Budgeting and Planning Salary Increases

This chapter provides an overview of the Base Compensation budgeting and planning business process and discusses how to:

• Calculate base compensation budgets.

• View budget comparisons.

• Plan group salary increases.

• Load salary changes to compensation records.

• (MEX) Define the increase matrix method.

Understanding the Base Compensation Budgeting and Planning Business Process

The following list briefly outlines the steps in the base compensation budgeting and planning process. You can calculate budget values with or without using the request budget functionality.

To calculate base compensation budgets:

1. Create a group using group build pages.

   See Setting Up and Working with Group Definitions.

2. Set up base compensation and budgeting control tables.

3. Create a budget in the Create/Approve Budget component and select the budget type or action reason.

4. Load rate codes and select one of these methods for calculation:

   • Matrix

   • Amount

   • Percent

   • Points

   • Percent of Points

   • Add Percent

5. Calculate the new budget and view the results.

6. (Optional) Compare proposed budgets and make adjustments.

7. (Optional) Request approval from approving manager via workflow.

8. Approve a budget or go directly to the Assign Group Increases component without approving the budget first.

9. Establish a salary increase plan for workers in the group based on the budget.

10. Manually adjust increases for individual workers in the group.

11. Compare salary plan figures with budget figures.

12. Finalize and approve the salary increase plan.

13. Populate worker records with planned, approved increases.

See Also

Establishing Group Default Control Values for Base Compensation Budgets and Plans

Common Elements Used in This Chapter

Calculating Base Compensation Budgets

This section provides overviews of Base Compensation budgeting procedures and budget setup and configuration for group salary increases, lists common elements, and discusses how to:

• Set up a budget description.

• Define budget requests.

• Enter and calculate budget components.

• View budget details.

Understanding Base Compensation Budgeting Procedures

You have the following options when using the Group Increases pages, the Budget Calculation process, and the Budget Comparison Inquiry pages:

• You can calculate a budget using either online processing in the Group Increases component pages or the Budget Calculation batch process.

  You want to use the batch process if your group is larger than 25 workers.

• If you create more than one budget for the same group and budget period, you can compare budgets during the approval process or skip the budget comparison steps.

• You can approve a budget on either the Create/Approve Group Budget - Budget Requested page or the Compare Group Budgets - Comparison page.

Complete these steps to establish a salary increase budget for a group:

1. Create a group using the group build pages.

   See Setting Up and Working with Group Definitions.

2. Set up salary plan control values for the group.

3. Assign a budget ID and describe the budget on the Create/Approve Group Budget - Budget Description page.

   You can approve only one budget for a single group and budget period start date.

4. Define the effective date, sequence, action, and action reason for the budget increase on the Create/Approve Group Budget - Budget Requested page.

   You can budget for different action or action reason combinations that take effect on different dates within the same budget. However, do not do this if the increases are administered by Anniversary Date.

5. Load rate codes to view all the rate codes for the group on the Create/Approve Group Budget - Budget Components page.

6. Enter salary increases by selecting a matrix or by entering an amount, a percent, and so on for each rate code, as needed, on the Create/Approve Group Budget - Budget Components page. You must save the page if you want to run the calculations that comprise the next step.

7. Calculate the requested and current budget amounts by clicking the Calculate button on either the Create/Approve Group Budget - Budget Components page or the Create/Approve Group Budget - Budget Requested page, or by running the Budget Calculations Application Engine process.

   If your group is large, you will want to use the application engine process.

   The system enters the calculated totals of the requested budget in the Requested and Current rows on the Create/Approve Group Budget - Budget Requested page.

8. If you are not using the requested budget functionality, do not click the Request Approval button.

   (Optional) Access the Create/Approve Group Budget - More Budget Details page and select the Total Current Annual Salaries, Approved Budget, and Allocation Amount check boxes. Click the Get Selected Values button to view the calculated budget values. You may also use the new additional fields for reserve amount, vacant position budget amount, and new position budget amount. Six user-defined fields are also provided.

9. If you are requesting a budget for approval, submit the budget for approval by clicking the Request Approval button on the Create/Approve Group Budget - Budget Requested page.

10. Compare budgets (if you created more than one budget for the same group and budget start date) on the Compare Group Budgets pages.

11. Approve the budget without modification by selecting the Budget Approved check box on the Compare Group Budgets - Comparison page.

12. Modify the current budget, approve it, or use it for salary planning without approving it.

    To modify the budget, change the values in the Current Budget grid on the Create/Approve Group Budget - Budget Components page.

13. To approve the budget, enter dates, select the Approve the Budget check box, and then save.

14. Use the approved or unapproved budget as the basis for creating a salary increase plan.

Understanding Budget Setup and Configuration for Group Salary Increases

This diagram illustrates the process flow required to set up group budgets for group salary increases:

Budgeting setup process, including the required steps to set up group budgets for group salary increases

Common Elements Used in This Section

Pages Used to Budget Group Increases

Setting Up a Budget Description

Access the Create/Approve Group Budget - Budget Description page (Compensation, Base Compensation, Group Budgets, Create/Approve Group Budget, Budget Description).

You can set up a number of different budgets with distinct budget IDs for the same group in the same budget period. You can compare these budgets in the Compare Group Budgets pages.

Set up the group default values on the Default Budget Parameters page.

Retrieving Group Information

Group Default Values

Defining Budget Requests

Access the Create/Approve Group Budget - Budget Requested page (Compensation, Base Compensation, Group Budgets, Create/Approve Group Budget, Budget Requested).

Effective Date	Select an effective date for the action and action reason associated with this budget. This is the effective date which will ultimately be loaded into Job Data. The effective date enables you to budget for different action and action reason combinations that take effect on different dates within the same budget. By using the Seq (sequence number), Effective Date, Action, and Reason fields, you can perform multiple actions on the same rate code for the same effective date and different action reasons. Note. If you administer salary increases by Employee Anniversary Date under the plan, you can only define one increase in the budget, which must have the salary plan start date as the effective date.
Sequence	If you enter an additional action with the same effective date and different action reason, increase the sequence number by one integer. The system assumes the first action to have a sequence number of 0; therefore, enter a sequence number of 1 for your second use of the an action code and action reason for the same effective date. You may have the same effective dates for pay rate changes for merit and promotions, and other types, using specific effective sequences.
Budget Type	Select a budget type from the available values. The values come from the Define Budgets page. The default value for this field appears.
Action	Select from these values associated with this budget: Demotion, Pay Rt Chg (pay rate change), Posn, Chg (position change), and Promotion. The default value for this field appears.
Reason	Select from the list of action reason code values established in the Action Reason Code table.
Budget Manager	The default value is the Manager ID defined for the group when the group was defined. You can override this ID if necessary. When you enter the manager ID, the system automatically updates the Rcd#(record number) field with the manager's worker record number.
Rcd#	The system enters the worker record number of the budget manager you identified.
Calculate	After you enter or change rate codes and increase values in the Requested Budget or Current Budget grids on the Create/Approve Group Budget - Budget Components page, click Calculate to calculate the budget and populate the Current, Requested, Planned Increase and Variance Percent, and Amount fields on this page. The system calculates the total for the group based on the following data: Increases in workers' compensation rate codes that you enter in the Create/Approve Group Budget - Budget Components page. Budget period parameters that you define for the budget. Note. Only the budget manager is allowed to cancel a budget approval. If you modify a budget that was already approved, you will have to recalculate the budget and then request a new approval. You cannot save the page unless a recalculation is done and a new approval is requested. You cannot modify a budget that has salary increases already loaded to JOB since a modification would change the status in Summarize and Approve Raises to Processed. If a budget is modified, the status will automatically be set to Proposed, even if the status was previously Approved.
Request Approval	(Optional) Click this button to send a workflow notifying the approval manager to review the budget. Workflow must be enabled.
Percent	Displays the total percent change in salaries. Requested Percent = Requested Amount - Total Annual⇒ Salaries prorated to the level of proration / Total⇒ Annual Salaries prorated to the level of proration x 100 Current Percent = Current Amount - Total Annual Salaries⇒ prorated to the level of proration / Total Annual⇒ Salaries prorated to the level of proration x 100 Planned Increase Percent = Planned Increase Amount / Total⇒ Annual Salaries prorated to the level of proration x 100 Variance Percent = Variance Amount / Total Annual Salaries⇒ prorated to the level of proration x 100 Note. Before doing this subtraction and division, Requested Amount and Current Amount values (prorated to level of proration) must be converted to an annual amount.
Amount	Displays the change in total salaries. These calculations include all base pay rate codes in each Job compensation package as well as any new percentage or salary points calculations resulting from the planned increase. Requested Amount = Sum of requested salaries prorated to⇒ the level of proration Current Amount = Sum of current salaries prorated to the⇒ level of proration Planned Increase Amount = Current Amount - Total Annual⇒ Salaries prorated to the level of proration Variance Amount = Current Amount - Requested Amount
Date	Enter the date that you are requesting this budget (in the Requested row) or approving the budget (in the Current row) or approving the salary plan (in the Planned Increases row). The system enters this date if you approve the budget on the Compare Group Budgets - Comparison page.
Requested	This information represents the amount being requested for salary increases.
Current	This information represents the budget as revised by the approver on the Create/Approve Group Budget - Budget Components page. This amount is available for distribution to group members on the Propose Raises page.
Planned Increases	This information represents the total increases that you define in the salary increase plan associated with this budget. All amounts appear in the budget currency and frequency.
Budget Approved	The approval manager first enters the date in the Current budget row and then selects the Budget Approved check box when satisfied with all of the budget figures. The system selects this check box if you approve a budget on the Compare Group Budgets - Comparison page. Only one approved budget can exist at one time for a single group and budget period start date. Only the budget manager can cancel a budget approval by deselecting this check box. Then, the Requested Budget and Current Budget grids on the Create/Approve Group Budget - Budget Components page will become available for edit.
Grand Totals	The total amount requested for the budget.
Amt (amount)	The system enters the total increases according to the current budget, calculated and displayed at the level of proration defined for the budget.
% (percent)	The system enters the percentage of increase between the sum of the annualized salaries as of the start date of the plan and the calculated increased salaries in the current budget.
Variance	After you create a salary increase plan associated with this budget, displays the variance between the Requested Amount and Current Amount. If the variance displays as a positive amount, the salary plan exceeds the budgeted amount. If the variance displays as a negative amount, the planned salaries fall short of the budgeted amount.
Salary Plan Approved	The approval manager selects this check box to approve the plan. It must be selected to load the salary increases to Job Data.

See Also

Understanding Salary Increase Budgeting and Planning

Entering and Calculating Budget Components

Access the Create/Approve Group Budget - Budget Components page (Compensation, Base Compensation, Group Budgets, Create/Approve Group Budget, Budget Components).

Common Page Information

Amounts Tab

When the budget is approved, this grid is not accessible. You are not able to insert or delete rows, and you cannot modify any value in the grid.

Note. If you modify a budget that was already approved, you need to recalculate the budget. You cannot save the page unless a recalculation is done. It is not possible to modify a budget that has salary increases already loaded to JOB since these increases change the status in the Propose and Summarize Raises page to Processed. If a budget is modified, the status will automatically be set to Proposed, even if the status was previously Approved.

Changes Tab

The fields on this tab are unavailable if a salary matrix is associated with any rate code on the Amounts tab.

Current Budget Amounts and Changes

As you enter the Requested Budget details, the system copies them into the Current Budget grid. The approval manager can adjust the budget in the Current Budget grid. When you click Calculate or run the Budget Calculation process, the system calculates and enters the adjusted totals in the Current row on the Create/Approve Group Budget - Budget Requested page.

When the budget is approved, this grid is not accessible. You are not able to insert or delete rows, and you cannot modify any value in the grid.

The fields in this section are identical to the fields on the Amounts and Changes tabs in the Requested Budget section.

Viewing Budget Details

Access the Create/Approve Group Budget - More Budget Details page (Compensation, Base Compensation, Group Budgets, Create/Approve Group Budget, More Budget Details).

Calculated Values

Customizable Values

Viewing Budget Comparisons

This section discuss how to use the Budget Comparison Inquiry pages to:

• View proposed budgets.

• View budget variances.

• Approve a budget.

Pages Used to View Budget Comparisons

Viewing Proposed Budgets

Access the Compare Group Budgets - Budgets page (Compensation, Base Compensation, Group Budgets, Compare Group Budgets, Budgets).

This page displays the budget description of each budget that you created for the specified group ID and budget period start date. Its fields are the same as those found on the Create/Approve Group Budget - Budget Requested page.

Note. Set up more than one group increase budget for the group ID and budget period start date before using this page.

Viewing Budget Variances

Access the Compare Group Budgets - Comparison page (Compensation, Base Compensation, Group Budgets, Compare Group Budgets, Comparison).

Displays the budgets that you selected on the Compare Group Budgets - Budgets page.

Approving a Budget

The system performs the following checks to ensure that only one budget ID is approved for a single group ID and budget period start date:

• When you select either Budget Approved or Salary Plan Approved for any increase with effective date and effective sequence within a group budget, the system will make sure that no other budget ID for the same group has been approved.

• When you select either Budget Approved or Salary Plan Approved for any increase with effective date and effective sequence within a group budget, the system will make sure that the increases within the budget that have a previous effective date or sequence have already been approved. This action occurs because each subsequent effective date or sequence budget calculation is performed based on previous budgeted increments.

You can use a budget for a salary increase plan without approving the budget first. However, before you can run a process to load the salary changes to the Job Data records, the following approvals must be completed:

• Salary Plan Approved must be selected on the Create/Approve Group Budget - Budget Requested page.

• The individual worker increases must be marked Approved on the Summarize and Approve Raises page.

Planning Group Salary Increases

This section provides an overview of salary increase planning and discusses how to:

• Calculate group increases.

• Apply group increases.

• View the salary plan summary.

• View budget information.

Understanding Salary Increase Planning

Use the Group Increases components located under Compensation, Base Compensation, Group Increases and the Group Budgets components under Compensation, Base Compensation, Group Budgets to create salary increase plans by group. The system loads the group members and their default, budgeted increases into the page, where you can view them individually. In addition to details of the worker's compensation package by rate code, the pages provide information about the worker's compa-ratio, percent in range, last increase date, salary history, and review results. This information helps you make decisions about adjusting the budgeted increase for individual workers without looking elsewhere in the system.

Complete these steps to use the Group Increases and Group Budgets components to create salary increase plans:

1. Create a group, define salary plan controls, and establish a group increase budget.

2. Run the Salary Plan Calculation process to apply the budgeted increases to the compensation packages of workers in the group.

   For small groups, use online processing instead of the batch process. To use online processing, click the Calculate button after accessing the Propose Raises page.

3. Adjust budgeted increases at the individual level by rate code on the Propose Raises page.

   After making changes, click the Refresh button on the Summarize and Approve Raises page to update the current budget on the Create/Approve Group Budget - Budget Requested page.

4. View summary information on the Summarize and Approve Raises page.

5. Approve worker raises on the Summarize and Approve Raises page.

   Approve all raises by clicking the Approve All button. Alternatively, you can approve or deny raises by changing the status of each worker individually.

6. Approve the Salary Plan on the Create/Approve Group Budget - Budget Requested page.

Integrating Worker Reviews and Salary Increase Plans

If you use salary increase guideline matrices that are associated with a salary plan, the system calculates whether the new salary figure is under, over, or meets increase guidelines established for the review rating and percent in range.

Calculating Salary Increases Based on the Budget

The system calculates worker increases using either of the following methods:

• The Salary Plan Calculation application engine process.

• Online processing on the Propose Raises page.

If you are using a salary increase matrix created as a configurable matrix to calculate the budget, then the system uses the criteria on the Data Content page to apply increases to each worker.

Pages Used to Plan Group Salary Increases

Calculating Group Increases

Access the Calculate Group Increases page (Compensation, Base Compensation, Group Increases, Calculate Group Increases, Calculate Group Increases).

Use this page to calculate budgets for large groups of workers.

Applying Group Increases

Access the Propose Raises page (Compensation, Base Compensation, Group Increases, Assign Group Increases, Propose Raises).

You must create a group increase budget for the worker's group before using this page.

Note. This process is recommended for calculating small groups.

Identifying the Budget

Propose Raises

The system enters default proposed increases based on the budget that you identified when you entered the page. It applies calculations only to budgeted rate codes that are already in the worker's compensation package. If you want to add additional salary components to the worker's compensation package or to increase components that were not originally budgeted, add these manually in the Pay Components grid on this page.

Pay Components

The pay components listed in the grid are those defined on the Job Data - Compensation page. The grid is populated when you enter the page. When you click Calculate, the system applies the increases to the rate code. To recalculate and refresh the data on the Create/Approve Group Budget - Budget Requested page after you manually add or change data here, click the Refresh button in the Grand Total section of the Summarize and Approve Raises page.

Note. Do not click the Calculate button after you make manual changes on this page because you will lose your manual changes. Instead, click the Refresh button in the Grand Total section of the Summarize and Approve Raises page. The Refresh button updates the requested budget on the Budget Requested page.

If a raise status is Processed, then this grid is not accessible.

Amounts Tab

Changes Tab

Conversion Tab

Employee Review Rating

In this section, view the results of the worker's review. The fields in this section are the same as those on the Employee Review page.

Employee Salary History - Rates Tab

In this section, view each salary change in the worker's salary history over time. The fields in this section detail each salary change and are the same as those in the worker's Job record.

Employee Salary History - Salary Grade Tab

See Also

Viewing Budget Information

Viewing the Salary Plan Summary

Access the Summarize and Approve Raises page (Compensation, Base Compensation, Group Increases, Assign Group Increases, Summarize and Approve Raises).

Budget Period	Displays the start and end dates that you defined for this budget ID.
Salary Planning Start Date	Displays the salary planning start date that you defined for this budget ID.
Approve All	Once you have finalized the plan, click Approve All to mark all increases with the Approved status. Increases must have the Approved status to be loaded into the workers' job records by the Load Salary Changes process.

Grand Total

Approve Raises

Displays the following information for each worker in the group. With the exception of the Rank and Status fields, this information is identical to the information on the Propose Raises page.

Viewing Budget Information

Access the Budget Information page (Compensation, Base Compensation, Group Increases, Assign Group Increases, Budget Information).

This page is display only. The information is similar to that found on the Budget Requested and Budget Components pages.

Loading Salary Changes to Compensation Records

This section provides an overview of loading salary changes to compensation records, lists prerequisites, and discusses how to:

• Create and refresh anniversary dates.

• Run salary changes.

Understanding Loading Salary Changes to Compensation Records

After you approve your salary increase plans and budgets, you can load the salary increases to the workers' Job records. The system provides a Load Salary Changes process to load all approved salary increases for the group ID and budget period start date that you specify.

This process inserts a new row for the worker in the Job record and the Compensation record. In addition to the new compensation rate, the new record contains the effective date, sequence, action, and action reason that you defined for the increase on the Create/Approve Group Budget - Budget Requested page.

Prerequisites

Before you can run the processes to load salary changes to the Job Data records:

• The Salary Plan Approved check box must be selected on the Create/Approve Group Budget - Budget Requested page.

• The individual worker increases must be marked Approved on the Summarize and Approve Raises page.

Pages Used to Refresh Anniversary Dates

Creating and Refreshing Anniversary Dates

Access the Refresh Anniversary Date page (Compensation, Base Compensation, Group Budgets, Refresh Anniversary Date, Refresh Anniversary Date).

Group ID	Enter the ID of the group for which you want to refresh anniversary dates.
Budget Period Start Date	Enter the start date of the budget for which you want to refresh anniversary dates.
Budget ID	Enter the ID of the budget for which you want to refresh anniversary dates.

Running Salary Changes

Access the Load Group Increases page (Compensation, Base Compensation, Group Increases, Load Group Increases, Load Group Increases).

Before using this page, the salary increase budget must be approved. Each worker increase that you want to load must have approved status on the Summarize and Approve Raises page.

(MEX) Defining the Increase Matrix Method

In Mexico, you can define salary increase calculations in two ways:

• Standard budget raise method.

• Salary increase matrix method.

With the standard budget raise method, you can take the budgeted percentage and insert it into the worker's salary plan. With the salary increase matrix method, you can take the percentage from the salary increase matrix.

Once you select the increase method on the Default Budget Parameters page and the Assign Group Budget Parameters page, you need to calculate the salary increase for the worker.

To calculate the salary increase if you select the By Matrix increase method:

1. Determine the result of the last evaluation before the increase effective date.

2. Determine the worker compensation quartile.

3. Determine the increase percentage.

4. Update worker data with the new raise percentage.

The following topics define how you calculate the salary increase matrix method.

Step 1 - Determine the Result of the Last Evaluation

Go to the Employee Review page to see the results. The Review Rating field indicates the result of the last evaluation. In our example, the worker received a review rating of 3 (Average) in his last evaluation.

Verify the effective date of the last evaluation on the Propose Raises page. In our example, the last effective date entered, indicated in the Start Date field, is 04/01/2000.

Note. Also enter the effective date for the new evaluation on the Propose Raises page.

Step 2 - Determine the Worker Compensation Quartile

Determine the worker's compensation quartile in the salary matrix on the Salary Plan page. Enter the salary administration plan, grade, and step for the worker. The matrix to which the worker belongs appears on this page.

On the Compensation page, verify the hourly, daily, monthly, and annual pay rates for the worker.

In our example, when we look at the Compensation page, we see that the monthly salary for this worker is 2166.67.

Once we have determined the worker's monthly salary, we look at the quartile.

On the Salary Grade Table page, you see the minimum, midpoint, and maximum salary ranges for the worker's salary grade.

Determine the worker's quartile using this formula:

Worker's Quartile Formula

The quartiles for the salary ranges are Below, Quartile 1, Quartile 2, Quartile 3, and Quartile 4.

Since our worker's monthly salary is 2166.67, we determine that this worker is in the Below range.

Note. The data used on the quartile formula is taken from the Salary Grade table.

Step 3 - Determine the Increase Percentage

Look at the Salary Increase Matrix table on the Define Salary Increase Matrix Table page to determine the salary increase percentage. In our example, we have a range, instead of an amount, so we need to calculate the average to find the increase percentage.

The information needed to determine the increase percentage for this worker is as follows:

• Review result = 3 (Average)

• Quartile = Below minimum

• Matrix = KUEX

Go to the Define Salary Increase Matrix Table page. There, in the Salary Increase Matrix group box, you see the minimum and maximum ranges for the increase percentages for each quartile.

For the Below Minimum range, you see that the minimum percentage is 5.0 and the maximum percentage is 9.0.

We calculate the increase percentage as follows:

Increase Percentage Formula

So, this worker will receive a salary increase percentage of 7 percent.

Step 4 - Update Worker Data with the New Raise Percentage

Go to the Create/Approve Group Budget - Budget Components page to update the new salary increase. There, on the Changes tab, enter the rate code that corresponds to the increase percentage.

Once you have entered the new raise percentage, the worker's new salary, change amount, and change percent appear.

See Also

Setting Up Salary Plans, Grades, and Steps