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FTE and Proration examples in Compensation

FTE

The FTE (Full Time Equivalent) is the quotient of an employee’s scheduled hours divided by the hours for a full-time workweek.

What is the reason for the FTE ? For employees who do not work full-time if their full time annual salary is stored (as per the leading practice in terms of Data Migration to Employee Central’s Comp Info portlet) then NOT adjusting it by the FTE could cause erroneous calculations with regards to range position / compa-ratio. The result could be a incorrect guideline recommendation.

In SuccessFactors the FTE is a standard field built in the Job Info portlet of Employee Central (EC) and used in the standard calculation of the standard Compa Ratio and Range Penetration fields (unfortunately there is no way to remove it from that standard calculation – a custom field would need to be created in the Comp Info portlet for that purpose and the details of the calculation as visible in the screenshot below would not show anymore).

Here are some examples from the Compensation Information portlet of Employee Central :

 

Compensation worksheets can be aligned with Employee Central’s behavior through the addition of the standard field FTE below :

Once added the FTE value will impact both the Pay Range display and the Compa Ratio calculation on the Compensation worksheets just like in EC (the only difference being that in EC the ranges aren’t already impacted by the FTE like on the comp worksheet, instead the detail of the calculation [Pay Range midpoint * FTE] is visible – please see screenshots above).

  • Before :

  • After :

If we don’t want the display of Pay Ranges and Compa Ratio to be impacted by the FTE but would like to get to a similar outcome in terms of salary increase for the employee we can keep the FTE standard field in Design Worksheet and add the following XML tag (not available through Admin UI, only through XML change) :

  • isActualSalaryImported=”false”

In that case only the Current Salary of the employee gets adjusted by the FTE. But since the Current Salary is adjusted the Recommendation amounts shrink as a consequence.

 

 

PRORATION

Proration is a feature only available in Compensation templates that adjusts Guidelines, Recommendations and Budgets based on the time the employee spent in the company during the Fiscal Year considered for planning.

There are 2 ways to set up Proration in a Compensation template :

  • By Percentage : from a field in EC or an MDF object (field of type String) mapped to the standard Proration field in Design Worksheet.
  • By Dates : dates can be defined in the compensation template settings as per the screenshot below. The worksheet will compare the Hire Date or any other date from EC feeding the Hire Date standard field from Design Worksheet against the Proration settings dates entered by Comp Admin and from there will calculate a percentage and populate it into the standard Proration field in Design worksheet.

How to determine which one to use ? It really depends on whether the Employee Central configuration already has a field that captures Proration as a percentage or not. If not, then using dates may be easier as Date of Last Hire is usually an information that is captured in Employee Central. However Proration setup using dates does not support cases where the employee starts and stops work multiple times in the same compensation period (it only compares one date against a range of dates to return a percentage). In that scenario, it would be best to calculate the proration outside the system and import the calculated percent.

Do most customers use Proration ? No. In my own experience and the experience of my colleague who consolidated the knowledge for this post most customers prefer to fully exclude employees who were hired or rehired past a certain date instead of using proration for them.

Percentages in the Proration field can be higher than 100% only if the following tag in the XML of the template (currently not supported through Admin UI) is set to True :

  • canExceedReviewPeriod=”true”.

 

Budgets are not automatically Prorated unless a specific setting is selected in the Budget settings :

 

Here is an example of Proration in a Compensation worksheet :

 

  • Before :

  • After 

 

 

Raise Prorating

If we don’t want guidelines and recommendations to be automatically adjusted but would like to get to a similar outcome in terms of salary increase we can use the Raise Prorating feature which only impacts the Total Increase standard field as per the explanations and example below.

To use Raise Prorating, we need to remove the standard Prorating fields and instead add the Total Raise Prorating standard fields below. Raise Prorating cannot be applied to Budgets like standard Prorating can and will need to be manually added to the formula of each Budget envelope.

 

 

 

As a conclusion one important thing to focus on when implementing these two features is to carefully look at all the custom formulas where these two FTE and Proration standard fields should be added as a multiplier to keep an overall consistency in the design of the worksheet. This is particularly true for budgets envelopes or spent formula.

Thank you and please comment if you have come across additional cases on these topics.

Credits go to Skip Jones (SAP) for consolidating the knowledge that helped in creating this post.

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