Define compensation process and calculate results


We will not be accepting edits to this topic, because it is generated from a business process in Lifecycle Services.

Compensation processes are used to determine new compensation amounts and awards for employees enrolled in fixed and variable compensation plans. Compensation processes can be run multiple times to perform "what-if" analysis, to verify all changes and settings are correct. This procedure will create a compensation process, run the process, and view the results. The demo data company used to create this procedure is USMF.

Create a compensation process

  1. Go to Human resources > Compensation > Process > Compensation processes.
  2. Click New.
  3. In the Process field, type a value.
  4. In the Description field, type a value.
  5. In the Process type field, select an option.
    • A cycle specifies the time period evaluated to determine compensation. The evaluation considers which positions were held by employees, which performance ratings to include, calculation of the percentage of time the employee was employed during the cycle, and more. An example of a cycle start date might be the first day of the past fiscal year.
  6. In the Cycle start field, enter a date.
    • The cycle end date is important because it is the date used to determine which employees were actively employed and enrolled in one or more compensation plans.
  7. In the Cycle end field, enter a date.
    • The transaction active date is the date the new compensation rates should take effect. Many companies include a few months between their end of a cycle and the time the new compensation rates go into effect. The additional time is used for processing and reviewing the new compensation.
  8. In the Transaction active date field, enter a date.
    • The point-in-time date is used for variable compensation plans that determine an employee's award amount based on their compensation rate at this point in time.
    • The fixed pay pro rated hire date is used with fixed compensation plans with a hire rule of Percent. Employees who are hired between the cycle start and the fixed pay pro rated hire date will receive 100% of their calculated compensation increase, instead of pro-rated percentage.
  9. In the Fixed pay pro rated hire date field, enter a date.
    • The review deadline is the date by which all process results should be reviewed so that they can be loaded into an employee's compensation record before the transaction active date. This field is informational only.
  10. In the Review deadline field, enter a date.
  11. Click Save.

Setup the compensation plans and actions for a compensation process

  1. Click Setup.
    • The Setup page is used to select which plans to process as part of this compensation process, as well as which actions should be taken against each plan.
  2. In the Plan field, enter or select a value.
  3. Click Save.
  4. Click Add.
  5. In the Action field, select an Equity type of action.
  6. Click Add.
  7. In the Action field, select a Merit type of action.
    • Compensation actions can be "chained" together using the Use previous result field to indicate whether the selected action should use the employees base pay or the result of the previous action as the starting point for this action's calculation.
  8. Select Yes in the Use previous result field.
  9. Click Add.
  10. In the Action field, select a General type of Action.
    • Different compensation action types enable different fields. For a General compensation action type, an increase percent or increase amount can be specified.
  11. Select the Select increase amount option.
  12. In the Increase amount field, enter a number.
  13. Click Add.
  14. In the Action field, select a Promotion type of Action.
    • Promotion and Other level change action types enable users to make manual adjustments to employee compensation. Recommendations can be enabled for these action types, as well as other action types to enable you to enter a new recommended compensation value for an employee.
  15. Click Add.
  16. In the Type field, select an option.
    • Fixed and variable compensation plans can be run in the same compensation process.
  17. In the Plan field, enter or select a value.
    • Use the Enable pay for performance check box to determine whether fixed and variable compensation amounts should be adjusted based on the employee's performance rating.
    • Leverage can be overridden on variable compensation plans.
  18. Click Save.
  19. Click Add.
  20. Close the page.

Run the compensation process

  1. Click Run process.
    • The Show processing results control lets you view processing messages for the complete compensation process when processing has finished.
  2. Select Yes in the Show processing results field.
  3. Click OK.

View the results

  1. Click Process results.
  2. Click Employee results.
  3. In the list, find and select the desired record.
  4. Expand the Fixed compensation section.
    • Expand the FastTabs to view the results of the process. If Enable recommendations was marked for a compensation action, the Recommendation fields will be enabled for that action.
  5. In the list, find and select the desired record.
    • The results for a single employee can be viewed by clicking the View results button.
    • You can overwrite the calculated compensation amount by adjusting the percent or the increase amount in the Recommendation fields.
  6. In the percent recommended field, enter a number.
  7. In the list, find and select the desired record.
  8. In the percent recommended field, enter a number.
    • Recalculate can be used to ignore any changes made to the existing record and generate a new compensation result for the selected employee.
    • When all changes are complete for an employee, change the status to Approved.
  9. Click Change status.
  10. Click Approved.
    • After the record has been approved it can be loaded to the employee's official compensation record. The new compensation will be effective as of the transaction date set on the compensation process.