Sap Compensation Management

SAP ERP 6.0EnterpriseCompensationManagement

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ECM Content Overview

The mySAP HR Enterprise Compensation Management (ECM) modulesupports companies in defining, streamlining, and putting intopractice a strategic performance-based compensation programthroughout the enterprise. The system offers the following maincomponents to a complete compensation management solution:

Compensation AdministrationPerform compensation reviews including fixed pay, variable pay, and LTIs. Applyeligibility rules and guidelines based on different criteria such as performanceratings. Implement approval cycles if required feedback, and compensationadministration.Long-Term IncentivesAdminister LTI processes such as granting, vesting, life events, and taxation.BudgetingCreate and maintain monetary and non-monetary budgets for the compensationplanning and LTI granting process.Job PricingExport employee salary data for participation in salary surveys. Import salarysurvey data and create market composite results. Age and weight market data,compare internal and external pay and adjust company pay structure if required.

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Compensation Administration

Compensation programs, plans and reviews

Unlimited number of plans supporting fixed, variable pay and stock options

Complex business rules, time dependencies supported

Eligibility

Defined at compensation program and plan level

Multiple employee, organizational and performance review attributes

Guidelines and proration

Proration rules for compensation plans proportional to employee’s eligibility

Multi-dimensional matrix, e.g. service, performance, compa-ratio

Flexible data maintenance

Exception handling supported

Salary changes tracked on payroll records (reason code on IT0008)

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Compensation Administration II

Compensation planning tool for managers via Manager Self Service (MSS)

Configurable frontend for planning and execution of compensation changes

Employee compensation profile including job salary elements

Historical reference through notes functionality

Salaried and hourly-paid employees

Standard approval scenario

Total compensation statement

ESS enabled

Compensation review statement

Communication on compensation changes

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Long-Term Incentives

LTI Administration

Granting process included in MSS

Vesting rules and exercise windows

Life event processing, stock splits, cancellations and forfeitures

Approval process

Standard approval scenario in MSS

Taxation in payroll

Payroll function delivered to support taxation of exercised options

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Budgets established on monetary and non-monetary units

Budget reassignment tool

Integration with Personnel Cost Planning & Simulation

Creation of detailed line item budgets based on multiple scenarios

Budget reassignment tool supporting organizational changes

Budget monitoring tool

Budgeted vs. Spent analysis at any level of organizational hierarchy

Compensation Specialist’ user role

Budgeting

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Job Pricing (Salary Surveys)

Data transferImport of multiple salary survey provider filesExport for participation in salary surveys

Aging of market data

Internal – external job matching with weighting capabilities

Market composite creationDerived values based on various survey dataComparison of composite results to internal compensation

Salary structure adjustmentSuggested salary structure changes based on composite analysis

‘Compensation Specialist’ user role

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Controlling

Personnel CostPlanning and

Simulation

PersonnelAdministration

EnterpriseCompensationManagement

OrganizationalManagement

Prerequisites for use ofECM

Integration Overview

BusinessInformation

Warehouse (BW)

PerformanceManagement

(Objective Settingand Appraisals)

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MSS Compensation Planning/Approval – Entry Point

To enter the Planning application navigate in the following path: Managers Self-Service -> Planning -> Compensation Planning

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MSS Compensation Planning – Select

Standard Select Options are delivered offering abilityto mitigate number of employees to bring into aplanning or approval sheet.Details on Employee Search: Entry options: LastName, First Name, Middle Name, Personnel Number,Organizational Unit, Personnel Area, PersonnelSubarea

Roadmap process support

Additional links Personalization of columndisplay & filter line in list (filteris per default not displayed).

Example: MSS Compensation Planning (same selection also for Compensation Approval available)

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Selection Options:• Employees from Organizational Units• Employees from Organizational Structure

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Selection Options:• Directly Subordinate Employees• Employee Search

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Personalization of table viewvia: Strg + right mouse click

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MSS Compensation Planning – Plan(Salary Adjustment)

Budget display and tracking.

Columns can be customized bysystem administrator andpersonalized by user if allowedby administrator, e.g. you canalso show performance ratings,reference salary or hire date.Additionally: Sorting of columns

Display of additionalinformation

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MSS Compensation Planning – PlanExample – Integration with SAP Performance Mgmt

Via Apply Guidelines, the system can propose an amount based onthe employees performance appraisal score/result

Column with Appraisal Score

Existing Guidelines can bereviewed via clicking on anemployee’s name

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MSS Compensation Planning – Plan(Regular Bonus Payment)

Example:Different column-setup for Regular Bonus plan

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MSS Compensation Planning – Plan(Stock Options)

Example:Different column-setup for Stock Option plan

Example:Filtering, wild-card search possible

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MSS Compensation Planning – Plan

Personalization of table viewand display of buttons via: Strg+ right mouse click

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Apply guidelines defined inCustomizing.

Bring selected employees tosalary range minimum.

Apply percentage specified toselected employees.

Graphical comparison ofselected employees per plan.

Functions can be shown/hidden per plan whereappropriate, e.g. Raise to Minimum not appropriate here.

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Employee Salary Data in MSS

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Salary Survey Data in MSS

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Eligibility Information per Employee in MSS(click on employee name)

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Guideline Information per Employee in MSS(click on employee name)

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Messages appear as defined in Customizing.

The compensation planning can be reviewed beforesending for approval.

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MSS Compensation Planning – Review and Send

Send for approval

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MSS Compensation Planning – Completed

Submitted changescan now be accessedby approving managerin ECM approvalscenario (see nextslide).

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MSS Compensation Planning/Approval – Entry Point

To enter the Approval application navigate in the following path: Managers Self-Service -> Planning -> Compensation Approval

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MSS Compensation Approval – Select

Same selection options as mentioned under MSSCompensation Planning.

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MSS Compensation Approval – Approve or Reject

Approval/Rejection onindividual basis.

Approve/Reject allemployees and plans.

Get an overview of approval/rejection,check and send. See next slide.

Approving managercan read andedit/send back noteto planning manager.

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MSS Compensation Approval – Review and Send

Go back to approval or reject stepfor changes after review or sendfinal approval/rejection.

Planning manager cancheck note, makechanges and resubmit toapproving manager.

Send to complete.

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MSS Compensation Approval – Completed

Approval/rejection can bereviewed.

OverviewManager: Compensation AdministrationCompensation Specialist: BudgetingCompensation Specialist: Compensation AdministrationCompensation Specialist: Job PricingTotal Compensation & Compensation Review Statement

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Budgeting Tool User Interface

Budget Maintenance:

Create budgets and maintain budget values. Import Personnel Cost Planning Data orcustom values. Also possible to maintain the budget structure such as adding anddeleting budget units as well as assigning budget or organizational units to thebudget.

Check and Release:

Check budget values are consistent. Release budgets so that they can be usedduring compensation reviews. Reset budget to planning if they have not been spent.

Budget Reassignment:

Reassign/move budget values from one budget to another when employee changesorganizational units.

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Budget Maintenance – Create Budget

Enter budget type & period (defined inCustomizing), the organizational unit ID youwant to create the budget structure from.

Enter how many levels down you want to createthe budget structure. If left at 0, then all levelswill be taken into account.

Enter budget unitif non-monetary(LTI) budget(stock unit definedin Customizing).

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Budget Maintenance – Display and Maintain Budget

Search for budget bydifferent criteria

Search result list.Select a budget fordetail display andmaintenance.

Enter/changebudget valuedirectly inbudget tree.

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Budget Maintenance – Display and Maintain Budget

Only active when havingturned on the option‘Org. Unit On’.

Under budget structure, you can add, assignand delete budget units (and all subordinates),assign org. units and delete assignments (alsofor individual budget unit deletion).

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Budget Maintenance – Percentage Change

You can change:• One value• All values below the selected budget unit• From the selected budget unit up to the highest.

You can increase and decreasebudget values by percentage. Totalbudget will then change.

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Budget Maintenance – Import Values from PCP

You can enter up to 10 cost items.

Enter here from which personnel costplan and which cost item within thatplan you want to import data

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Budget Maintenance – Check and Release Budget

Check for negative values.

Release budget for display & use inMSS Compensation Planning

Reset released budgets back tostatus ‘Planned’ if required forediting.

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Budget Reassignment I

Reassigning budget values betweenorganizational units is a 4-step process.

1. Select the organizational unit that youwish to reassign values from (not thebudget unit).

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Budget Reassignment II

2. Select an organizational unit that is toreceive the value of the organizational unityou selected in step 1.

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Budget Reassignment III

3. The system displays the selectedorganizational units (sending and receiving) andallows you to select the amount that you wish totransfer between units.

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Budget Reassignment IV

4. This final step displaysthe changes you have made.

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Change Compensation Process Status

Mass processing report

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Evaluate LTI Grants

This report lists all employees with LTI Grants and provides an overview aboutthe status of the grants, such as number of granted, forfeited, vested,exercisable grants etc.

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Display Budget (Audit Report for Comp. Budgets)

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Analytics – Average Annual Salary per Employee I

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Analytics – Average Annual Salary per Employee II

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Job analysis

Create internaljobs and jobdescriptions

1Select Survey Provider

Organization decideswhich salary surveys toparticipate in

2Receive survey data

Receive survey data(online, disk, Excel,etc.) from surveyproviders

3

Import data

Upload jobcatalog to thesystem

4Job matching

Match survey jobs tointernal jobs based on jobdescriptions

5Import data

Upload market data tothe system

6

Age data

Age marketdata toevaluation date

7Weight data

Weight market data fromdifferent provider

8Compile market data

Create composite resultfor internal jobs frommatched survey jobs

9

Job Pricing Process Overview I

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Job Pricing Process Overview II

Data analysis

Evaluate andcompare tocurrent internalcompensation

10Determine market gap

Identify which jobs or jobfamilies requireadjustments

11Philosophy

Determine or createcompensationphilosophy of company

12

Identifytargets

Create markettargets forcertain jobs orfamilies

13Adjust salary structure

Create proposaladjustments for internaljobs. Job to be priced “at”or to “lead” or “lag” themarket.

14Activate adjustment

Adjust the currentsalary structure

15

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Job Pricing – Functionality I

Import and store survey dataCreate and maintain list of survey providersSelect and filter information from data filesUpload function for job catalog, job descriptions and market data

Job matchingExtended search functionality for internal and external jobsDisplay job detailsMatch one internal to many external jobsWeight job matching

Age survey market dataMass agingAge all data for one internal jobAging by age factor or by market movement rate

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Job Pricing – Functionality II

Market data analysisCreate composite result for internal jobsChange matching factor and age factor and view result

Reporting and AnalysisCompare market data to internal compensation dataCompare by job, employee, job family, etc.BW reporting: Survey job catalog, Job matching list, Job catalog with marketdata, comparison lists

Salary structure adjustmentMarket results by jobs, grade, familyCreate and maintain proposal values for salary structure adjustmentCalculate costs for adjustment

Export Compensation dataDownload functionalityParticipate in surveys

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Imported Provider Data II

Imported survey whichrepresents imported market data.In this case the effective date ofthe market data is 1st of July,2003.

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Imported Provider Data III

Applicable slice of market datawas provided in the importedsalary survey provider file.

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Imported Provider Data IV

There are 4 rows of data for PayCategory because 4 differentslices of market data have beenimported and can be reviewedunder Market Criteria

Aged data of marketdata is displayed.

Imported jobdescription. In thiscase, job descriptionfor Project Manager

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Import Data: Import Survey Job Catalog I

Import of data is a 3-step process.The 3-step process is to be done for• Survey Job Catalog• Survey Job Descriptions• Survey Market Data

1. Specify the importparameters for the import.

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Import Data: Import Survey Job Catalog III

3. Review the imported valuesfor confirmation. Click on SaveImported Data to complete theprocess.

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Job Matching: Match Internal Benchmark Jobs toExternal Survey Jobs I

Once the data is imported, you can matchinternal to external jobs. This is done sothat market data from the providers can beconnected to the SAP structure.

Internal and external jobdescriptions can be displayed.

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Job Matching: Match Internal Benchmark Jobs toExternal Survey Jobs II

When a match is created, you canapply a weighting factor to thevendor if applicable.In this example:Towers Perrin results are weightedtwice as much for marketcomposite result build comparedto Watson Wyatt results.

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Building a Composite Result of Market Data I

1. Under Select MarketCriteria, select theproviders you want to usefor the composite.

When more than one survey job ismatched to an internal benchmark job,then the compensation specialist needto view a composite or blended result ofthe market data. That’s a 3-step process

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Building a Composite Result of Market Data II

2. Under Build CompositeResult, select the marketdata and click on BuildComposite.

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Compare Market vs. Internal Data I

Compare Market vs.Internal Data:Select the compositeresult, set the parametersand click on CompareValues.

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Compare Market vs. Internal Data II

3. Comparison can bemade and displayed onjob, position andemployee basis.

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Salary Structure Adjustment – Plan SalaryStructure

Plan new structure by enteringvalues here and save new structureas planned salary structure.

Get planned salary structure (either existing one or createnew from market data as starting point for planning).

Display graphic e.g. for internal vs marketvalues on different aggregation levels.Possibility to show regression lines(linear, exponential, logarithmic...) etc.Possibility to analyze data based on jobgroups.

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Provides an overview of all compensation data and benefits thatan employee received over a specific period of time, such as ayear, for example.

Payroll

Total CompensationStatement

CompensationManagement

Training & EventManagement

PersonnelDevelopment

Benefits

Total Compensation Statement

© SAP 2007 / © SAP 2007 / Page 79

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Sap Compensation Management

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