Creating Market Compensation Scenarios

To create market compensation scenarios use the WA_CM_MODEL_TBL.GBL, WA_WEIGHT_DFN.GBL, and WA_SCENARIO_DFN.GBL components.

This section provides an overview of market compensation scenarios, and discusses how to:

Calculate regressions.
View regression statistics.
Define market models.
Define market weighting rules.
View market survey samples.
Set up market scenarios.
Run the Market-Based Pricing Application Engine process (WA_MBP).
Review the Market-Based Pricing process.
Review market compensation scenario data.

Pages Used to Create and Run Market Compensation Scenarios

Page Name	Definition Name	Navigation	Usage
Salary Regression Calculator	WA_REGRESS_TBL	select Workforce Analytics, then select Market Compensation, then select Setup, then select Salary Regression Calculator	Calculate regressions. Specify dimension criteria about your organization's size, relative to the size of companies in the survey. The system uses this information to calculate and store regressed survey values for predicted market rates.
Regression Statistics	WA_REGR_INFO_SPNL	Click the View Statistics link on the Salary Regression Calculator page	View regression statistics for the selected job code and survey instance.
Market Model	WA_CM_MODEL_TBL	select Workforce Analytics, then select Market Compensation, then select Setup, then select Setup Market Model, then select Market Model	Define market compensation models and view job codes in the model.
Market Weighting Rule	WA_WEIGHT_DFN	select Workforce Analytics, then select Market Compensation, then select Setup, then select Setup Weighting Rules, then select Market Weighting Rule	Define market weighting rules. Select the compensation survey data to include in the model, screen the survey data, and apply a weight to the data.
Market Survey Samples	WA_SAMPLE_SPNL	Click the Information button on the Market Weighting Rule page.	View market survey samples.
Market Scenario	WA_SCENARIO_DFN1	select Workforce Analytics, then select Market Compensation, then select Setup, then select Setup Market Scenario, then select Market Scenario	Set up market compensation scenarios by specifying the models that make up the scenarios.
Run Market Scenario	RUN_PF_JOBSTREAM	select Workforce Analytics, then select Market Compensation, then select Process, then select Run Market Scenario, then select Run Market Scenario	Run market–based pricing application engine process.

Understanding Market Compensation Scenarios

Create scenarios with the Market Compensation module to assess your organization's compensation gap to market, that is, to compare your organization's current compensation rates to an estimate of the prevailing market rates. To create a scenario:

Regress the survey values for certain executive and some mid management level jobs, based on your organization's dimensions and business needs.
Define a model ID, including aging rules.
Select survey samples and apply weighting rules.
Create a scenario ID.
Run the Market-Based Pricing process.

To summarize, define a market compensation model as a set of benchmark job codes, along with their weighting and aging rules. Then reference the model to define a market compensation scenario.

Survey Regression

Regression is a statistical technique that determines the relationship between two or more variables. Regression predicts the value of one variable (the dependent variable) based upon one or more independent variables.

Run regression calculations in the Market Compensation module to adjust market rates for certain jobs from those delivered with the survey. For example, the market rates delivered in a particular compensation survey may come from a set of companies whose business circumstances are substantially different from your organization's circumstances. The survey data might be from companies that are much larger or smaller than yours, based upon their total revenue or the number of employees.

Perform regression on the salary data for executive level jobs, where the pay levels are strongly dependent on the size of the organization. The Market Compensation module uses the financial size and unit size dimensions to gauge relative organization size. This helps you run regressions for executive pay data from surveys where the companies surveyed are much larger or smaller than your organization, based on one of these dimensions, and where regression statistics are provided by that survey.

For each survey with data requiring regression, specify dimension values (financial size or unit size) to regress the compensation survey data for each benchmark job. The system calculates and stores the regressions for the predicted market rates, with a dimension value of Regressed. Market Compensation calculates single regression equations, in either natural logarithms or common logarithms. Choose according to your business requirements.

Survey Data Aging

When you create a model in the Market Compensation module, one of the model parameters that you specify is an aging factor. The aging factor is an annualized percentage, used by the system to age the survey data by updating it to a common date. The aging factor is usually based on the expected movement of pay in the market (for example, 4 percent) based on surveys that report merit budgets for the coming year. The aging calculation is a daily calculation and it works as follows:

(Market Rate Measure Value x Aging Factor) / 360 = (Daily Adjustment Amount).
(Daily Adjustment Amount x Number of Days to Age) + (Market Rate Measure Value) = (Aged Market Rate Measure Value).

For example, assume that:

A compensation survey is effective-dated March 1, 2000.
The market rate measure value for a job in the survey is 50,000 USD.
We choose to apply an annualized aging factor of 4 percent (based on the expected movement of pay in the market).
We choose to age the survey data to January 1, 2001, a period of 10 months (or 300 days).

The calculation is:

(50,000 USD x .04) / 360 days = 5.5 USD per day.
(5.5 USD per day x 300 days) + 50,000 USD = 51,650 USD, which is the new aged market rate measure value.

Survey Selection and Weighting Rules

Market compensation surveys provide data about prevailing compensation rates for jobs. Use this data to calculate market rates for comparison against your organization's current pay structures, or against a pay strategy. Different compensation surveys have differing importance or credibility based upon how closely they reflect the business circumstances for your organization (industry type, financial size, and so on).

On the Market Weighting Rules page, you select the compensation survey data from the data warehouse tables that best fits your analysis. This way, you direct the system to process only the market compensation data that you consider to be most relevant. Assign relative weights to the data, if you think that one set of data is more, or less, important than another.

Workforce Rewards uses the compensation survey data and weightings when calculating market rates for a scenario.

Salary Regression Calculator Page

Use the Salary Regression Calculator page (WA_REGRESS_TBL) to calculate regressions.

Specify dimension criteria about your organization's size, relative to the size of companies in the survey. The system uses this information to calculate and store regressed survey values for predicted market rates.

Navigation

select Workforce Analytics, then select Market Compensation, then select Setup, then select Salary Regression Calculator

Image: Salary Regression Calculator page

This example illustrates the fields and controls on the Salary Regression Calculator page. You can find definitions for the fields and controls later on this page.

Job Code Set

Select the node of the JOBCODE tree to which you want to map the survey job code. Values are from the WA_JOBCDSET_D00 table.

Geography, Industry, Financial CD (financial code), Unit CD (unit code)

Select survey dimensions.

The selection criteria tells the system which survey samples to pull the regression statistics from, and then uses these dimension values as keys for the new regressed survey sample rows of data. Select from the prompt list values, which are from the GEOGRAPHY_D00, WA_INDUSTRY_D00, WA_FINCODE_D00, and WA_UNITCODE_D00 tables, respectively.

Variable Type

Select the appropriate variable type for this survey sample regression calculation. Values are:

Financial: The regression calculation takes into account your organization's financial size.

Unit: The regression calculation takes into account your organization's unit size.

Variable

Enter your organization's financial or unit size value. The system uses this value when calculating the regression.

Logarithm Type

Select Natural or Common, depending on the preferences or practices of your organization.

View Statistics

Click to access the Regression Statistics page, and review statistics provided by the selected survey sample that is involved in running the regression calculation.

Calculate

Click to trigger system processing. The system regresses the survey data, based on the survey sample, dimension criteria, and variable information that you entered on this page.

Regressed Values

The system populates the Regressed Values group box with the regressed values for each compensation code and measure ID provided by that survey sample. The system also inserts new rows of data for that survey sample, with regressed measure values, in the WA_SURVALUE_F00 table.

Measure ID

Displays a percentile of the market rate.

Measure Value

Displays the calculated market rate value for a specified percentile of a market rate. This is the annual, monetary pay level that you compare against the compensation level for similar jobs in your organization.

Note: When you click the Calculate button, the system writes the rows of data that appear on the page to the WA_SURVALUE_F00 table. However, the system uses the original effective date of the survey instance, not the effective date that you entered on this page. Each time that you modify the information for the survey instance and job code set and run the regression calculation, the system writes over the previous rows of data for the survey instance and job code set.

Regression Statistics Page

Use the Regression Statistics page (WA_REGR_INFO_SPNL) to view regression statistics for the selected job code and survey instance.

Navigation

Click the View Statistics link on the Salary Regression Calculator page

Image: Regression Statistics page

This example illustrates the fields and controls on the Regression Statistics page. You can find definitions for the fields and controls later on this page.

View statistics for the regression calculation for this survey sample and benchmark job. Base Compensation and Cash Compensation are the two most common compensation types found in compensation surveys, and these are some of the most common statistics used to evaluate the regressions.

Return

Click to return to the salary regression calculator.

Market Model Page

Use the Market Model page (WA_CM_MODEL_TBL) to define market compensation models and view job codes in the model.

Navigation

select Workforce Analytics, then select Market Compensation, then select Setup, then select Setup Market Model, then select Market Model

Image: Market Model page

This example illustrates the fields and controls on the Market Model page. You can find definitions for the fields and controls later on this page.

Note: You normally create model IDs on the EPM Foundation, Business Metadata, Business Framework, Models page. The Workforce Rewards Market Model page, however, enables you to create the model ID and further define the model, all on one page. Create your market compensation model IDs using this page only.

If you are adding a model, you have the option of cloning an existing model. To do this, enter a clone model ID and click the Tab button to move through the field. When saving the page, the system clones the specified model along with the associated job codes and weighting rules.

Annual Aging Rate

Enter the annual aging rate or factor. The system uses this percentage to age the survey data included in the model. Specify an aging rate to bring the survey data up to the current date or to make the survey data consistent with the dates of other surveys.

Parent Model ID

Enables you to link models together, using object-based modeling. This functionality is discussed in the EPM Foundation documentation.

Notes

Enter notes as appropriate.

Job Codes

Displays job codes and descriptions.

If you cloned a previous model as well as the associated job codes and weighting rules for the model, then the system displays the job codes here.

If you created a model without cloning the rules from another model, then the system displays no data rows. To view the job data associated with this model, save and close the Market Model page, complete the Weighting Rules page for this new model, and then access the Weighting Rules page again in Update/Display or Correction mode. Access the Market Model page, where you can now view the job data.

When you create a market model and assign a parent model, the page does not display the job codes of the parent model. The page displays only the job codes for the current model. To view the job codes from the parent model, access the page for the parent model.

Market Weighting Rule Page

Use the Market Weighting Rule page (WA_WEIGHT_DFN) to define market weighting rules.

Select the compensation survey data to include in the model, screen the survey data, and apply a weight to the data.

Navigation

select Workforce Analytics, then select Market Compensation, then select Setup, then select Setup Weighting Rules, then select Market Weighting Rule

Image: Market Weighting Rule page

This example illustrates the fields and controls on the Market Weighting Rule page. You can find definitions for the fields and controls later on this page.

Select the compensation survey data that you want to include.
Screen the survey data using dimension criteria.
Assign the survey data a relative weighting.

Note: Any job codes for which you want to establish weighting rules must appear on the Job Code tree. If you try to add a weighting rule, and you receive an error message from the system saying that the job code is not available, you may not have added the job code to your tree.

Clone Rule

This field appears at the top of the page in Add and Correction mode. Use this field to clone your weighting rules for the selected job code from a prior job code. Then modify the weighting rules or use as is. Select a job code from the prompt list values. These values are from a view that joins the JOBCODE_D00 and WA_WEIGHT_DFN tables.

The system uses the sample rows of the cloned job code as search criteria for the new job code. If the system returns a valid row for the new job code, then the sample row inherits the set and weight from the cloned job code.

Selection Criteria

Use the Selection Criteria group box to select survey samples, define screening criteria for the survey samples, and apply weighting factors to the selected survey samples.

Survey

Select a set of survey data to include in your model, to enter the selection criteria manually. The prompt values are from the WA_SURVEY_R00 table.

Geography, Industry, Financial CD (financial code), and Unit CD (unit code)

Select the dimension values to use to screen the specified set of survey data. The values are from the GEOGRAPHY_VW, WA_INDUSTRY_VW, WA_FINCODE_VW, and WA_UNITCODE_VW tables, respectively.

To select regressed survey values from the Regression Calculator, enter Regressed in either the Financial CD or the Unit CD field.

Weight

Enter a whole number multiplier weight for this set of survey samples. The system uses the weighting to calculate an adjusted market rate for this job code from all of the selected survey samples. Use a weight value of 0 (zero) to exclude a survey sample from the calculation for sizes that are too small or otherwise has data that is not thought to be valid for your organization.

Set

Enter a set value, which is a counter used to identify each set of search criteria that you enter using this page. It is a logical group of survey sample criteria containing a particular set of dimension values.

Attach

Click to enable the system to populate the Survey Samples group box with rows of survey data based on your selection criteria. Each time that you click the button, the system returns a new set of survey samples based on your criteria.

Remove

Click to enable the system to remove the data that appears in the Survey Samples group box, based on your selection criteria.

Survey Samples

For each survey sample returned, the system displays the set number, or counter, for the survey sample screening criteria, and the weight that you applied to the survey sample. You can override this value for a particular row. The Survey, Job Code Set, Geography, Industry, Financial CD (financial code), and Unit CD (unit code) fields display the selection criteria that you entered in the Search Criteria group box. The data is taken from the WA_WEIGHT_SEQ table.

Click the Survey Sample Information icon to access the Market Survey Samples page and view details of the survey sample.

Add, remove, and modify data in the grid as needed, to define the survey data that you want to use for this model ID and job code. Click the Attach to List button to add more survey samples. Click the Remove From List button to remove the rows from the grid and start over. Or remove one row at a time.

The system uses these survey samples and associated weightings to perform market rate calculations, when you run the Market-Based Pricing process. Here is a summary of the weighting calculation that occurs:

The market rates for each of the survey samples are multiplied by the weights indicated, to provide adjusted market rate values for each sample.
All of the adjusted market rate values are added to make an aggregate value.
All of the weights are added to make an aggregate value.
The aggregate rate value is divided by the aggregate weight value, to yield a single, weighted market rate value for each job code, compensation code, and measure ID.

Market Survey Samples Page

Use the Market Survey Samples page (WA_SAMPLE_SPNL) to view market survey samples.

Navigation

Click the Information button on the Market Weighting Rule page.

Image: Market Survey Samples page

This example illustrates the fields and controls on the Market Survey Samples page. You can find definitions for the fields and controls later on this page.

Survey Instance

In this group box, the page displays the company participant count and employee participant count, which provide you with an idea of the overall size of the survey from which you selected your samples.

Survey Sample

In this group box, the system displays selection criteria that you applied to the survey data on the Market Weighting Rules page.

Market Values

In this group box, the system displays the data for the selected survey sample, including each compensation code, measure ID, and associated measure value (market rate). The measure ID is a percentile of the market rate. The measure value is the calculated market rate value for a particular percentile of a market rate, and for a particular scenario and job code. This is the annual, monetary pay level to compare against the compensation level for similar jobs in your organization.

For each row, the system also displays the total sample count of companies and sample count of employees, which provide you with an idea of the overall size of the survey samples that you selected from the survey with your screening criteria.

Review this information to determine if your sample size is too small to be statistically significant, or whether the survey data is weighted properly. This can help you decide whether you want to use the data on the Market Weighting Rule page, and whether to save the data.

Market Scenario Page

Use the Market Scenario page (WA_SCENARIO_DFN1) to set up market compensation scenarios by specifying the models that make up the scenarios.

Navigation

select Workforce Analytics, then select Market Compensation, then select Setup, then select Setup Market Scenario, then select Market Scenario

Image: Market Scenario page

This example illustrates the fields and controls on the Market Scenario page. You can find definitions for the fields and controls later on this page.

Note: You normally create scenario IDs in the EPM Foundation, Business Metadata, Business Framework, Scenarios page. The Market Scenario page, however, enables you to create the scenario ID from within Workforce Rewards. Market compensation scenarios are always historical.

Model ID

Select the model ID of the model that you want to include in the scenario. The prompt values are from the MODEL_VW table.

Notes

Enter notes as appropriate.

Run Market Scenario Page

Use the Run Market Scenario page (RUN_PF_JOBSTREAM) to run market–based pricing application engine process.

Navigation

select Workforce Analytics, then select Market Compensation, then select Process, then select Run Market Scenario, then select Run Market Scenario

As of Dated Jobstream

Market compensation scenarios are historical scenarios only, as of a single point in time. Select the As of Dated Jobstream check box to enable the system to hide the Fiscal Year and Accounting Period fields and display the As of Date field. Enter an as of date for the scenario.

Jobstream ID

Select the WA_MBP jobstream ID. Although several jobstream IDs appear in the list of values, this is the jobstream that you want to run from this page for the Market-Based Pricing process. We deliver this metadata for you to use to run the process:

Application Engine IDs WA_MBP and PF_MERGE.

Job IDs WA_MBP and WA_MBP_MRG.

Jobstream ID WA_MBP.

Warning! Do not run the Market Compensation Scenario jobstream based on a fiscal year and accounting period. Also, do not run a jobstream with a Forecast type scenario from this page. If you do either, the Market Compensation engine will not run successfully.

Reviewing the Market-Based Pricing Application Engine Process (WA_MBP)

The WA_MBP jobstream runs the Market-Based Pricing process. This process calculates market rates for the job codes from the survey samples that you selected, using the aging and weighting rules that you defined. A market rate value is calculated for every compensation code and measure. (A measure is a percentile of the market rate.) The system places the new, calculated market rate data in a temporary table called WA_MKT_SCEN_T.

The jobstream then runs the Final Table Merge Application Engine process (PF_MERGE). This process moves the data from the temporary table to the final table, WA_MKT_SCEN_TBL, where the calculated market rates are stored with Scenario ID as a key. WA_MKT_SCEN_TBL is also the source table for the Market Compensation data approval process.

Reviewing Market Compensation Scenario Data

When you run the Market-Based Pricing process, the system also calls the Market Scenario Data Mart process (WA_MC_SCEN), which updates the Workforce Rewards Data Mart. This keeps the data for the Data Mart and the Workforce Rewards tables synchronized. You can also run the Market Scenario Data Mart process alone, to populate the fact tables for previous periods without having to run the WA_MBP process.

This table lists the input tables used to populate the Data Mart fact tables:

Reporting Area	Input Table (D00, R00, and F00)	Output Table (Fact)
Market Compensation	WA_MKT_SCEN_TBL, WA_MKT_RATE_TBL , JOB_F00, WA_COMP_HST_F00, JOBCODE_D00, LOCATION_D00, SAL_GRADE_D00	WA_MC_SCEN_FACT: Contains all of the data required from the Market-Based Pricing engine, at the job code level. WA_MC_EMPL_FACT: Contains all of the data required from the Market-Based Pricing engine, at the employee level.

Reporting Area

Input Table (D00, R00, and F00)

Output Table (Fact)

Market Compensation

WA_MKT_SCEN_TBL, WA_MKT_RATE_TBL , JOB_F00, WA_COMP_HST_F00, JOBCODE_D00, LOCATION_D00, SAL_GRADE_D00

WA_MC_SCEN_FACT: Contains all of the data required from the Market-Based Pricing engine, at the job code level.

WA_MC_EMPL_FACT: Contains all of the data required from the Market-Based Pricing engine, at the employee level.

In Market Compensation, the fact table data is accessed by delivered inquiry pages in the Market Compensation Scenario component. You may also select a business intelligence application and develop analysis templates to use with Market Compensation.