Understanding Compensation Cycles

This chapter provides overviews on these topics:

• Compensation Cycles in eCompensation Manager Desktop.

• Salary Plans for Workforce Administration.

• Groups.

• Trees.

• Salary plans in compensation cycles.

• Configurable matrices.

• Variable compensation plans.

• Approval transaction configuration.

• Compensation cycles.

• Security considerations

• Compensation alerts.

• Document and link configuration.

Compensation Cycles in eCompensation Manager Desktop

Compensation Cycle is compensation activity that is established for a specific period of time (for example, the annual merit increase or bonus awards that are typically performed after the employee's annual performance evaluation).

This diagram illustrates, at a high level, the business process flow for implementing Compensation Cycles in eCompensation Manager Desktop:

Here is a brief summary of some of the steps that you may need to complete to set up and implement compensation cycles:

• Define base compensation.

• Define rules.

• Define Variable Compensation plans.

• Define or update trees.

  Note. The Tree Definition is used to further breakdown your eligible population into groups that will be assigned role access (for example, Submitter, Reviewer, Confirmer, and so on) to enter and approve proposals.

• Define eligible compensation groups using PeopleSoft Group Build.

• Define cycle funding.

• Specify the approval and delegation process that will be used.

• Use summary analytics to review the compensation data contained in the cycle.

• Maintain alerts and notifications.

• Make sure ePerformance document types have been defined if the cycle is applying ePerformance integration (optional).

  Note. eCompensation integrates with ePerformance to drive funding based on performance achievements. This integration also enforces proposal guidelines.

• Run the Load Awards and Salary Updates process.

  Note. This process loads award updates back to the PeopleSoft Variable Compensation application and salary updates to the Job and Compensation History records of employees. The system applies the updates and integrates the information with payroll.

See Also

Setting Up Group Definitions

Setting Up Group Security

Updating Salary Information

Salary Plans for Workforce Administration

Salary plans represent individual compensation programs such as merit increases, optional increases, bonuses, or incentive stock options and include specific qualifications and funding.

Before you can use the eCompensation Manager Desktop business process, you need to set up the control tables that support it. You define your salary plans, grades, and steps on a series of control tables. At each level, you define parameters such as review rating scale and currency.

Depending upon how your organization defines its salary structures, you may set up salary increase matrix guidelines on the Salary Increase Matrix Table page. Set up this table only if you use matrix guidelines in your organization to plan salary increases.

Define each salary plan with a unique ID on the Define Salary Plan page. For each salary grade, you may set up salary steps with pay components and their compensation values and currency on the Salary Step Components page. The system uses salary structures to establish default compensation packages. For this reason, you can access the same salary plan setup pages through the Workforce Administration menu.

See Also

Setting Up Salary Plans, Grades, and Steps

Groups

The Group Build feature is the standard way to create groups of people in HRMS. This feature enables you to define specific criteria using various records and fields. For example, you can define group criteria using fields from tables like Job Data, Employment Data, and Compensation.

You could also define a group that includes everyone in departments 10200 through 10500, where the Compensation Rate Code is equal to NAANNL.

Eligible participants for a compensation cycle are primarily determined by the group ID that you specify on the Compensation Cycle Definition page.

The Compensation Cycle Build process calls the Group Build process for the group ID on your Compensation Cycle definition. For each employee returned by the Group Build process, the Compensation Cycle Build process prepares and calculates funding for the Salary and Variable Compensation plans that you have associated to your Compensation Cycle definition.

See Also

Setting Up and Working with Group Definitions

Trees

This section discusses:

• How trees are defined.

• When employees are not associated to trees.

How Trees are Defined

The PeopleSoft Enterprise eCompensation Manager Desktop application is providing a Tree Builder Utility that uses application classes to derive the organizational basis for the tree. To build a tree that is maintained in the Tree Manager application within PeopleTools, these components must be in place:

• An applicable tree structure definition.

  This structure defines the type of content the tree contains and has references to a supporting record, page, and component where that content can be accessed.

• A page and component where the node content can be viewed or maintained.

• A record that can associate the node references (the keys) with the actual content items.

The two primary hierarchies that we recommend are supervisor and position. This requires a new tree structure with new supporting elements. A supervisor-based tree uses the supervisor ID on the Job record to determine who works for whom. The supervisor ID on the Job record captures only a reporting employee ID, but not the full job specification. The system attempts to resolve a manager's multiple jobs using alternate matching criteria.

These rules apply to both supervisor-based trees and position-based trees:

• All employees must belong to the same business unit.

• The employee's department must match the manager's department.

• The manager's department does not have to match the department of their manager.

• An employee can only be on a tree once unless they are a manager.

• A manager can only appear once on a branch.

The system uses a series of programs written to a standard interface to build the various hierarchies and navigational methods that are tied to the trees. Each program encapsulates the fixed supporting elements needed to expand a specific hierarchy's data model into a tree. The selection of a hierarchy method is a setup item on the Tree Builder Run Control page.

Note. The PeopleSoft eCompensation Manager Desktop application can support the use of department trees. However, using department-based trees has some unexpected results that you should be aware of. For example, the manager of a department will also be listed with his or her own direct reports in a department-based tree structure. This causes issues when proposals are submitted and the higher level manager cannot enter proposals for the manager in the submitted node. Although the use of department-based tress is available, it is our recommendation that you use the supervisor or position based trees to administer compensation cycles.

See Building Trees.

The Tree Builder Application Engine then instantiates the applicable class, whose primary function is the building of the tree. Since the indirect hierarchies specified by PeopleSoft HCM data models are not validated or enforced, the Tree Builder makes an attempt to navigate the hierarchy top-down and record the reporting relationships in the tree. Anyone (or any group) who lacks an appropriate relational linkage, or whose linkage is ambiguous, non-resolvable, or inactive, is omitted from the tree.

In this scenario the Tree Builder only provides assistance in turning a hierarchy into a tree. You must manually maintain and validate all subsequent tree maintenance within the PeopleTools Tree Manager application. The tree-building activity, if used, is entirely unrelated to and separate from the compensation cycle.

Note. Trees that have been created using Tree Builder should not be modified in such a way that the Tree Manager's structure is altered. These actions may cause unexpected results during the Cycle Build process. It is our recommendation that you create new trees and attach them to the compensation cycle.

See Also

Creating and Modifying Security Trees

Enterprise PeopleTools PeopleBook: PeopleSoft Tree Manager, Using PeopleSoft Tree Manager

When Employees are Not Associated to Trees

If an employee cannot be associated to any of the tree nodes based on the hierarchical basis value that is set by the user, the employee is placed into a default node called Comp Admin Group. For example there could be employees that have department IDs other than any of those found in the tree.

Because the selection criteria for the Tree Creation process and the Group Build process could be different, there is an implied connection via the hierarchical basis value.

The assumption is that the user is aware of the relationship between the two processes and has made efforts to ensure that they are both compatible. This may not always be the case, however:

• The selection criteria for the population may be too broad and pick up more employees than expected.

• The tree structure that has been defined may not have all of the appropriate nodes that were expected to be included.

• There is bad or incorrect data in either the organization or employee's attributes that causes a mismatch.

• The employee being processed resides at the root node of the tree

The Compensation Cycle Build process highlights these potential data anomalies by creating a special node and labeling it as a Comp Admin Group. This node is positioned so it reports directly to the root node. This enables the compensation administrator associated to the root node to view it as part of their setup and administrative activities.

For example, if the root node represented the president of the company, that person will then have access to update his or her own data. Therefore, the president is assigned to the Comp Admin Group and can be managed directly by the compensation administrator. The compensation administrator will have access to this node and will be able to determine if adjustments need to be made to the tree or if they will personally manage the employees that were placed in this node.

Salary Plans in Compensation Cycles

The compensation cycle in eCompensation Manager Desktop enables you to manage salary increases like annual merit increases and other forms of compensation.

On the Compensation Cycle Definition – Salary page you can define the salary plan parameters that will be used to calculate funding for salary increases. You can specify the funding percent, minimum and maximum percents allowed, and whether the funding amount calculated should be defaulted as the employee's proposed increase. You can also specify rounding and proration rules for your salary plan along with the increase date and action reason combination that the system will use when it applies the salary increase to the employee's Job and Compensation record.

For more complex funding calculations, you can implement a configurable matrix to derive the funding calculation based on factors like the employee's performance rating, salary plan, location, and department.

Configurable Matrices

This section discusses:

• How the configurable matrix is used.

• Matrix Types specific to eCompensation Manager Desktop.

How the Configurable Matrix is Used

A configurable matrix is a special type of lookup table that can be designed and populated by the administrator. The administrator specifies the inputs (or criteria) that are used as lookup variables and the outputs (or results) that the table returns for specific combinations of input values.

The guidelines that control a manager's salary actions are configured to support a wide range of business practices. Both base compensation and variable compensation may require flexibility in their funding, baseline, and validation rules. The configurable matrix is used to achieve this requirement. Within PeopleSoft eCompensation Manager Desktop, the Salary Increase Matrix is used for salary planning purposes.

Matrix Types Specific to eCompensation Manager Desktop

To avoid confusion with existing usage, PeopleSoft created these additional matrix types to support the salary plans associated with compensation cycles:

• BASECOMP - Base Compensation Adjustments

• VARCOMP - Variable Compensation Awards

For example, a Base Compensation Adjustments configurable matrix could have with inputs equal to the business unit source ID and outputs equal to the funding percentage, minimum percentage, and maximum percentage. In this example the output content could equal 4, 1, and 10 respectively.

In addition PeopleSoft has defined several new simple results. The system links the matrices into the cycle process through the eCompensation Cycle Plans setup table, which defines the salary plans included in the cycle. The system uses the matrices primarily during the Cycle Build process. During this process, the system produces the funding calculations.

The matrix is also used for validation of a manger's recommended entries against the minimum and maximum.

The system supports these result types and outputs:

See Also

Variable Compensation Plans

The PeopleSoft Enterprise Human Resources Variable Compensation business process enables you to create and manage multiple variable compensation plans. These plans can encompass everything from onetime ad hoc awards to stock options, bonus plans, non-cash incentives, and holiday gifts or bonuses.

Variable Compensation plans can be simple or complex based upon prorated eligibility, goal levels, funding allocations, smoothing mechanisms, and approval processing.

You have the flexibility to create variable compensation plans that support your organization. To add a Variable Compensation plan, you must define a salary plan before you define your compensation cycle. The new Compensation Cycle functionality has not changed the configuration of Variable Compensations plans.

Using compensation cycles to adjust employee salaries can help you effectively manage your compensation information, adjusting employee salaries as changes are processed. Compensation cycles also involve other variable compensation awards.

On the Compensation Cycle Definition - Awards page you can associate a Variable Compensation plan to your Compensation Cycle definition. The system provides complete configuration and award calculations for PeopleSoft Variable Compensation.

See Also

Setting Up Variable Compensation Plans

Entering General Cycle Definition Parameters Entering Salary Calculation Information Entering Award Information Configuring the Manager Self-Service Page Administer the Cycle Process Flow

Approval Transaction Configuration

This section discusses:

• Approval transactions.

• Route for approval events.

• Email templates.

Note. You can configure approval transactions, events, email templates, and registry using the Approval Workflow Engine (AWE) components and pages. If you use the AWE framework for approvals for the compensation cycle you must configure it for each cycle. Approval transactions, approval events, and email templates are configured at the cycle level and do not apply to all compensation cycles. The setup and configuration of AWE is not required, however. eCompensation Desktop Manager works as designed by providing a rollup submission of nodes that implement a form of implied approval. This rollup follows the access roles as they are defined in the system.

See Also

Setting Up and Working with Approvals

Approval Transactions

eCompensation Manager Desktop uses the Configure Transactions component to select and define elements that determine what triggers a notification, who receives the notification, and the content of the notification. Notifications are mapped to work with the approval transaction registry and include menus and components and SQL definitions.

The events for which the system sends notifications include:

• Launch of the approval process on a transaction.

• Queue of approval step to an approver.

• Queue of a review step to a reviewer.

• Completion of the approval process.

Note. The launch of the approval process occurs when the compensation proposal for a group is submitted by a user when they click the Submit button.

Route for Approval Events

When the approval process is initiated, after submitting the compensation information for the cycle, the system evaluates the next step in the approval process. To route it to the next approver in line, you need to instantiate the Route for Approval event (select Set Up HRMS, Common Definitions, Approvals, Approvals Setup Center, Configure Transactions).

Among the tasks that are completed internally with this event, some notifications need to be sent to the next approver in line to indicate that a request is waiting for approval.

PeopleSoft eCompensation Manager Desktop delivers a process ID (ApproveCompensationProposals), definition IDs, and email templates as part of the setup for Route for Approval.

Here is the Configure Transactions page that you would use to route approvals to requesters, approvers, and reviewers.

See Configuring Approval Transactions.

Email Templates

Clicking the Submit button from the Manager Self-Service - Manage Cycle Transactions page launches the Approval Workflow Engine (AWE) and initiates the approval process. Workflow tables track who initiated the request and who is the next approver. The system also submits the compensation information for approval and triggers the respective email notifications that were setup in AWE.

Clicking the Submit button also sets the status of the cycle to Submitted. After a transaction has been submitted, a user cannot edit the transaction. An event can be resubmitted only if the approver denies the transaction or after the next approver in line has clicked the Push Back button to send it back to the requestor or originator.

If you setup the notification process within AWE, the original submitter receives an email notification. Recipients of notifications include requesters, approvers, and reviewers. These users can receive their notifications through either worklist entries or by email notification. The PeopleSoft Enterprise eCompensation Desktop Manager application provides several templates for specific AWE events that you can modify for your own specific use. To modify email templates select Set Up HRMS, Common Definitions, Approvals, Approvals Setup Center, Generic Templates.

Here is the suggested text for the email template:

Note. AWE automatically creates the URL when the system sends the notification.

Here is an example of the Generic Template Definition page that you can use on the Configure Transaction page to route approvals to requesters, approvers, and reviewers:

Note. The eCompensation Manager Desktop application delivers the Compensation Pending Approval template (WCS_APPR_APPROVAL_REQ).

See Defining Notification Templates for Approvals.

Compensation Cycles

A compensation cycle defines the compensation activity and associated time period. The cycle ID and funding period are used as key fields throughout the process to identify unique cycles.

This section discusses:

• Administering the Compensation process.

• Cycle statuses.

• Group statuses.

• Proposal statuses.

Administering the Compensation Process

The administrative functions within eCompensation Manager Desktop's enable you to establish plans, define processes, and manage the compensation process for your organization. These functions encompass the activities that a compensation administrator would need to complete to configure the self-service component that managers use to review and enter compensation information.

Compensation administrators use these functions to configure the eCompensation Manager Desktop application:

• Compensation Cycle Definition

  Use the pages within this component to define your compensation cycles and associated provisions for both salary and award processing. Here are the types of parameters that comprise a compensation cycle definition:

  • What group of employees will be processed?

  • What tree hierarchy will be used to group employees for processing and approvals?

  • Will performance ratings be integrated into the Compensation Cycle process?

  • What Salary Plan rules will be used to calculating funding and process salary increases?

    – Will a configurable matrix be used to derive the funding percentage?

    – What rounding rules will be in effect?

    – What proration rules will be in effect?

  • What Variable Compensation rules will be used for calculating funding and processing bonuses and awards?

    – Will funding be defaulted from Variable Compensation or manually funded?

    – What rounding rules will be in effect?

  • What specific fields of information need to be displayed on the Manager Self-Service pages?

  • What type of approval process will be used?

• Cycle Administration

  Use the pages within this component to manage the major events during a compensation cycle. This component provides the event steps and prompts for the activities that need to be completed throughout the compensation cycle. You can also use this component to build your compensation cycles to prepare employees and calculate funding, open cycles to managers to enter proposals, load approved salary updates and awards, finalize compensation cycles, or cancel cycles to adjust the configuration and rebuild the cycles.

• Cycle Role Management

  The pages within this component enable the compensation administrator and designated administrators to update group node role access for the organization tree hierarchy defined for your compensation cycle. For each group node, an employee ID and employee record number can be assigned a specific access role (Submitter, Reviewer, Confirmer, and so on) that provides access to view, update, and approve salary and award proposals.

• Plan Funding

  Use the pages within these components to provide a summary of all cycle funding within each organizational group. Through this functionality you can view and update funding based on the provisions of the cycle definition and the processing status within the cycle. You can also manually distribute funding.

• Transaction Management

  Use the pages within this component to detail the calculated compensation proposals for organizational groups and funding basis. Compensation administrators may update proposals at either the group or individual level at any time after the cycle has been released for manager entry. This component also features group and individual view capabilities. At the individual level users can view compensation history.

Cycle Statuses

The Cycle Status is used by the compensation administrator to evaluate where the cycle stands at any time during the process. This status is directly linked to the Compensation Administration component that is used to move the cycle through various steps and processes. This display fields communicate the status of the cycle and the person responsible for setting that status in motion.

During cycle definition (and prior to running the Cycle Build process) the status of the cycle equals Defined. The As of date and Last Processed By fields represent the last edit date and operator ID. As each activity is completed, the system updates the status accordingly.

Group Statuses

The Group Status is used to identify where each group (or reporting node) is within the compensation cycle. This is the primary status indicator used during manager self-service to track compensation proposals.

Proposal Statuses

The Proposal Status code is used to indicate whether the approved updates and awards have been loaded successfully for an individual within one or more of the plans with a Ready to Load group status. The system only updates the status from the Pending status following the Load Salary Updates and Awards process.

Security Considerations

Access to the Manager Self-Service component is controlled through standard PeopleSoft security. The system uses PeopleCode to determine whether the current user has the credentials to access the component. This is necessary because URLs can be distributed, copied and modified to invoke the component directly, even though no direct portal access exists.

Access to a specific compensation cycle is dependent upon the cycle status together with information residing in the Cycle Role Access table. The Cycle Role Access table retains role access security to a specific group node in your organizational tree hierarchy. Depending upon the role access, the user may have the proper credentials to review, update, or approve proposals.

This table outlines the criteria the system uses to provide access to the pages within the Manager Self-Service component.

Compensation Alerts

eCompensation Desktop Manager alerts are limited to compensation events that are specifically related to the Compensation Cycle business process. There are three primary areas where changes are of interest to managers who need to make and submit proposals:

• Changes to the compensation cycle status that determine the state of the entire business process.

• Changes to the manager's group status that describe the point of completion in the compensation cycle.

• Changes to the access roles that identify the role or responsibility of the individual manager within the business process.

Compensation alert messages are generated by compensation administrators, senior managers, line managers, and compensation processes after certain activities are performed. An alert is simply a message logged during the process, which can be viewed and acted upon by a participant when a manager accesses the Allocate Compensation page.

The system displays an alert entry with basic information such as a task name, a task description, or other instructional text. It can also include an attachment.

The Enterprise Component's Event Framework provides the content the actual message that is displayed to the user. In this common publish-subscribe scenario, the event is the published message, which indicates that something of interest occurred. This is important as an event may have many subscribers and many recipients. The subscription process is contained within the management (creation, update and deletion) of the compensation alert messages.

Note. The system does not deliver direct manager component access through the portal navigation tree outside of the manager's home page.

Document and Link Configuration

The HCM Attachment Framework is a flexible and user-friendly component for integrating document and link management for specific application areas. Using the pages included in the Attachments component, you can make documents or links context-sensitive and provide security based on standard PeopleSoft roles, permissions, and data values in HCM.

Here is how the system displays the Attachments group box to users in Manager Self Service:

Because the implementation of the Attachment Framework depends on a predefined set of keys, PeopleSoft has delivered system data that specifies the key structure for Compensation Alert documents. On the Configure Keys page the HWCS object owner ID and ALRT sub ID define the application that has been implemented for use.

Note. eCompensation Desktop Manager has not implemented the ability for users to add or update existing documents. All documents must be defined and loaded by the compensation administrator using the Attachment pages. Therefore, stored attachment documents are displayed as read-only to the user.

Located in the Attachments folder, the Define Attachments page (select Set Up HRMS, Common Definitions, Attachments) allows you to specify a configuration for each document or link. To simplify this concept, think of a configuration as the system's identifier for a defined document target. The term attachment includes both documents and links. The term configuration refers to many types of files, including Word documents, Excel spreadsheets, PDF files, or links to internal or external websites. The configuration provides the details regarding the intended target including a complete definition, a status, and the type or form of attachment. More importantly, it stores the actual document or link and the PeopleSoft roles that are allowed access to it.

On the Define Attachments page, PeopleSoft recommends that you use the same ID to set up both the attachment configuration and the compensation cycle ID. Although this is not required, it is beneficial to use the compensation cycle ID as the key identifier for the attachment. For example, if you have an annual merit cycle called 2009 Focal, a configuration ID of 2009 FOCAL allows you to quickly identify the attachment that is associated to that particular compensation cycle. This can be helpful if you are administering many compensation cycles that need their own attachments. In addition, the effective date enables you to create multiple versions of the same document over time for the same configuration.

To attach a document or URL to an alert, select Set Up HRMS, Common Definitions, Attachments, Define Attachments. On the Define Attachments page select WCS_ALERT as the configuration ID. You can then change the instructional text, or add an attachment and URL. In addition you can select the roles to which the system will display the alert and attachment or URL.

Here is an example of the Define Attachments page for compensation instructions using the WCS_ALERT configuration ID:

The Maintain Definitions page enables you to set up context-sensitivity for each attachment configuration. It is the combination of two key values – Compensation Cycle ID and Event Code – that enable you to define the scope of the document's availability to the end user. You can set up the context keys in any combination, including a blank value that means any. The key values prompt against the Compensation Cycle Configuration and Compensation Alert Setup tables for selection. The system performs no specific validation as the combination of the two keys (including the effective date) will typically result in a found attachment.

Note. At a minimum, the event code should be specified; otherwise all alerts (regardless of event code) could potentially retrieve the same attachment configuration. The system attempts to locate and retrieve the configuration for an attachment when a user attempts to access the Allocate Compensation page (select Manager Self Service, Compensation and Stock, Allocate Compensation). If the system finds a valid attachment, it displays the Info column and a link in the form of an icon. Conversely, if the system does not locate a attachment for any of the alert messages listed in the grid, it hides the column. When the user clicks the Info icon, the system opens a new browser window and displays the associated document.

See Also

Configuring Attachments