Integration & Design of different salary structures in one global compensation template
In this blog, I would like to give an overview of the implementation design principle (IDP) which was released to help customers with the design & integration of different salary structures in one global compensation template.
SAP SuccessFactors Compensation is a global solution which supports companies in streamlining and standardizing their annual merit cycle process. However, in a company which operates around the globe, different industry and country-specific regulations around employee compensation needs to be considered. This becomes a challenge when companies want to implement a global, harmonized compensation planning process in one template. Nevertheless, companies aim to have one global compensation template showing all subordinates to their compensation planners in an easy way. The compensation planning process should not focus on the complex salary structures underneath but support the compensation planner in decision making. This means that the set up and analysis of the pay components in Employee Central should be a focus topic during a compensation implementation.
The standard logic in SuccessFactors Compensation is that a single pay component is increased for all employees on the worksheet (e.g. a global base pay component). This amount is then published back to Employee Central. All other pay components will remain unchanged in the salary review process. However, as discussed in the introduction, this is not a common scenario. In this IDP, we discuss two common variants for salary structures:
- Variant 1: Base Salary is increased in the salary review process having percentage-based allowances assigned as well as amount-based allowances (“static amounts”). This scenario is common for non-tariff employees. Please find a graphical overview:
- Variant 2: Allowances are increased in the salary review process having percentage-based or amount-based allowances assigned. This scenario is common for tariff-employees (base salary is “static” and cannot be increased) whose employers want to grant a performance supplement. Please find a graphical overview:
All of the above pay components result in the total compensation of the employee and are handled as the basis amount for the compensation planner in the compensation cycle.
The solution presented in this document explains how different components of the various salary structures can be categorized into specific pay component groups and integrated with a compensation worksheet capable of handling different salary structures using a unified approach. Furthermore, it is specified how to handle different payout frequencies (e.g. monthly, bi-weekly) and explained how to handle hourly paid employees.
Please read the detailed design principle document to get further insights into the set up of pay component groups in Employee Central and the required configuration in Compensation. You can access it in the Community here, or in the Partner Edge Portal here.