Compensation Planning | Business Context

Introduction 

Compensation Planning, also known as Merit Planning, Salary Planning, or Bonus Planning enables HR to set up a recurring process for salary and bonus reviews so managers can propose salary increases and bonuses for their direct reports. Recurrence is typically annual. You can also use Compensation Planning to plan and execute ad hoc, one off remuneration events.

The Compensation Plan can be dedicated to salary planning, bonus planning, or can combine both salary and bonus planning in one plan.  Initial setup includes creating formulas for projected values and to identify those team members who are eligible for awards or to be excluded.  Manual override of all formula results is supported. 

Each plan is distributed to managers through the WX self-service portal, with each manager able to see just those team members reporting to them. Managers are designated as planners, able to modify suggested salary increase or bonus amounts by value or percentage. Percentages can be specified to 2 decimal places. Requested amounts exceeding suggested amounts are highlighted in red. Requested amounts within range of suggested amounts are highlighted in green. 

All elements of the plan can be reused in the future. All formulas, dates, and other time dependent values must be reviewed and tested before reuse for accuracy and compliance with changing requirements.

Features 

• You can define multiple plans for comparison; for example, to compare the impact of plans with different eligibility or exclusion formulas or different effective dates.

• Suggested values can be defined by plan administrators.

• Formulas can be created to define eligible and excluded Team Members.

• Multiple formulas can be used to define eligibility, exclusion, and projections, with one of each selected for each plan.

• Managers can approve values suggested by administrators or suggest their own values.

• Managers must input either a new value or the suggested value, for added security of review.

• Planners have control over their own views of the Plan, including field selection, column displays, field filtering for specific fields, and pin columns.

• A Top Planner can be chosen, and is not constrained to the CEO.

 

Assumptions 

• Your organization has a process in place to handle exceptions to the Plan outside the system.

• If performance review values contribute to plan formulas, performance reviews must be completed before starting the plan. 

• Recommended bonus amounts are based on percentage of salary rather than an amount.  During the planning process, managers can propose amount values as well as percentages. 

• Salary planning is in the team member's local currency and payment frequency; amounts are not automatically annualized. Values for team members paid in different currencies and pay frequencies are displayed in local currencies and with actual pay frequencies such as hourly, weekly, or monthly.

• Current salary records must be populated for all team members to avoid errors returned by the system data check.

• Managers who are expected to be planners must have direct reports.

How customers use Compensation Planning 

Individual managers - planners - are responsible for completing and submitting plans for their direct reports. These are known as child plans. Child plans are aggregated and submitted to the top planner, who is responsible for approving the overall plan for the organization.

HR Administrators are responsible for setting up and determining plan parameters, including:

• Eligibility.

• The amount to be distributed.

• How it is to be distributed throughout the organization.

• When the payments resulting from the plan are to be effective.

When the plan is setup:

• Child plans are made available to the Managers in WX.

• Managers complete and submit their plans.

• Plans are reviewed and approved.

• On the effective date new salary and bonus records are created for Team Members who met all criteria.

Compensation Planning in WX

When the Compensation Plan has been setup in the HR Portal, the planning is done in the WX self-service portal by managers:

1. List View of the Compensation Plans assigned and available to the manager:

   

2. Select a plan to display plan detail:

   

3. A manager with direct reports who are also planners can drill down to view their direct reports' child plans:

   

4. When a plan is in progress any changes are displayed dynamically. Green and red highlights identify entries within (green) or above (red) suggested values:

   

5. The Details section of the plan also changes dynamically to identify the difference between requested and suggested amounts:

   

When complete, the manager submits the plan and the status is updated in the WX list view.

Key terms 

Plan status

• Draft

  The plan is being setup by HR.

• Processing

  Data integrity checks are in progress.

• In Progress

  Deployed to planners for review and completion.

• Submitted

  Planners have completed their changes and sent the plan to their parent planner.

• Approved

  The top planner has approved the complete plan.

• Partially Committed

  Conflicts identified for Team Members with future dated HR Requests.

• Committed

  Approved and changes committed to new records.

Formulas

• Projection

  Calculates how a budgeted amount is to be distributed. You can define multiple projection formulas and decide which one to use for each Compensation Plan. Each formula is set up as a number or currency formula field on the Employment Record.

• Eligibility

  Filters team members who are eligible for a compensation award from all team Members in an organization. The formula is set up as a checkbox formula field on the Employment Record and returns either a True or False value. Anyone who renders a True value is eligible for an award.

• Exclusion

  Filters out team members to be excluded from a compensation plan. The formula is set up as a checkbox formula field on the Employment Record and returns either a True or False value. Anyone who renders a True value is not eligible for an award.

Plan dates

• Effective date

  When a compensation award takes effect. Compensation Planning enables an Effective Date to be set for all Team Members in a Plan entitled to an award with a single setting. The plan can also be set up to allow Planners to amend the date for individual Team Members.

• Effective Date Planner

  Enables planners to override the effective date for individual team members. Must be enabled for display when setting up the plan.

Values and percentages

• Suggested percentage

  The percentage value of an amount expressed as a percentage of a current amount. Derived from a Projection Formula used to distribute a budgeted amount between eligible employees.

  Suggested percentage is: ((Suggested value - Current value)/Current value) x 100

  Suggested percentages are displayed in the Suggested Salary % and Suggested Bonus % fields on a Compensation Plan.

• Requested percentage

  The percentage value of an amount expressed as a percentage of a current amount. Entered by a planner when the suggested percentage is considered inadequate or over generous.

  Requested percentage is: ((Requested value - Current value)/Current value) x 100

  Requested percentages are displayed in the Requested Salary % and Requested Bonus % fields on a Compensation Plan.

• Suggested value

  A currency value derived from a Projection Formula used to distribute a budgeted amount between eligible employees. Suggested values are displayed in the Suggested Salary and Suggested Bonus fields on a Compensation Plan.

• Requested value

  A currency value entered by a planner when the suggested value is considered inadequate or over generous. You can enter Requested values in the Requested Salary and Requested Bonus fields on a Compensation Plan.

Customer planning

Compensation Planning requires some planning before configuration:

• Have you reviewed your data to be sure everything is accurate?

• Who will be responsible for setting up the plans?

• Who will be eligible or excluded from the plans?

• How is the suggested increase for a salary or an award going to be calculated?

• What are the date ranges for the planning process?

• When is the plan to take effect?

Maintenance

• Upgrade to the latest version of Sage People HCM and Compensation Planning to take advantage of the most recent features and functionality.

• Refresh your Sandbox to bring current data from the production environment to the Sandbox, enabling you to create and test plans using up to date information. 

Compensation Planning is typically completed once a year. Revisit Key Terms used during the process and the steps of the process, as given in the full guide to Compensation Planning.

Revisit the formulas driving team member inclusion, exclusion, and the calculation of suggested values for the plan. Sage People recommends creating new formulas for each planning cycle, enabling you to retain historical formulas for review and analysis, including use of techniques and syntax.   In addition, unimplemented historical plans in draft or those used for testing may use formulas in an original state; revising the formulas may impact your ability to delete or archive those plans.

Review Customer planning and Assumptions sections for help when defining formulas.

To request a sandbox refresh or for more help with Compensation Planning, reach out to your Customer Success Manager.