6Manage Compensation Budgets

This chapter contains the following:

You use compensation budgets to make sure that your workforce compensation aligns with company financial goals and targets. You can publish budgets and budget amounts that line managers can use to award compensation. They can calculate the budget amounts manually or use models to automatically determine the amounts.

Depending on your role, here's what you can do:

Role Actions

Compensation Manager

Publish budgets to line managers in two ways:

  • Distribute budgets down the reporting hierarchy

  • Allocate budget amounts at the worker level

Publish amounts automatically so that line managers can award compensation within their allocated budget amounts.

Line Manager

Use these options to enter budget amounts:

  • Calculate the amounts manually

  • Use a compensation model

  • Download budget details to a spreadsheet and enter the amounts offline

Tasks for Managing Compensation Budgets include:

  • Allocate budgets to managers and workers

  • View the audit trail

  • Publish the budgets

In this case, you're signed in as Henry Jones a manager.

Allocating Budgets to Managers and Workers

  1. Click My Team.

  2. Click Workforce Compensation.

  3. Click the 1 of 14 link to open the Primary Managed Plans dialog box.

  4. Click Simple Merit and Bonus 2018.

  5. In the Tasks section, Click Manage Budgets.

  6. Select Simple Bonus Budget 2018.

    As your Budget Method is All managers, you can view all the managers who report directly to you. You can also expand each one so that you can view all the managers who report to your direct managers. You can then allocate budgets to yourself and all the managers below you.

  7. Click to expand the Brown, Julie row to see all managers who report to Julie Brown.

  8. Click the Actions list to view the available actions.

    The available actions depend on how compensation has been implemented.

  9. In the Direct Reports row, click the Worker List icon.

    You can also view all the workers who report directly to you so that you can allocate a budget to yourself or your direct reports. Use the Actions list to export the data of all workers or direct reports to Excel, or change their bonus eligibility status. If the budget pool is set up to use worker-level budgeting, you can allocate budgets to each worker.

  10. Click Done.

Viewing the Audit Trail

  1. Click the Actions list and select View Audit Trail.

    You can look at the audit trail and see changes to your budget or a selected manager's budget.

  2. Click the Export list and select Export with Ability to Import.

    You can make changes to this budget on this page, or export data to an Excel spreadsheet, change the data, and then upload the revised information to the budget sheet.

  3. In the Brown, Julie row, click Budget Distribution Percentage field.

  4. Enter 9.

    You can enter a budget amount or percentage for each manager. In this case, you're increasing the budget to 9 percent.

  5. Press TAB to see the recalculated budget amount.

Publishing the Budgets

  1. Click the Publish list.

    You can publish budgets to selected managers or to all managers. You can also withdraw previously published budgets to make changes to them. In this case, you can publish the budgets.

  2. Select Publish All Budgets.

  3. You can optionally enter comments to your managers, who receive a notification that budgets have been published to them.

  4. Click Submit.

  5. Click OK.

  6. Click Save and Close.

    After the budgets are published, managers can begin allocating compensation to workers.

You can publish, and republish, your budget to all or selected managers, as well as unpublish budgets on the Manage Budgets page. You can also use both budget publishing methods. For example, you select a manager to get a budget now, and then publish the rest of the budget to all your other managers later.

All Managers

Managers receive their own budgets to manage. If they have managers who report to them, they publish the budget to those managers. If they don't have reporting managers, they allocate compensation directly to their workers. .

Selected Managers

Only selected managers get a budget. Then they can manage their own budgets.

You can distribute budgets for managers in three ways: Distribute budgets manually, run the Start Compensation process, or use a model to distribute budgets. Managers have read-only access to their budgets when the budget is null or zero.

  • A null budget means you haven't been allocated a budget.

  • A zero budget means your budget is zero dollars.

Distribute Budgets Manually

You can distribute budgets manually in two ways.

  • Switch to the manager whose budget you want to distribute on the landing page.

  • Click the Adjust Budgets button on the Manage Budgets page.

You can distribute budgets for the first time or adjust budgets previously distributed for a selected manager. The budget amount can be a flat amount or a percentage of total eligible salaries. The selected manager gets the budget amount you distributed or modified.

Run the Start Compensation Cycle Process

When you create a budget pool you can decide to automatically publish budgets. The process distributes budget amounts or percentages according to the values you configure for these columns on the Configure Budget Page Layout page:

Column Location

Budget Distribution Distributed Amount or Budget Distribution Distributed Percentage

Detail Table tab

Budget Amount or Budget Percentage

Summary tab, Table View subtab.

Budget Amount or Budget Percentage

Worker List tab for worker level budgeting

Here's how the process distributes budgets.

Method How the Budget is Distributed

Manager level budgeting

As amounts to all managers with at least one lower level manager under them.

Worker level budgeting

As amounts or percentages at the worker level. The manager level budgets are the sum of the individual worker budgets.

Use a Model to Distribute Budgets

You can build a model or use an existing model to distribute budget amounts for the first time according to the model criteria. On the Create Model: Apply or Edit Model: Apply page, you apply the results as budget amounts to all managers in the model population. You need to have a budget published to you before you can use a model to distribute a budget.

The allocation method determines how a model calculates budget or compensation amounts and target amounts or ranges for a given worker population. It influences how you apply the model results. The allocation methods available depend upon how the plan is set up. The allocation method you select lets you model amounts by:

  • Bringing workers up to a specific compa-ratio or quartile

  • Supplying a numeric or text value to a user-defined column

  • Supplying a target range or percentage

  • Allocating by a specified amount or percentage

  • Increasing by a specified amount or percentage

Bringing Workers Up to a Specific Compa-Ratio or Quartile

Increase all workers' budget or compensation amounts by specific criteria. For example:

  • Bring all workers in the US whose compa-ratio is less than 80 to a compa-ratio of 100

  • Bring all workers in the UK in the Operations department to the third quartile

Supplying a Numeric or Text Value to a User-Defined Column

Enter a numeric or text value in a specific user-defined column. For example:

  • Rename user defined numeric column 16 to Corporate Modifier and display:

    • 02 for all workers in the US with a target of 80 percent or higher

    • 05 for all workers in Canada with target of 80 percent or higher

  • Rename user-defined text column 1 to Sanity Check and display Verify Salary for all workers whose:

    • Performance rating is high

    • Compa-ratio is less than 80

Supplying a Target Range or Percentage

Define a target range using a flat amount or percentage. For example, define a target bonus range of 3,000 to 5,000 USD for workers in the US who have a job title of Analyst and a grade of 3.

Allocate By a Specified Amount or Percentage

Allocate compensation by a flat amount or percentage. For example, allocate bonuses as follows:

  • US workers with an outstanding performance rating a Bonus of 5,000 USD

  • UK workers with an average performance rating a Bonus of 2,500 GBP

Increase By a Specified Amount or Percentage

Increase already allocated amounts by a flat amount or percentage of eligible salary. For example, give all workers in France an additional one percent of eligible salary on top of the compensation already allocated to them. To decrease a budget, enter a negative number or percentage.

When you use a model to distribute budgets to your managers, you must specify the level of management to which the budget amounts apply. You fund budgets by one of three methods.

Budget Funding

The following table shows the three funding levels and how they distribute budgets.

Funding Level Distribution

Top Managers

Only top level managers who have no manager above them

Managers One Level Down

Managers one level away from the highest manager in the hierarchy

All Managers

All managers

This example shows how to create and preview a performance management salary compensation model. The model allocates a percentage of eligible salary based on job and performance rating, excludes one worker from the model, and applies the results to the budget sheet.

Task Summary

To create the compensation model, complete the following tasks:

  1. Create a compensation model.

  2. Apply the model to budget sheet.

Use the default values except where otherwise indicated.

Prerequisites

  1. Create a workforce compensation plan.

  2. Enable modeling.

  3. Enable performance ratings.

  4. Set up the following rating scales:

    • Rating 1 equals Meets Expectation

    • Rating 2 equals Exceeds Expectations

    • Rating 3 equals Outstanding

Creating a Model

  1. On the home page, click My Team > Workforce Compensation.

  2. In the Workforce Compensation work area, select your plan.

  3. Click Manage Models.

  4. On the Manage Models page, click Create.

    1. On the Create Model dialog box, enter a model name and select a component.

    2. Click Continue.

  5. On the Create Model: Define Model page, configure the performance management salary compensation model.

    1. Complete the fields, as shown in this table, if not already selected.

      Field Value

      Allocation Method

      Allocate n percent of eligible salary

      Model Access

      Limit model access to model creator

      Criteria 1

      Job

      Criteria 2

      Performance Rating

    2. Click Next.

  6. On the Create Model: Select Workers page, specify whom to include and exclude from the performance management salary compensation model.

    1. In the Show field, select Show managers.

    2. In the Include column, deselect Elizabeth Mavery.

    3. On the Exclude Workers dialog box, exclude subordinates.

      1. Select Also exclude subordinates.

      2. Click OK.

    4. On the Create Model: Select Workers page, finish excluding workers.

      1. Click Exclude Workers Shown.

      2. Click Next.

  7. On the Create Model: Enter Values page, configure the percentages of eligible salary.

    1. In the Percentage of Eligible Salary column, complete the fields, as shown in this table.

      Selection Criteria Percentage of Eligible Salary Value

      Analyst - 3, Meets Expectations

      3

      Analyst - 4, Exceeds Expectations

      4

      Analyst - 5, Outstanding

      5

    2. Click Next.

  8. On the Create Model: Select Purpose page, specify the purpose of the performance management salary compensation model.

    1. Select Apply as Budget Amounts, if not already selected.

    2. Click Next.

  9. On the Create Model: Review Results page:

    1. View the model results.

    2. Click Next.

Applying Model Results

  1. On the Create Model: Apply page, select Overwrite existing budgets, if not already selected.

  2. Click Save and Apply.

  3. On the Warning dialog box, click Yes.

  4. On the Confirmation dialog box, click Done.

  5. On the Manage Models page, click Done.

After you create a model and preview model results, you apply the results to the worksheet or budget sheet. You replace the existing amounts or supply a target amount or range by applying the model results in one of four ways:

  • Apply as budget amounts

  • Apply as compensation amounts on the worksheet

  • Apply to target amounts

  • Apply to target ranges

Apply as Budget Amounts or Compensation Amounts

Replace the existing worksheet or budget sheet amounts with the model budget or compensation amounts You increase the existing amounts if you use one of the following allocation methods that you enable during setup:

  • Increase amount by n percent

  • Increase n amount per person

  • Increase n percent of eligible salary

Apply as Target Amounts or Target Ranges

Supply a target amount or range for managers to use as a guideline when determining allocations for their workers. For example:

  1. Create a model to determine budget target ranges based on length of service and performance rating for an annual bonus plan.

  2. Enter different ranges for workers who meet different combinations of length of service and performance rating.

  3. Apply the model as target ranges.

FAQ

The managers have read-only access and the available budget changes.

  • If there's no budget, then there's no available budget. They can't make allocations.

  • If the budget is 0, then no amount is budgeted. When they make allocations the available budget becomes negative.