SAP SuccessFactors Compensation Introduction & Overview – Part 1
Hello Compensation Experts,
Now, let’s continue with details related to this topic.
Note – Screenshots are subject to change.
A solution called SAP SuccessFactors Compensation was created to make manager compensation planning more uniform. Compensation professionals should rest easy knowing that rewards are not only appropriately calculated to help retain high performance, but also calculated correctly.
It is a system for pay and long-term incentive (stock) planning that uses templates and offers the following advantages:
- Reduce manager bias
- Improve understanding with metrics
- Boost compliance with regulations and budgets Ensure data integrity
Both internal and external HRIS systems can supply the employee information used in SAP SuccessFactors Compensation. Employee data are immediately linked to Compensation when Employee Central is utilised as the HRIS. Employee data for external HRIS can be manually uploaded in CSV format, sent over sftp, or obtained via an API. If using a flat file technique or another integration, your professional services consultant will either help with the field mapping for EC-Integrated customers or give thorough integration requirements.
To successfully integrate work performance with compensation awards, the SAP SuccessFactors Compensation solution can be used in conjunction with performance management. Planners can easily access performance data when deciding how much to pay employees.
It is possible to establish automated merit increases based on formulas for calculating guidelines such job level, pay grade, performance rating, compa-ratio, and range penetration. Additionally, you can automate lump sum payments and merit rollovers when they are due.
The Compensation Cycle and Forms
Using forms, SAP SuccessFactors Compensation operates. A compensation plan template is made for each pay period. All the components required for compensation planning are included in the template, including functional currency, exchange rates, benchmarks, rating sources, eligibility requirements, policies, and budgets.
A name is provided to the template that makes it easy to recognise it. Using “20xx Compensation Plan” as an example, you may name a template. The compensation planning forms are then produced using this template.
When a form is submitted, the person in charge of organising the compensation for that particular group of persons receives it. Only for that group, the form includes links to employee profiles or Employee Central data and information on compensation. The person in charge of planning is honoured by having their name on the form. The “20xx Compensation Plan for Carla Grant (cgrant)” example.
The Compensation Cycle and Forms
With each new compensation cycle, a new template must be made in order to ensure data integrity. This template in SAP SuccessFactors can be copied from an earlier template. Cloning streamlines the process while maintaining all previous configuration choices. It can also be necessary to copy and modify other supporting materials including salary ranges, lookup tables, and currency conversion rates.
Upon completion, a compensation form is accepted in accordance with a procedure that has been set up in the system through the route map.
Role-based permissions allow you to control access to applications in the SAP SuccessFactors suite via permission groups and permission roles. Roles define what is allowed; the groups define who is allowed to do it (granted users) and for whom (target users).
Depending on the relevant population and administrative requirements, granular permissions can be granted. The majority of permissions can also be restricted based on the target population, allowing for distributed process administration.
The Interface for Compensation Planning
The interface provides quickly accessible connections to more in-depth information and presents the data that you, the client, have determined is most pertinent to the planner. A manager’s team members are listed on an individual compensation planning form together with additional data, such as performance, pay, merit raise guidelines, and budget data (information you think important for managers to make recommendations for their team members).
The system will compute the overall compensation package and the remaining budget allocation when the planner chooses individual compensation awards.
Planners have the option to add notes and turn on a promotion, if your setting permits it. Additional configuration options, depending on your company process, include needing notes, carrying out promotions, requiring managers to stay within budget or within standards, and modifying the majority of column labels and form text.
The upper-left area of the worksheet for compensation planning has links.
There are links for Summary and/or Reports in several settings.
Additional worksheets from your settings, such as Stock or SAP SuccessFactors Variable Pay, will also be shown here.
These links’ names can be changed.
Salary: For the majority of implementations, this worksheet is the default. The Salary sheet shows details about an employee’s present pay, performance rating, and several other fields of data that have been set up by your company.
This sheet’s primary objective is to give managers the knowledge they need to make educated judgements about merit, adjustments, lump sums, and other matters.
Stock: The Stock worksheet is designed for companies whose compensation plans include long-term incentives.
When stock planning is done in units rather than currency amounts, the Stock tab is often the only one that is used. For instance, 200 RSUs as opposed to 20,000 USD.
Additionally, there are tabs for the budget, metrics, and route map views in addition to using instructions for the spreadsheet. You can select the currency that will be shown on the worksheet using the Functional Currency drop-down option.
Structure of Compensation Planning
The compensation planner has the key role and responsibility for recommending compensation changes for employees.
SAP SuccessFactors has three different methods for designating the role of compensation planning:
Decision Points for HR / Business Administrators
- Standard Suite Hierarchy
- Rollup Hierarchy
- Compensation Hierarchy
1.Standard Suite Hierarchy
Every employee who has direct reports is designated by Standard Suite Hierarchy as the person who plans the salary for those they supervise.
This method is the simplest of the three methods as it requires no additional work. This system is not open to alterations of the manager/planner if there are special scenarios, except for one off manual interventions by an administrator.
Not every manager in this scenario works as a pay planner. Planning may be rolled up to the manager at the next level. The designation can be made using either the import file or the administrator interface. In their structure, planners have responsibility for lower-level tasks. This technique makes it simple to assign planners and can lower the complexity and quantity of forms used. Its drawbacks include the need for clear communication and the fact that managers are not automatically designated as pay planners.
In the Compensation Hierarchy, the hierarchy for compensation planning is created and can be 100% customized.
Employees are assigned to be designated compensation planners who may or may not be direct or indirect supervisors in the standard managerial hierarchy. This method provides the greatest degree of flexibility in assigning compensation managers.
The Compensation Hierarchy is most often used for organizations that want the hierarchy to remain frozen during planning or those where not all employees with direct reports conduct compensation planning.
Note:- The use of the Compensation Hierarchy has a disadvantage that it requires different maintenance from the regular Manager Hierarchy.
In Part 2, I’ll introduce About
- The Components introduction
- Employee Specific Data (UDF)
- Plan Specific Data(Currency Conversion / Pay Matrix)
- Proration with types / options
- Benchmarks for Salary (Compa-ratio / Range Penetration)
- The Rote Map Process
- Executive Review
- Approvals Based on Hierarchy