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This guide also applies to on-premise implementations

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1 Plan Workforce Deployment

This chapter contains the following:

Plan Workforce Deployment: Overview

Manage Departments, Divisions, and Other Organizations

Manage Locations

Manage Jobs and Positions

Manage Grades, Grade Rates, and Grade Ladders

Plan Workforce Deployment: Overview

Use the plan workforce deployment process to review workforce structures, and to revise your initial setup as your organization changes over time. For example, you may need to add new departments, create new jobs, or revise rates for grades. Using the tasks in this activity, you can review, revise, and create new:

  • Departments

  • Divisions

  • Disability organizations

  • Organization trees

  • Department trees

  • Locations

  • Jobs

  • Positions

  • Grades

  • Grade rates

  • Grade ladders

You can also use this activity to revise payroll statutory units, legal employers, and tax reporting units, but to create new ones, you must access the Manage Legal Entity task in the Setup and Maintenance work area to first create a legal entity.

Manage Departments, Divisions, and Other Organizations

Enterprise Structures: Overview

Oracle Fusion Applications have been designed to ensure your enterprise can be modeled to meet legal and management objectives. The decisions about your implementation of Oracle Fusion Applications are affected by your:

  • Industry

  • Business unit requirements for autonomy

  • Business and accounting policies

  • Business functions performed by business units and optionally, centralized in shared service centers

  • Locations of facilities

Every enterprise has three fundamental structures, legal, managerial, and functional, that are used to describe its operations and provide a basis for reporting. In Oracle Fusion, these structures are implemented using the chart of accounts and organizations. Although many alternative hierarchies can be implemented and used for reporting, you are likely to have one primary structure that organizes your business into divisions, business units, and departments aligned by your strategic objectives.

This figure is a grid in the shape of a cube with the Business Axis representing the enterprise division, Legal Axis representing the companies, and the Functional Axis representing the business functions.

Legal Structure

The figure above shows a typical group of legal entities, operating various business and functional organizations. Your ability to buy and sell, own, and employ comes from your charter in the legal system. A corporation is a distinct legal entity from its owners and managers. The corporation is owned by its shareholders, who may be individuals or other corporations. There are many other kinds of legal entities, such as sole proprietorships, partnerships, and government agencies.

A legally recognized entity can own and trade assets and employ people in the jurisdiction in which it is registered. When granted these privileges, legal entities are also assigned responsibilities to:

  • Account for themselves to the public through statutory and external reporting

  • Comply with legislation and regulations

  • Pay income and transaction taxes

  • Process value added tax (VAT) collection on behalf of the taxing authority

Many large enterprises isolate risk and optimize taxes by incorporating subsidiaries. They create legal entities to facilitate legal compliance, segregate operations, optimize taxes, complete contractual relationships, and isolate risk. Enterprises use legal entities to establish their enterprise's identity under the laws of each country in which their enterprise operates.

In the figure above, a separate card represents a series of registered companies. Each company, including the public holding company, InFusion America, must be registered in the countries where they do business. Each company consists of various divisions created for purposes of management reporting. These are shown as vertical columns on each card. For example, a group might have a separate company for each business in the United States (US), but have their United Kingdom (UK) legal entity represent all businesses in that country. The divisions are linked across the cards so that a business can appear on some or all of the cards. For example, the air quality monitoring systems business might be operated by the US, UK, and France companies. The list of business divisions is on the Business Axis. Each company's card is also horizontally striped by functional groups, such as the sales team and the finance team. This functional list is called the Functional Axis. The overall image suggests that information might, at a minimum, be tracked by company, business, division, and function in a group environment. In Oracle Fusion Applications, the legal structure is implemented using legal entities.

Management Structure

Successfully managing multiple businesses requires that you segregate them by their strategic objectives, and measure their results. Although related to your legal structure, the business organizational hierarchies do not need to be reflected directly in the legal structure of the enterprise. The management structure can include divisions, subdivisions, lines of business, strategic business units, and cost centers. In the figure above, the management structure is shown on the Business Axis. In Oracle Fusion Applications, the management structure is implemented using divisions and business units.

Functional Structure

Straddling the legal and business organizations is a functional organization structured around people and their competencies. For example, sales, manufacturing, and service teams are functional organizations. This functional structure is represented by the Functional Axis in the figure above. You reflect the efforts and expenses of your functional organizations directly on the income statement. Organizations must manage and report revenues, cost of sales, and functional expenses such as research and development (R&D) and selling, general, and administrative (SG&A) expenses. In Oracle Fusion Applications, the functional structure is implemented using departments and organizations, including sales, marketing, project, cost, and inventory organizations.

Designing an Enterprise Configuration: Example

This example illustrates how to set up an enterprise based on a global company operating mainly in the US and the UK with a single primary industry.

Scenario

InFusion Corporation is a multinational enterprise in the high technology industry with product lines that include all the components that are required to build and maintain air quality monitoring (AQM) systems for homes and businesses. Its primary locations are in the US and the UK, but it has smaller outlets in France, Saudi Arabia, and the United Arab Emirates (UAE).

Enterprise Details

Enterprise Details

In the US, InFusion employs 400 people and has a company revenue of $120 million. Outside the US, InFusion employs 200 people and has revenue of $60 million.

Analysis

InFusion requires three divisions. The US division will cover the US locations. The Europe division will cover the UK and France. Saudi Arabia and the UAE will be covered by the Middle East division.

InFusion requires legal entities with legal employers, payroll statutory units, tax reporting units, and legislative data groups for the US, UK, France, Saudi Arabia, and UAE, in order to employ and pay its workers in those countries.

InFusion requires a number of departments across the enterprise for each area of business, such as sales and marketing, and a number of cost centers to track and report on the costs of those departments.

InFusion requires business units for human capital management (HCM) purposes. Infusion has general managers responsible for business units within each country. Those business units may share reference data. Some reference data can be defined within a reference data set that multiple business units may subscribe to. Business units are also required for financial purposes. Financial transactions are always processed within a business unit.

Resulting Enterprise Configuration

Resulting Enterprise Configuration

Based on this analysis, InFusion requires an enterprise with multiple divisions, ledgers, legal employers, payroll statutory units, tax reporting units, legislative data groups, departments, cost centers, and business units.

This figure illustrates the enterprise configuration that results from the analysis of InFusion Corporation.

A figure of an enterprise configuration

Enterprise: Explained

An enterprise consists of legal entities under common control and management.

Enterprise Defined

When implementing Oracle Fusion Applications you operate within the context of an enterprise that has already been created in the application for you. This is either a predefined enterprise or an enterprise that has been created in the application by a system administrator.

An enterprise organization captures the name of the deploying enterprise and the location of the headquarters. There is normally a single enterprise organization in a production environment. Multiple enterprises are defined when the system is used to administer multiple customer companies, for example, multiple tenants, or when a customer chooses to set up additional enterprises for testing or development.

Oracle Fusion Applications offers capabilities for multiple tenants to share the same applications instance for some human resources processes. If you offer business process outsourcing services to a set of clients, each of those clients may be represented as an enterprise within an Oracle Fusion Application instance. To support this functionality, system owned reference data such as sequences, sets, and flexfields are also defined within an enterprise.

In Oracle Fusion Applications, an organization classified as an enterprise is defined before defining any other organizations in the HCM Common Organization Model. All other organizations are defined as belonging to an enterprise.

Division: Explained

Managing multiple businesses requires that you segregate them by their strategic objectives and measure their results. Responsibility to reach objectives can be delegated along the management structure. Although related to your legal structure, the business organizational hierarchies do not need to reflect directly the legal structure of the enterprise. The management entities and structure can include divisions and subdivisions, lines of business, and other strategic business units, and include their own revenue and cost centers. These organizations can be included in many alternative hierarchies and used for reporting, as long as they have representation in the chart of accounts.

Divisions

A division refers to a business oriented subdivision within an enterprise, in which each division organizes itself differently to deliver products and services or address different markets. A division can operate in one or more countries, and can be comprised of many companies or parts of different companies that are represented by business units.

A division is a profit center or grouping of profit and cost centers, where the division manager is responsible for attaining business goals including profit goals. A division can be responsible for a share of the company's existing product lines or for a separate business. Managers of divisions may also have return on investment goals requiring tracking of the assets and liabilities of the division. The division manager reports to a top corporate executive.

By definition a division can be represented in the chart of accounts. Companies may choose to represent product lines, brands, or geographies as their divisions: their choice represents the primary organizing principle of the enterprise. This may coincide with the management segment used in segment reporting.

Oracle Fusion Applications supports a qualified management segment and recommends that you use this segment to represent your hierarchy of business units and divisions. If managers of divisions have return on investment goals, make the management segment a balancing segment. Oracle Fusion applications allows up to three balancing segments. The values of the management segment can be comprised of business units that roll up in a hierarchy to report by division.

Historically, divisions were implemented as a node in a hierarchy of segment values. For example, Oracle E-Business Suite has only one balancing segment, and often the division and legal entity are combined into a single segment where each value stands for both division and legal entity.

Use of Divisions in Oracle Fusion Human Capital Management (HCM)

Divisions are used in HCM to define the management organization hierarchy, using the generic organization hierarchy. This hierarchy can be used to create organization based security profiles.

Cost Centers and Departments: Explained

A cost center represents the smallest segment of an organization for which costs are collected and reported. A department is an organization with one or more operational objectives or responsibilities that exist independently of its manager and has one or more workers assigned to it.

The following two components need to be considered in designing your enterprise structure:

  • Cost centers

  • Departments

Cost Centers

A cost center also represents the destination or function of an expense as opposed to the nature of the expense which is represented by the natural account. For example, a sales cost center indicates that the expense goes to the sales department.

A cost center is generally attached to a single legal entity. To identify the cost centers within a chart of accounts structure use one of these two methods:

  • Assign a cost center value in the value set for each cost center. For example, assign cost center values of PL04 and G3J1 to your manufacturing teams in the US and India. These unique cost center values allow easy aggregation of cost centers in hierarchies (trees) even if the cost centers are in different ledgers. However, this approach will require defining more cost center values.

  • Assign a balancing segment value with a standardized cost center value to create a combination of segment values to represent the cost center. For example, assign the balancing segment values of 001 and 013 with cost center PL04 to represent your manufacturing teams in the US and India. This creates 001-PL04 and 013-PL04 as the cost center reporting values.

    The cost center value of PL04 has a consistent meaning. This method requires fewer cost center values to be defined. However, it prevents construction of cost center hierarchies using trees where only cost center values are used to report results for a single legal entity. You must specify a balancing segment value in combination with the cost center values to report on a single legal entity.

Departments

A department is an organization with one or more operational objectives or responsibilities that exist independently of its manager. For example, although the manager may change, the objectives do not change. Departments have one or more workers assigned to them.

A manager of a department is typically responsible for:

  • Controlling costs within their budget

  • Tracking assets used by their department

  • Managing employees, their assignments, and compensation

Note

The manager of a sales department may also be responsible for meeting the revenue targets.

The financial performance of departments is generally tracked through one or more cost centers. In Oracle Fusion Applications, departments are defined and classified as Department organizations. Oracle Fusion Human Capital Management (HCM) assigns workers to departments, and tracks the headcount at the departmental level.

The granularity of cost centers and their relationship to departments varies across implementations. Cost center and department configuration may be unrelated, identical, or consist of many cost centers tracking the costs of one department.

Disability Organizations: Explained

Set up disability organizations to identify the external organizations with which workers with disabilities are registered. Disability organizations provide information and support to people with disabilities. The Royal National Institute of Blind People is an example of a disability organization. Disability organizations can also assess the degree to which a person is affected by the disability.

Disability Organizations and Person Records

When you create person records for workers with disabilities, you select the disability organization with which the worker is registered, identify the registration and expiration dates, and enter any other descriptive or legislative information that pertains to the disability.

To create disability organizations as TCA parties, use the Manage Third Parties task from the Setup and Maintenance work area, and select the disability organization party usage code.

Using Single or Multiple Classifications for an Organization: Points to Consider

Organization classifications define the purpose of the organization, whether it's a department, a division, or a legal entity. In some enterprises, organization classifications overlap, which means that the same organization can be assigned multiple classifications. For example, one organization within an enterprise might be both a project organization and a department. The classifications of organizations vary according to business objectives, legal structure, industry, company culture, size and type of growth. You can create organizations in Oracle Fusion with one or more classifications to reflect your enterprise structure.

Defining an Organization with One Classification

Define each organization in your enterprise as a separate organization with a single classification to reflect your enterprise structure and provide flexibility for growth and expansion. The advantage of setting up separate organizations is the ability to add further organizations to expand the enterprise easily. For example, if your enterprise acquires another company which has a different line of business in a country in which you employ people, then you can create a division to represent the new company, a legal entity (classified as a legal employer and payroll statutory unit) for the company's payroll tax and social insurance, and any additional departments for workers.

Defining an Organization with Multiple Classifications

Define an organization with multiple classifications if the organization has multiple purposes. For example, if you want to use an organization within the Oracle Sales Cloud applications as a department that employs sales people, you can classify it as a department and a sales organization. Or, if your enterprise operates and employs people in multiple countries, you can create a legal entity for each country using the Oracle Fusion Legal Entity Configurator and then use the Manage Departments task to classify them as a department as well.

Legal Entities: Explained

A legal entity is a recognized party with rights and responsibilities given by legislation.

Legal entities have the right to own property, the right to trade, the responsibility to repay debt, and the responsibility to account for themselves to regulators, taxation authorities, and owners according to rules specified in the relevant legislation. Their rights and responsibilities may be enforced through the judicial system. Define a legal entity for each registered company or other entity recognized in law for which you want to record assets, liabilities, expenses and income, pay transaction taxes, or perform intercompany trading.

A legal entity has responsibility for elements of your enterprise for the following reasons:

  • Facilitating local compliance

  • Taking advantage of lower corporation taxation in some jurisdictions

  • Preparing for acquisitions or disposals of parts of the enterprise

  • Isolating one area of the business from risks in another area. For example, your enterprise develops property and also leases properties. You could operate the property development business as a separate legal entity to limit risk to your leasing business.

The Role of Your Legal Entities

In configuring your enterprise structure in Oracle Fusion Applications, you need to understand that the contracting party on any transaction is always the legal entity. Individual legal entities own the assets of the enterprise, record sales and pay taxes on those sales, make purchases and incur expenses, and perform other transactions.

Legal entities must comply with the regulations of jurisdictions, in which they register. Europe now allows for companies to register in one member country and do business in all member countries, and the US allows for companies to register in one state and do business in all states. To support local reporting requirements, legal reporting units are created and registered.

You are required to publish specific and periodic disclosures of your legal entities' operations based on different jurisdictions' requirements. Certain annual or more frequent accounting reports are referred to as statutory or external reporting. These reports must be filed with specified national and regulatory authorities. For example, in the United States (US), your publicly owned entities (corporations) are required to file quarterly and annual reports, as well as other periodic reports, with the Securities and Exchange Commission (SEC), who enforces statutory reporting requirements for public corporations.

Individual entities privately held or held by public companies do not have to file separately. In other countries, your individual entities do have to file in their own name, as well as at the public group level. Disclosure requirements are diverse. For example, your local entities may have to file locally to comply with local regulations in a local currency, as well as being included in your enterprise's reporting requirements in different currency.

A legal entity can represent all or part of your enterprise's management framework. For example, if you operate in a large country such as the United Kingdom or Germany, you might incorporate each division in the country as a separate legal entity. In a smaller country, for example Austria, you might use a single legal entity to host all of your business operations across divisions.

Legal Entity in Oracle Fusion: Points to Consider

Oracle Fusion Applications support the modeling of your legal entities. If you make purchases from or sell to other legal entities, define these other legal entities in your customer and supplier registers, which are part of the Oracle Fusion Trading Community Architecture. When your legal entities are trading with each other, you represent both of them as legal entities and also as customers and suppliers in your customer and supplier registers. Use legal entity relationships to determine which transactions are intercompany and require intercompany accounting. Your legal entities can be identified as legal employers and therefore, are available for use in Human Capital Management (HCM) applications.

There are several decisions that need to be considered in creating your legal entities.

  • The importance of legal entity in transactions

  • Legal entity and its relationship to business units

  • Legal entity and its relationship to divisions

  • Legal entity and its relationship to ledgers

  • Legal entity and its relationship to balancing segments

  • Legal entity and its relationship to consolidation rules

  • Legal entity and its relationship to intercompany transactions

  • Legal entity and its relationship to worker assignments and legal employer

  • Legal entity and payroll reporting

  • Legal reporting units

The Importance of Legal Entity in Transactions

All of the assets of the enterprise are owned by individual legal entities. Oracle Fusion Financials allow your users to enter legal entities on transactions that represent a movement in value or obligation.

For example, the creation of a sales order creates an obligation for the legal entity that books the order to deliver the goods on the acknowledged date, and an obligation of the purchaser to receive and pay for those goods. Under contract law in most countries, damages can be sought for both actual losses, putting the injured party in the same state as if they had not entered into the contract, and what is called loss of bargain, or the profit that would have made on a transaction.

In another example, if you revalued your inventory in a warehouse to account for raw material price increases, the revaluation and revaluation reserves must be reflected in your legal entity's accounts. In Oracle Fusion Applications, your inventory within an inventory organization is managed by a single business unit and belongs to one legal entity.

Legal Entity and Its Relationship to Business Units

A business unit can process transactions on behalf of many legal entities. Frequently, a business unit is part of a single legal entity. In most cases the legal entity is explicit on your transactions. For example, a payables invoice has an explicit legal entity field. Your accounts payables department can process supplier invoices on behalf of one or many business units.

In some cases, your legal entity is inferred from your business unit that is processing the transaction. For example, your business unit A agrees on terms for the transfer of inventory to your business unit B. This transaction is binding on your default legal entities assigned to each business unit. Oracle Fusion Procurement, Oracle Fusion Projects, and Oracle Fusion Supply Chain applications rely on deriving the legal entity information from the business unit.

Legal Entity and Its Relationship to Divisions

The division is an area of management responsibility that can correspond to a collection of legal entities. If desired, you can aggregate the results for your divisions by legal entity or by combining parts of other legal entities. Define date-effective hierarchies for your cost center or legal entity segment in your chart of accounts to facilitate the aggregation and reporting by division. Divisions and legal entities are independent concepts.

Legal Entity and Its Relationship to Ledgers

One of your major responsibilities is to file financial statements for your legal entities. Map legal entities to specific ledgers using the Oracle Fusion General Ledger Accounting Configuration Manager. Within a ledger, you can optionally map a legal entity to one or more balancing segment values.

Legal Entity and Its Relationship to Balancing Segments

Oracle Fusion General Ledger supports up to three balancing segments. Best practices recommend that one of these segments represents your legal entity to ease your requirement to account for your operations to regulatory agencies, tax authorities, and investors. Accounting for your operations means you must produce a balanced trial balance sheet by legal entity. If you account for many legal entities in a single ledger, you must:

  1. Identify the legal entities within the ledger.

  2. Balance transactions that cross legal entity boundaries through intercompany transactions.

  3. Decide which balancing segments correspond to each legal entity and assign them in Oracle Fusion General Ledger Accounting Configuration Manager. Once you assign one balancing segment value in a ledger, then all your balancing segment values must be assigned. This recommended best practice facilitates reporting on assets, liabilities, and income by legal entity.

Represent your legal entities by at least one balancing segment value. You may represent it by two or three balancing segment values if more granular reporting is required. For example, if your legal entity operates in multiple jurisdictions in Europe, you might define balancing segment values and map them to legal reporting units. You can represent a legal entity by more than one balancing segment value, do not use a single balancing segment value to represent more than one legal entity.

In Oracle Fusion General Ledger, there are three balancing segments. You can use separate balancing segments to represent your divisions or strategic business units to enable management reporting at the balance sheet level for each division or business unit. For example, use this solution to empower your business unit and divisional managers to track and assume responsibility for their asset utilization or return on investment. Using multiple balancing segments is also useful when you know at the time of implementation that you are disposing of a part of a legal entity and need to isolate the assets and liabilities for that entity.

Note

Implementing multiple balancing segments requires every journal entry that is not balanced by division or business unit, to generate balancing lines. Also, you cannot change to multiple balancing segments easily after you have begun to use the ledger because your historical data is not balanced by the new multiple balancing segments. Restating historical data must be done at that point.

To use this feature for disposal of a part of a legal entity, implement multiple balancing segments at the beginning of the legal entity's corporate life or on conversion to Oracle Fusion.

If you decided to account for each legal entity in a separate ledger, there is no requirement to identify the legal entity with a balancing segment value within the ledger.

Note

While transactions that cross balancing segments don't necessarily cross legal entity boundaries, all transactions that cross legal entity boundaries must cross balancing segments. If you make an acquisition or are preparing to dispose of a portion of your enterprise, you may want to account for that part of the enterprise in its own balancing segment even if it is not a separate legal entity. If you do not map legal entities sharing the same ledger to balancing segments, you will not be able to distinguish them using the intercompany functionality or track their individual equity.

Legal Entity and Its Relationship to Consolidation Rules

In Oracle Fusion Applications you can map legal entities to balancing segments and then define consolidation rules using your balancing segments. You are creating a relationship between the definition of your legal entities and their role in your consolidation.

Legal Entity and its Relationship to Intercompany Transactions

Use Oracle Fusion Intercompany functionality for automatic creation of intercompany entries across your balancing segments. Intercompany processing updates legal ownership within the enterprise's groups of legal entities. Invoices or journals are created as needed. To limit the number of trading pairs for your enterprise, set up intercompany organizations and assign then to your authorized legal entities. Define processing options and intercompany accounts to use when creating intercompany transactions and to assist in consolidation elimination entries. These accounts are derived and automatically entered on your intercompany transactions based on legal entities assigned to your intercompany organizations.

Intracompany trading, in which legal ownership isn't changed but other organizational responsibilities are, is also supported. For example, you can track assets and liabilities that move between your departments within your legal entities by creating departmental level intercompany organizations.

Note

In the Oracle Fusion Supply Chain applications, model intercompany relationships using business units, from which legal entities are inferred.

Legal Entity and Its Relationship to Worker Assignments and Legal Employer

Legal entities that employ people are called legal employers in the Oracle Fusion Legal Entity Configurator. You must enter legal employers on worker assignments in Oracle Fusion HCM.

Legal Entity and Payroll Reporting

Your legal entities are required to pay payroll tax and social insurance such as social security on your payroll. In Oracle Fusion Applications, you can register payroll statutory units to pay and report on payroll tax and social insurance on behalf of many of your legal entities. As the legal employer, you might be required to pay payroll tax, not only at the national level, but also at the local level. You meet this obligation by establishing your legal entity as a place of work within the jurisdiction of a local authority. Set up legal reporting units to represent the part of your enterprise with a specific legal reporting obligation. You can also mark these legal reporting units as tax reporting units, if the legal entity must pay taxes as a result of establishing a place of business within the jurisdiction.

Payroll Statutory Units, Legal Employers, and Tax Reporting Units: How They Work Together

When you set up legal entities, you can identify them as legal employers and payroll statutory units, which makes them available for use in Oracle Fusion Human Capital Management (HCM). A tax reporting unit is created automatically when you add a legal entity and identify it as a payroll statutory unit. Depending on how your organization is structured, you may have only one legal entity that is also a payroll statutory unit and a legal employer, or you may have multiple legal entities, payroll statutory units, and legal employers.

Legal Employers and Payroll Statutory Unit

Payroll statutory units enable you to group legal employers so that you can perform statutory calculations at a higher level, such as for court orders or for United Kingdom (UK) statutory sick pay. In some cases, a legal employer is also a payroll statutory unit. However, your organization may have several legal employers under one payroll statutory unit. A legal employer can belong to only one payroll statutory unit.

Payroll Statutory Units and Tax Reporting Units

Payroll statutory units and tax reporting units have a parent-child relationship, with the payroll statutory unit being the parent.

Tax Reporting Units and Legal Employers

Tax reporting units are indirectly associated with a legal employer through the payroll statutory unit. One or more tax reporting units can be used by a single legal employer, and a tax reporting unit can be used by one or more legal employers. For example, assume that a single tax reporting unit is linked to a payroll statutory unit. Assume also that two legal employers are associated with this payroll statutory unit. In this example, both legal employers are associated with the single tax reporting unit.

Legislative Data Groups: Explained

Legislative data groups are a means of partitioning payroll and related data. At least one legislative data group is required for each country where the enterprise operates. Each legislative data group is associated with one or more payroll statutory units.

Legislative Data Groups

Oracle Fusion Payroll is organized by legislative data groups. Each legislative data group marks a legislation in which payroll is processed, and is associated with a legislative code, currency and its own cost key flexfield structure. A legislative data group is a boundary that can share the same set up and still comply with the local laws. It can span many jurisdictions as long as they are within one country, and contain many legal entities that act as payroll statutory units. Each payroll statutory unit can belong to only one legislative data group.

HCM Organization Models: Examples

These examples illustrate different models for human capital management (HCM) organizations. Each example includes a legislative data group (LDG). LDGs are not an organization classification, but they are included in the example to show how you associate them with a payroll statutory unit to partition payroll data.

Simple Configuration

This example illustrates a simple configuration that does not include any tax reporting units. The legal employer and payroll statutory units are the same, sharing the same boundaries. Reporting can only be done at a single level. Countries such as Saudi Arabia and the United Arab Emirates (UAE) might use this type of model, as reporting in these countries is done at the legal entity level.

This figure illustrates a simple configuration where the enterprise has only one legal entity that is both a payroll statutory unit and a legal employer.

An enterprise with one legal entity that is also a payroll statutory unit and a legal employer. The legal entity is associated with one legislative data group.

Multiple Legal Employers and Tax Reporting Units Under One Payroll Statutory Unit

This example illustrates a more complex configuration. In this enterprise, one legal entity, InFusion US, is defined as a payroll statutory unit and has two separate legal entities, which are also legal employers. This model shows multiple legal employers that are associated with a single payroll statutory unit, and how tax reporting units are always associated with a specific legal employer (or employers) through the payroll statutory unit. The implication is that payroll statutory reporting boundaries vary from human resources (HR) management, and the balances can be categorized separately by either payroll statutory unit, legal employer, or tax reporting unit. This configuration is based on tax filing requirements, as some tax-related payments and reports are associated with a higher level than employers. An example of a country that might use this model is the US.

This figure illustrates an enterprise that has one payroll statutory unit and multiple legal employers and tax reporting units.

A figure that contains one enterprise with one payroll statutory unit, multiple legal employers and multiple tax reporting units

One Payroll Statutory Unit and Two Tax Reporting Units That Are Subsidiaries of the Legal Entity

This model makes no distinction between a legal employer and a payroll statutory unit. Tax reporting units are defined as subsidiaries to the legal entity. In this enterprise, legal entity is the highest level of aggregation for payroll calculations and reporting, and statutory reporting boundaries are assumed to be the same for both payroll and HR management. An example of a country that might use this model is France.

This figure illustrates an example of an organization with one legal entity that is both a legal employer and a payroll statutory unit and that has two tax reporting units.

An organization that has one legal entity that is both a payroll statutory unit and legal employer and has two tax reporting units.

One Payroll Statutory Unit with Several Tax Reporting Units That Are Independent from the Legal Employer

In this model, the enterprise has one legal entity, and legal employers and tax reporting units are independent from each other within a payroll statutory unit, because there is no relationship from a legal perspective. Therefore, you can run reporting on both entities independently. Using this model, you would not typically need to report on tax reporting unit balances within a legal employer, and balances can be categorized by either or both organizations, as required. An example of a country that might use this model is India.

This figure illustrates an enterprise with one legal entity that is a payroll statutory unit and a legal employer, and the tax reporting units are independent from the legal employer.

A figure that shows an enterprise with one legal entity that is both a legal employer and a payroll statutory unit and that has multiple tax reporting units that are independent from the legal employer

Multiple Payroll Statutory Units with Several Tax Reporting Units that are Independent from the Legal Employer

In this model, the enterprise has two legal entities, and legal employers and tax reporting units are independent from each other within a payroll statutory unit, because there is no relationship from a legal perspective. Therefore, you can run reporting on both entities independently. Using this model, you would not typically need to report on tax reporting unit balances within a legal employer, and balances can be categorized by either or both organizations, as required. An example of a country that might use this model is the United Kingdom (UK).

This figure illustrates an enterprise with two legal entities, and legal employers and tax reporting units are independent from each other.

A graphic that illustrates an enterprise with two legal entities

Oracle Fusion HCM Trees: Explained

Oracle Fusion trees are graphical representations of hierarchical data such as the structure of your organization. Oracle Fusion Human Capital Management (HCM) provides predefined tree structures for department, organization, position, and geography trees. You cannot change the predefined HCM tree structures. With the exception of geography trees, you can create multiple trees for each HCM tree type, and multiple versions of each tree. For all HCM tree types, however, only one version of each tree can be active at one time.

Department Trees

Using the predefined tree structure for a department tree, you can create multiple department trees and then create multiple versions of each tree to build hierarchical representations of the departments within your organization. The top node of the tree is a department, and all of the child nodes are also departments. You can have only one top-level node for a department tree, and you cannot add a department as a node more than one time in the same tree version.

You can use department trees for the following purposes:

  • Secure data by using a department tree in an organization security profile.

  • Create custom gallery messages to appear in the portraits of workers assigned to departments within a department tree. For example, you may create a gallery message notifying workers of a server outage or a public holiday in a particular location.

Organization Trees

If you use the Oracle Fusion Enterprise Structures Configurator to set up your enterprise structure, a default organization tree is created automatically for you, with the ultimate holding company as the first node, divisions and country holding companies as the second level, and legal employers as the third level. You can modify the organization tree as needed, and you can create additional organization trees. If you do not use the Enterprise Structures Configurator, then you can create organization trees based on the predefined organization tree structure. In an organization tree, you can select any type of organization for the top node and for the child nodes, but you can have only one top-level node.

You can secure HCM data by using an organization tree to identify organizations in an organization security profile.

Position Trees

Using the predefined tree structure for a position tree, you can create multiple position trees and then create multiple versions of each tree to establish reporting relationships among positions. You can have only one top-level node for a position tree.

You can use position trees for the following purposes:

  • Review position hierarchies for budgeting and organizational planning.

  • Secure access to positions by identifying a position hierarchy in a position security profile. For example, you can create a position security profile that includes all positions in a position hierarchy below a specified top position. You can also include the position security profile in a person security profile to secure access to person records. In this case, the person security profile includes the person records of the people who occupy the positions in the position security profile.

The following figure illustrates a position hierarchy that you can establish using a position tree.

A figure that illustrates a hierarchy of positions within a company

Geography Trees

Using the predefined tree structure for a geography tree, you create a version of a geography tree to represent the countries in which your organization operates. Although you can create multiple versions, you can create only one geography tree, and the tree can have only two levels in the hierarchy. You can have only one top-level node for a geography tree.

You can use the geography tree to specify the locations to which calendar events apply. If an event applies to your entire enterprise, then you can attach it to the top-level node in the tree. If an event applies only to specific countries or territories in your enterprise, then you can attach it to the nodes for those specific countries.

This figure illustrates the geographical hierarchy that you can establish using a geography tree.

A figure that illustrates a hierarchy of geographic locations

FAQs for Manage Departments, Divisions, and Other Organizations

What's a tax reporting unit?

Use a tax reporting unit to group workers for the purpose of tax and social insurance reporting. A tax reporting unit is the Oracle Fusion Human Capital Management (HCM) version of the legal reporting unit in Oracle Fusion Applications. To create a tax reporting unit, you use the Oracle Fusion Legal Entity Configurator to define a legal entity as a payroll statutory unit. When you identify a legal entity as a payroll statutory unit, the application transfers the legal reporting units that are associated with that legal entity to Oracle Fusion HCM as tax reporting units. You can then access the tax reporting unit using the Manage Legal Reporting Unit HCM Information task.

If you identify a legal entity as a legal employer only, and not as a payroll statutory unit, you must enter a parent payroll statutory unit. The resulting legal reporting units are transferred to Oracle Fusion HCM as tax reporting units, but as children of the parent payroll statutory unit that you entered, and not the legal entity that you identified as a legal employer.

What's a payroll statutory unit?

Payroll statutory units are legal entities that are responsible for paying workers, including the payment of payroll tax and social insurance. A payroll statutory unit can pay and report on payroll tax and social insurance on behalf of one or many legal entities, depending on the structure of your enterprise. For example, if you are a multinational, multicompany enterprise, then you register a payroll statutory unit in each country where you employ and pay people. You can optionally register a consolidated payroll statutory unit to pay and report on workers across multiple legal employers within the same country. You associate a legislative data group with a payroll statutory unit to provide the correct payroll information for workers.

What's a legal employer?

A legal employer is a legal entity that employs workers. You define a legal entity as a legal employer in the Oracle Fusion Legal Entity Configurator.

The legal employer is captured at the work relationship level, and all employment terms and assignments within that relationship are automatically with that legal employer. Legal employer information for worker assignments is also used for reporting purposes.

What's a reporting establishment?

A reporting establishment is an organization that is used for statutory reporting other than tax and social insurance reporting. A reporting establishment has a parent-child relationship with a legal employer, with the legal employer being the parent organization. A legal employer can be the parent of multiple reporting establishments.

In some countries, such as France, a reporting establishment can also be a tax reporting unit.

Can I delete an organization?

No. However, you can disable an organization if it is no longer required. For example, if the enterprise is downsizing, then you can set the status of the organization to inactive. Changing the status of the organization disables the organization and the organization is no longer available to select.

How can I identify my organization in a report?

Use the organization manager information to enter a reporting name to help you identify an organization in a report. You use organization hierarchies for statutory, legal and management reporting.

Manage Locations

Locations: Explained

A location identifies physical addresses of a workforce structure, such as a department or a job. You can also create locations to enter the addresses of external organizations that you want to maintain, such as employment agencies, tax authorities, and insurance or benefits carriers.

The locations that you create exist as separate structures that you can use for reporting purposes, and also in rules that determine employee eligibility for various types of compensation and benefits. You enter information about a location only once. Subsequently, when you set up other workforce structures you select the location from a list.

Location Sets

When you create a location, you must associate it with a set. Only those users who have access to the set's business unit can access the location set and other associated workforce structure sets, such as those that contain departments and jobs.

You can also associate the location to the common set so that users across your enterprise can access the location irrespective of their business unit. When users search for locations, they can see the locations that they have access to along with the locations in the common set.

The following figure shows how locations sets restrict access to users.

Controlling access to locations using sets

Uploading Locations Using a Spreadsheet

If you have a list of locations already defined for your enterprise, you can upload them from a spreadsheet. To use this option, you first download a spreadsheet template, add your location information to the spreadsheet, and then upload directly to your enterprise configuration. You can upload the spreadsheet multiple times to accommodate revisions.

FAQs for Manage Locations

Why can't I see my location in the search results?

You can search for approved locations only. Also, if you created a location in Oracle Fusion Trading Community Model, then you can't access that location from Oracle Fusion Global Human Resources. For use in Oracle Fusion HCM, you must recreate the location from the Manage Locations page.

How can I associate a location with an inventory organization?

From the Manage Locations page in Oracle Fusion Global Human Resources.

To appear on the Create or Edit Location pages, your inventory organization must be effective on today's date and must exist in the location set that you selected.

What happens if I select an inventory organization when I'm creating or editing a location?

The location is available for selection in purchase documents of that inventory organization in Oracle Fusion Inventory Management. If you don't select an inventory organization, then the location is available in purchase documents across all inventory organizations.

What happens if I select a geographic hierarchy node when I'm creating or editing a location?

The calendar events that were created for the geographical node start to apply for the location and may impact the availability of worker assignments at that location. The geographical hierarchy nodes available for selection on the Locations page display from a predefined geographic hierarchy.

What happens if I inactivate a location?

Starting from the effective date that you entered, you can no longer associate the location with other workforce structures, assignments, or applications. If the location is already in use, it will continue to be available to the components that currently use it.

Manage Jobs and Positions

Jobs and Positions: Critical Choices

Jobs and positions represent roles that enable you to distinguish between tasks and the individuals who perform those tasks. The key to whether to use jobs or positions is how each is used. Positions offer a well-defined space independent of the person performing the job. Jobs are a space defined by the person. A job can be defined globally in the Common Set, whereas a position is defined within one business unit.

You can update the job and department of a position at any time. This is useful if you hire someone into a new role and want to transfer the position to another department.

During implementation, one of the earliest decisions you will make is whether to use jobs or a combination of jobs and positions. The determinants for this decision are:

  • The primary industry of your enterprise

  • How you manage your people

Primary Industry of Your Enterprise

Primary industries and how they usually set up their workforce are listed in the table below.


Primary Industry

Workforce Setup

Mining

Positions

Utilities

Positions

Manufacturing

Positions

Retail Trade

Positions

Transportation and Warehousing

Positions

Educational Services

Positions

Public Transportation

Positions

Agriculture, Forestry, Fishing, and Hunting

Jobs

Construction

Jobs

Wholesale Trade

Jobs

Information

Jobs

Finance and Insurance

Jobs

Professional, Scientific, and Technical Services

Jobs

Management of Companies and Enterprises

Jobs

Administrative and Support and Waste Management and Remediation Services

Jobs

Arts, Entertainment, and Recreation

Jobs

Accommodation and Food Services

Jobs

Other Services (Except Public Administration)

Jobs

Management of People

The following table displays suggestions of whether to use jobs or a combination of jobs and positions based on your industry and how you manage your employees when there is turnover.


Industry

We always replace employees by rehiring to same role

We replace the head count, but the manager can use the head count in a different job

We rehire to the same position, but the manager can request a reallocation of budget to a different post

Project (An industry that supports project-based forms of organization in which teams of specialists from both inside and outside the company report to project managers.)

Positions

Jobs

Jobs

Controlled (An industry that is highly structured in which all aspects of work and remuneration are well organized and regulated.)

Positions

Positions

Positions

Manufacturing

Positions

Jobs

Positions

Retail

Positions

Jobs

Positions

Education

Positions

Jobs

Positions

Other

Positions

Jobs

Jobs

Jobs: Example

Jobs are typically used without positions by service industries where flexibility and organizational change are key features.

Software Industry

For example, XYZ Corporation has a director over the departments for developers, quality assurance, and technical writers. Recently, three developers have left the company. The director decides to redirect the head count to other areas. Instead of hiring all three back into development, one person is hired to each department, quality assurance, and technical writing.

In software industries, the organization is fluid. Using jobs gives an enterprise the flexibility to determine where to use head count, because the job only exists through the person performing it. In this example, when the three developers leave XYZ Corporation, their jobs no longer exist, therefore the corporation has the flexibility to move the headcount to other areas.

This figure illustrates the software industry job setup.

Jobs setup example

Positions: Examples

Positions are typically used by industries that use detailed approval rules, which perform detailed budgeting and maintain head counts, or have high turnover rates.

Retail Industry

ABC Corporation has high turnover. It loses approximately 5% of their cashiers monthly. The job of cashier includes three positions: front line cashier, service desk cashier, and layaway cashier. Each job is cross trained to take over another cashier position. When one cashier leaves from any of the positions, another existing cashier from the front line, service desk or layaway can assist where needed. . But to ensure short lines and customer satisfaction, ABC must replace each cashier lost to turnover.

Since turnover is high in retail it is better for this industry to use positions. There is an automatic vacancy when an employee terminates employment. The position exists even when there are no holders. This is important if the person who leaves the company is a manager or supervisor with direct reports. All direct reports continue reporting to the position even if it is empty. You do not need to reassign these employees to another manager or supervisor; the replacement manager is assigned to the existing position.

Also, an advantage to using positions is that when you hire somebody new many of the attributes are defaulted in from the position. This speeds up the hiring process.

This figure illustrates the retail position setup.

Position example set up for retail industry

Health Care Industry

The hospital has a structured head count and detailed budgeting. For example, a specific number of surgeons, nurses, and interns of various types are needed. These positions need to be filled in order for the hospital to run smoothly. Use jobs and positions if you need to apply detailed head count rules.

Health care is an industry that needs to regulate employment, roles, and compensation according to strict policies and procedures. Fixed roles tend to endure over time, surviving multiple incumbents. Industries that manage roles rather than individuals, where roles continue to exist after individuals leave, typically model the workforce using positions.

This figure illustrates the hospital position setup.

Position example set up for a health care industry

Manage Grades, Grade Rates, and Grade Ladders

Grades: Explained

Create grades to record the level of compensation for workers. You can create grades for multiple pay components, such as salary, bonus, and overtime rates. You can define one or more grades that are applicable for jobs and positions. This list of valid grades, combined with the settings for two profile options, enables you to restrict the grades that can be selected when you set up assignments or employment terms for a worker.

Grades and Sets

You assign each grade to a set. If you assign a grade to the common set, then the grade is available for use in all business units. To limit a grade to a single business unit, you can assign it to a set that is specific to that business unit.

Grade Steps

Grade steps are distinct increments of progression within a grade. You can set up grades with or without grade steps.

The following figure illustrates the difference between grades with and without steps.

A figure comparing grades with steps and grades without steps

Grade Rates

Grade rate values are the compensation amounts associated with each grade. You can set up rates at the same time that you create grades, or set them up independently from grades. For grades with steps, you set up the step rates when you include them in a grade ladder. Grade rates are optional.

Grade Ladders

You can combine grades into grade ladders to group your grades or grades with steps in the sequence in which your workers typically progress. For example, you might create three grade ladders for your enterprise: one for technical grades, another for management grades, and a third for administrative grades.

Grade Rates: Explained

Grade rates contain the pay values that are related to each grade. Grade rate values can be either a fixed amount or a range of values, and you can set up rates for different types of pay, such as salary, overtime, and bonuses.

Grade rates for some jobs or positions might include an hourly salary rate and an overtime rate. Grade rates for other jobs or positions might contain a salary rate type with a range of amounts and a bonus rate type with a fixed amount. Grade rates typically serve only as a guideline to validate that the salary you propose during the compensation process for a worker on a certain grade is appropriate for that grade.

This figure illustrates a grade that has two rate types associated with it. One is a salary rate type that has a range of values, and the other is a bonus rate type with a fixed amount.

A figure that shows one grade with both a salary rate type and a bonus rate type associated with it.

This figure illustrates a different grade that has two rate types associated with it. One is a salary rate type that has a fixed amount, and the other is an overtime rate type that also has a fixed amount.

A figure that shows one grade with both a salary rate type that is a fixed amount and an overtime rate type associated with it.

Rate Types

The types of rates that you can set up depend on the values for lookup type GRADE_PAY_RATE_TYPE. Examples of rate types are: salary, bonus, and overtime pay.

Grade Rates and Legislative Data Groups

You assign a legislative data group to each grade rate. Depending on how your enterprise is configured, you may have several legislative data groups. You can set up grades that are shared across different areas of your business, and then enter rates that are specific to each legislative data group.

Grade Rates and Grades

You can set up grade rates when you set up grades, or you can set them up independently from grades. For grades with steps, you enter rates when you attach the grades to a grade ladder.

Grade Ladders: Explained

Create grade ladders to group grades and grades with steps in the sequence in which your workers typically progress. Grade ladders describe the grades and steps to which a worker is eligible to progress and compensation value associated with that grade and step. You can set up separate grade ladders for different types of jobs or positions in your enterprise. For example, you may create three grade ladders for your enterprise: one for technical grades, another for management grades, and a third for administrative grades.

Ladders with Grades

You create ladders with grades by building a hierarchy of grades that were created without steps. When you set up this type of ladder, only grades without steps are available to add to the ladder. You cannot create a grade ladder with a combination of both grades and grades with steps.

You do not define any grade rates when you set up a ladder with grades; the rates for the grades within the ladder are inherited from the rates that were added when you set up the grades. To add or edit rates for grades, you must use the Manage Grade Rates task.

Ladders with Grade Steps

You create ladders with grade steps using grades that were created with steps When you set up this type of ladder, only grades with steps are available to add to the ladder.

You define step rates when you set up the ladder, and the rates are unique to each ladder. You cannot share step rates between grade ladders.

Grades, Grade Rates, Sets, and Legislative Data Groups: How They Work Together

You assign grades to sets, and you assign grade rates to legislative data groups. If you have grades that are common across multiple business units, you can assign the grades to the set that is associated with the business units, and then set up grade rates that are specific to each legislative data group.

The following figure illustrates how you can use sets to share grades across multiple business units and then change the grade rates for each legislative data group.

A figure that shows five grades assigned to one set and then legislative data groups for the US, UK, and Australia. Each legislative data group has the same set but different rates.

Grades and Sets

Sets enable you to share grades that are common across business units in your enterprise. You can assign grades to either a specific set or to the common set to each grade. If you assign the grade to the common set, then the grade is available for use in all business units.

Grade Rates and Legislative Data Groups

Grade rate values are associated with each component of compensation for your workers. While grades may be common across different areas of your enterprise, grade rates vary among the countries in which you employ people. For example, if your enterprise has engineer jobs in the United States, the United Kingdom, and Australia, you can set up grades for a set that is shared between the countries, but set up different grade rates for each country in the applicable currency.

Grades and Grade Rates: How They Work with Jobs, Positions, Assignments, Compensation, and Payroll

To ensure that workers are compensated according to the grade structure that you create, you use grades and grade rates in the following components of Oracle Fusion HCM:

  • Jobs

  • Positions

  • Assignments and employment terms

  • Compensation

  • Payroll

How Grades Work with Jobs and Positions

You can define one or more grades that are applicable for each job and position. This list of valid grades, combined with the settings for two profile options, enables you to restrict the grades that can be selected when you set up assignments or employment terms for a worker.

If you use positions, then the grades that you assign to jobs are the default grades for the positions that you associate with each job. You can use the default grades for the position, remove ones that don't apply, or add new ones

How Grades Work with Assignments and Employment Terms

When you set up assignments or employment terms, you can select the applicable grade for the job or position. Two profile options determine the grades that are available for selection. The first profile option is PER_ENFORCE_VALID_GRADES. If you set this site-level profile option to Yes, then users can select a grade only from the list that you defined for the job or position.

  • If users select both a job and a position for the assignment or employment terms, then they can select grades that are valid for the position only.

  • If valid grades are defined for neither the job nor the position, then users can select from all grades

If you set this profile option to No, which is the default value, then users can select from all grades.

The second profile option is PER_DEFAULT_GRADE_FROM_JOB_POSITION. If you set this site-level profile option to Yes, and there is only one valid grade for a job or position, then that grade is used by default in the assignment or employment terms. In addition, if an entry grade is defined for a position, then that grade is used by default when the user creates a new set of employment terms or a new assignment.

If you set this profile option to No, which is the default value, then users can select from all grades

How Grades and Grade Rates Work with Compensation and Payroll

Depending on the configuration of the legal employer to which workers belong, their salary can be stored at either the assignment or employment terms level, and the grade rate can be linked to the salary basis within the salary record. If this is the case, then their salaries are validated using the grade rates. For example, assume an assignment record for a worker indicates that he is in grade A1 and has a salary of 40,000.00 USD. The grade rate range that is attached to grade A1 is 30,000.00 USD to 50,000.00 USD, therefore, his salary is within the grade rate range, and no warnings are issued. If his manager or a human resource (HR) specialist changes his salary to 55,000.00 USD, a warning is issued that the new salary is outside his salary range.

In addition, compa-ratios and salary range positions for workers are calculated using the minimum and maximum amounts that are defined in the grade rates for their grades.

Payroll elements reference grades in the eligibility criteria. For example, assume you want to process a bonus for all workers who are at grade level A2. To accomplish this, you would create an earnings element for the bonus and specify A2 for the grade in the eligibility criteria. The result of this setup, when combined with additional eligibility criteria that may be applied by the bonus plan, is that when payroll is processed, workers who are at grade level A2 and who meet the additional eligibility criteria would receive the bonus.

Grades, Grate Rates, and Grade Ladders: Examples

The following examples illustrate how InFusion Corporation might set up different types of grades, rates, and ladders for the different types of jobs within the company. The examples include grade structures for administrative workers, managers, senior executives, and line workers. All amounts in the examples are US dollars.

Grades with Steps

The grade structure for annual salary amounts for administrative workers in InFusion Corporation includes five grades, and each grade includes five steps. When workers move from one grade to another in this ladder, they do not always start at step 1 of a grade. Their next step is based on their previous salary plus two steps. For example, a worker could move from Step 5 in Grade 1 to Step 3 in Grade 2.

The following table lists the five grades, steps, and the rates associated with them for administrative workers at InFusion Corporation.


Grade

Step 1

Step 2

Step 3

Step 4

Step 5

1

17, 803

18, 398

18, 990

19, 579

20, 171

2

20, 017

20, 493

21, 155

21, 717

21, 961

3

21, 840

22, 568

23, 296

24, 024

24, 752

4

24, 518

25, 335

26, 152

26, 969

27, 786

5

27, 431

28, 345

29, 259

30, 173

31, 087

To set up your grade structure to reflect this table, perform the following tasks:

  • Set up five different grades and add five steps for each grade.

  • Set up a grade ladder using the Grades with Steps type, and select all five grades.

  • Set up step rates for annual salary amounts using the rates in the preceding table.

Grades Without Steps

The grade structure for annual salary amounts for level 3 managers at InFusion Corporation includes grades without steps. The grade rates are fixed amounts.

The following table lists the grades and associated rates for level 3 managers at InFusion Corporation.


Grade

Annual Salary Amount

1

103, 900

2

111, 800

3

119, 900

4

127, 800

5

135, 900

6

143, 700

7

151, 800

8

155, 500

To set up your grade structure to reflect this table, perform the following tasks:

  • Set up eight separate grades.

  • For each grade, enter the rates from the preceding table.

  • Set up a grade ladder with the Grades type and add all eight grades to the ladder.

Grades with Grade Rate Ranges

The grade structure for annual salary amounts for senior executives at InFusion Corporation includes grades with no steps, and the rates are set up using ranges.

The following table lists the rate range for senior executives at InFusion Corporation.


Grade

Minimum Annual Salary Amount

Maximum Annual Salary Amount

SNREXEC

154, 300

243, 900

To set up a grade structure to reflect this table, perform the following tasks:

  • Create a single grade.

  • Create a grade rate and enter the minimum and maximum amounts from the preceding table for the grade rate range.

Grade Rates with Hourly Amounts

The grade structure for line workers at InFusion Corporation includes grades with steps, and the rates are hourly amounts.

The following table lists the hourly rates for line workers at InFusion Corporation.


Grade

Step 1

Step 2

Step 3

Step 4

Step 5

1

10.64

11.07

11.49

11.96

12.40

2

11.77

12.27

12.76

13.24

13.72

3

12.92

13.46

13.98

14.55

15.07

4

14.03

14.63

15.21

15.80

16.39

5

15.20

15.83

16.46

17.12

17.75

To set up your grade structure to reflect this table, perform the following tasks:

  • Create five grades, each with five steps.

  • Set up a grade ladder using the Grades with Steps type, and select all five grades.

  • Set up step rates for hourly amounts using the rates in the table.

Setting Up Grade Ladders for Pay Scale Requirements: Worked Example

This example illustrates how to use a grade ladder to create a pay scale that is typical of technicians in the metal industry in Germany. The ladder includes four grades, and each grade includes four steps.

The following table summarizes key decisions for the grades, rates, and grade ladder in this scenario.


Decision to Consider

In This Example

Are steps required for the grades?

Yes.

Which step in each grade should be the ceiling step?

The last step in each grade.

What type of rates are necessary?

Salary rates only.

Will the ladder be created using grades or grades with steps?

Grades with steps.

Summary of the Tasks

To set up the pay scale, complete these tasks:

  • Create grades

  • Create a grade ladder

Creating Grades

  1. In the Workforce Structures work area, click Manage Grades to open the Manage Grades page.
  2. On the Manage Grades page, click Create to open the Create Grade: Grade Details page.
  3. In the Grade Details region of the Create Grade: Grade Details page, complete the fields as shown in this table, using the defaults unless otherwise indicated.

    Field

    Value

    Grade Set

    Common

    Name

    Technicians 03

    Code

    Tech03


  4. Click Next to access the Create Grade: Grade Steps page.
  5. In the Grade Steps region of the Create Grade: Grade Steps page, click Add Row.
  6. Add four steps for the grade by completing the fields as shown in this table. You must click Add Row after adding each step.

    Field

    Value

    Step Name

    Year 1

    Step Name

    Year 2

    Step Name

    Year 3

    Step Name

    Year 4


  7. Verify that Year 4 is the ceiling step.
  8. Click Submit. You will add the grade rates when you create the grade ladder.
  9. In the Warning dialog, click Yes.
  10. In the Confirmation dialog, click OK.
  11. Repeat steps 2 through 9 to add three more grades with steps. Complete the information for each grade using the information in these tables. The ceiling step in each grade is Year 4.

    Field

    Grade 2

    Grade 3

    Grade 4

    Grade Set

    Common

    Common

    Common

    Name

    Technicians 04

    Technicians 05

    Technicians 06

    Code

    Tech04

    Tech05

    Tech06


    Field

    Value

    Step Name

    Year 1

    Step Name

    Year 2

    Step Name

    Year 3

    Step Name

    Year 4


Creating a Grade Ladder

  1. In the Workforce Structures work area, click Manage Grades Ladders to open the Manage Grade Ladders page.
  2. On the Manage Grade Ladders page, click Create to access the Create Grade Ladder: Grade Ladder Details page.
  3. In the Grade Ladder Details region of the Create Grade Ladder: Grade Ladder Details page, complete the fields as shown in this table, using default values unless otherwise indicated.

    Field

    Value

    Grade Set

    Common

    Name

    Metal Technicians

    Grade Type

    Grade with steps


  4. Click Next to access the Create Grade Ladder: Grades page.
  5. In the Search Grades region of the Create Grade Ladder: Grades page, enter TECH in the Code field and click Search.
  6. Select Tech03 and click Add to Grade Ladder.
  7. Select Tech04 and click Add to Grade Ladder.
  8. In the Add to Grade Ladder Hierarchy dialog, select At the top and click OK.
  9. Select Tech05 and click Add to Grade Ladder.
  10. In the Add to Grade Ladder Hierarchy dialog, select At the top and click OK.
  11. Select Tech06 and click Add to Grade Ladder.
  12. In the Add to Grade Ladder Hierarchy dialog, select At the top and click OK.
  13. Verify that the grades appear in numerical order, with Tech06 at the top of the ladder and Tech03 at the bottom of the ladder.
  14. Click Next to access the Create Grade Ladder: Rate Values page.
  15. On the Create Grade Ladder: Rate Values page, select the legislative data group for Germany.
  16. In the Grade Step Rates region, click Add Row.
  17. Complete the following fields as shown in this table.

    Field

    Value

    Name

    Technician Ladder Rates

    Rate Type

    Salary

    Frequency

    Monthly

    Annualization Factor

    12

    Currency

    EUR


  18. In the Step Rate Values region, enter rates for the four steps in each grade by completing the fields as shown in this table.

    Grade Name

    Step Name

    Value

    Technicians 03

    Step 1

    1,750.73

    Technicians 03

    Step 2

    1,878.90

    Technicians 03

    Step 3

    2,009.79

    Technicians 03

    Step 4

    2,143.92

    Technicians 04

    Step 1

    2,238.57

    Technicians 04

    Step 2

    2,408.39

    Technicians 04

    Step 3

    2,577.68

    Technicians 04

    Step 4

    2,744.81

    Technicians 05

    Step 1

    2,831.87

    Technicians 05

    Step 2

    3,047.14

    Technicians 05

    Step 3

    3,257.52

    Technicians 05

    Step 4

    3,469.00

    Technicians 06

    Step 1

    3,586.36

    Technicians 06

    Step 2

    3,851.38

    Technicians 06

    Step 3

    4,122.34

    Technicians 06

    Step 4

    2,143.92


  19. Click Next.
  20. On the Create Grade Ladder: Review page, review the grade ladder hierarchy and the rates, and click Submit.
  21. In the Warning dialog, click Yes.
  22. In the Confirmation dialog, click OK.

Setting Up Grade Ladders for Spine Point Requirements: Example

This example illustrates how you can use grades, rates, and a grade ladder to represent spine points.

Scenario

Some organizations, such as in the public sector in the United Kingdom (UK), use spine points to structure their grades. Each point corresponds to one or more steps within a grade, as grades often overlap each other.

Grade Structure

Grade Structure

You can use grade ladders to meet the requirements of a grade structure with spine points. This example shows a grade structure with spine points that is similar to one for university workers in the UK.

The following figure illustrates an example of a grade structure with spine points.

A table that shows spine points and the grades and salaries associated with each point

Analysis

To set up grades for the spine point structure, you must:

  • Create three grades with steps and name each step using the spine point number

  • Create a grade ladder with all three grades

  • Create step rates with annual salary amounts

Resulting Grades, Rates, and Grade Ladder

Resulting Grades, Rates, and Grade Ladder

To create the grades needed for the grade structure with spine points, you must create three grades with steps. You can name the steps using the spine point numbers. The following table lists the grades and steps needed to meet the requirements of the grade structure with spine points.


Grade Name

Steps

Ceiling Step

Grade 1

  • Spine Point 1

  • Spine Point 2

  • Spine Point 3

  • Spine Point 4

  • Spine Point 5

  • Spine Point 6

Spine Point 5

Grade 2

  • Spine Point 6

  • Spine Point 7

  • Spine Point 8

  • Spine Point 9

  • Spine Point 10

  • Spine Point 11

  • Spine Point 12

Spine Point 11

Grade 3

  • Spine Point 12

  • Spine Point 13

  • Spine Point 14

  • Spine Point 15

  • Spine Point 16

  • Spine Point 17

Spine Point 17

To create the grade ladder for the grade structure with spine points, you must create a ladder using grades with steps. When you create the rates, use annual salary amounts. The following table lists the grades, steps, and rates to add to the ladder.


Grade

Steps

Rates

Grade 1

  • Spine Point 1

  • Spine Point 2

  • Spine Point 3

  • Spine Point 4

  • Spine Point 5

  • Spine Point 6

  • 25, 674

  • 26, 631

  • 27, 068

  • 27, 796

  • 30, 394

  • 31, 778

Grade 2

  • Spine Point 6

  • Spine Point 7

  • Spine Point 8

  • Spine Point 9

  • Spine Point 10

  • Spine Point 11

  • Spine Point 12

  • 31, 778

  • 32, 648

  • 33, 542

  • 34, 466

  • 35, 425

  • 38, 441

  • 39, 510

Grade 3

  • Spine Point 12

  • Spine Point 13

  • Spine Point 14

  • Spine Point 15

  • Spine Point 16

  • Spine Point 17

  • 39, 510

  • 40, 634

  • 41, 746

  • 42, 914

  • 44, 118

  • 45, 358

FAQs for Manage Grades, Grade Rates, and Grade Ladders

What's a ceiling step?

A ceiling step is typically the highest step within a grade to which a worker may progress. When a worker reaches the ceiling step within a grade, typically any further progress must be made by moving the worker to another grade. You can override the ceiling for individual assignments.

In most cases, the ceiling step is the last step in the sequence. For example, if the grade has steps 1 through 5, step 5 is the ceiling step. However, you may have situations where you want another step to be the ceiling. For example, in a grade with steps 1 through 5, you might indicate that step 4 is the ceiling step, and workers can progress from step 1 to step 4, and then on to the next grade. You can use step 5 when a worker is not entitled to move to the next grade, perhaps because he doesn't yet have the required qualifications or certificates, but you still want to increase his pay to reward him for many years of experience and good performance. You can provide the pay increase by moving him to step 5.

How can I edit rates for a grade?

You can edit rates by accessing the Manage Grade Rates task. You cannot edit rates within the Manage Grades task, because grades and rates have separate effective dates.

How can I add rates to grade steps?

You add rates for a grade with steps when you add the grade to a grade ladder.

Can I edit the legislative data group for a grade rate?

No. If you need to change the legislative data group for a grade rate, then you must change the grade rate to inactive, and create a new grade rate with the correct legislative data group.