value so that step increase process as well as pay scale reclassification is well supported.

STEP 2: Assigning the Pay Scale Objects to Positions and Employees

Once, the Pay Scale Structure is implemented, it is possible to configure the Pay Scale Structure fields on Position and Employee’s Job Information. Please notes that, in the position object, these field are not standard fields, therefore custom-fields referring to the pay scale generic objects are needed. Here is what it looks like once configured:

Pay Scale Structure on the Position Object

Pay Scale Structure on the employee’s Job Information

STEP 3: Automatic Assignment of Employee’s Pay Component based on Pay Scale

One of the best value in maintaining the company Pay Scale Structure in SuccessFactors is that the user doing the data entry will no longer have to enter the Pay Component information in the system. Using Business Rules, it is possible to create employee’s Pay Component automatically when Hiring or updating an employee’s Pay Scale Level. Here how it works for the end user:

1. Create Pay Scale Assignment on Employee Hire Rule

As in this example, during the new hire process, once getting to the Compensation Information screen, the Pay Component gets pre-filled with the Pay Scale Structures based on the employee’s Job Information Pay Scale Level, no need for data entry:

Check out a business rules example to set this up in the system at the end of the article. This rule should be set on-Init of the Recurring Pay Component section in the Succession Data Model. Note that rule will vary based on the customer’s requirements.

2. Create Pay Scale Assignment on Employee Update Rule

Same thing happens when an employee Pay Scale Level gets changes. There is no need to select Compensation Information during the changes and a business rules will adjust the Pay Component information on-Save. Check out a business rules example to set this up in the system at the end of the article.

Result on Pay Component Information:

STEP 4: Manage General Increases

Managing General Pay Increase using feature – Adjust Employees’ Compensation to Tariff Changes
One great Pay Scales Structure feature in SuccessFactors, is the “Adjust Employees’ Compensation to Tariff Changes” transaction also termed as Manage pay Increases. With this transaction, it is possible to mass change employee’s compensation after a general pay increase.
To see how this works, let’s say, there is a change of a Pay in the new agreement effective as of March 20th 2017 where the employees now makes 25 Euros hourly instead of 20 Euros on a specific pay scale structure. We would insert a record specifying the new amount in the existing Pay Scale Level object effective March 20th 2017:

Then, to update all the employees belonging to this Pay Scale Structure to the new Pay Component Amount, we would run Adjust Employees’ Compensation to Tariff Changes transaction.

This transaction allows you to fetch all the employees that pay components amount should be increased from a specific date. In our example, we would run the Tariff Changes program as of March 15th, 2017. It is possible to build an Employee Group as a filter to limit which employees should be picked up by the Tariff Changes programs and/or limit the changes to employees belonging to a particular Pay Scale Type/Area/Group. In our example, we will select Pay Scale Group G2 as the Pay Scale Level we modified belongs to the G2 Pay Scale Group.

Once, our Tariff Changes run as been set-up, we can run the program in simulation mode or perform the changes using update mode. The system will ask the user to select the event reason to be used and if a log file needs to be generated (log file generation is recommended when running this transaction in order to view all employee changes).

Here how the employee compensation history looks like after running the Tariff Changes program:

Here is an example of the Log file given below:

In order for the Tariff Changes program to work, the following IF statement needs to be added to the Create Pay Scale Assignment on Employee Update rule. (See rule example at the end of article)
This is it for Pay Scale Structure in SuccessFactors. We hope that our blog entry was helpful to the SuccessFactors community in understanding what are Pay Scale Structures and how can we configure them in SuccessFactors.

Stay tune for our future blog entry on how to upgrade Pay Scale Level automatically using Off Event Batch (Also termed as OEB) Cycle rule in SuccessFactors!!

Annexes:

On Hire Rule (On Init of Recurring Pay Component):

On Update of Job Info Rule (on Save of Job Info

Adapting the on Update of Job Info Rule to support general Increase: