9Salary Range Differentials

This chapter contains the following:

You can configure salary range differentials to adjust base salary ranges from the grade rate associated with the salary basis. Differentials vary, for example, to reflect the cost of living in different locations or the relative ease of hiring. For example, you want to pay everyone working on the East Coast of the US at 1.1 times the standard grade rate. You want to pay everyone working on the West Coast at 1.2 times. You pay Central people the standard grade rate and everyone in the South at 0.8 times.

Select the level of granularity that best supports your salary policies and processes:

  • Location

  • Business unit

  • Location and business unit

  • Compensation zone

  • Compensation zone and business unit

Here are some additional configurations you can do with the compensation zone and compensation zone and business unit differentials:

  • You can configure grade rate versions to override the grade rate of the salary basis. The adjusted salary range is the range of the overriding grade rate.

  • You can configure the differentials to enforce relevant statutory limits around minimum salaries by setting lower limits. Also optionally specify which address types to use to identify the applicable differential. For example, you're going to associate the differentials with people who work at client sites and from home. And, you want to use their remote addresses, rather than their work addresses to identify their compensation zones and differential factors.

Compensation Zone Types

You use zone types, such as compensation or wage regions, to categorize zones and group them together. You need to create your zone types before you define one or more zones for a geographical boundary. You can create a zone type that contains geographical boundaries from anywhere in the world, or that contains only geographies in a specified country. When you create a zone type for a specified country, you can define which geography types or geographies you can select when you create the zones.

Compensation Zones

Zones are geographical boundaries for a zone type, for example, the San Jose compensation zone. Zones are based on the geography hierarchy data of the master reference. You create zones in a zone type and you can associate geographies to define the zone. For example, you have the Compensation Regions zone type. You create a West Coast zone that has the state of California as one of its geographies. In a geography, you can specify a postal range. So for the state of California, for example, you can specify that the zone spans the postal codes 90001 through 90011.

Reference

The Salary Range Differentials and Compensation Zones document explains how salary range differentials are processed. It also explains how to configure and apply zone-based differentials. The document (ID 2605772.1) is on My Oracle Support at https://support.oracle.com.

Configure Compensation Zone Types and Zones

Here's how you configure the compensation zone types used to group zones together and the zones that make up a zone type. Use the Compensation Zones task in the Compensation Management offering, Base Pay functional area.

Create the Compensation Zone Type

We recommend limiting the number of compensation zone types, preferably to 1, such as by postal code. Here's how you create a zone type:

  1. On the Manage Zone Types page, click the Create icon.

  2. Enter a name for the zone type.

  3. Specify the boundary of the zone type.

  4. Select the geography.

  5. At the appropriate geographic level, such as Postal Code, select Zone Creation Allowed.

Caution: You need to make sure that geography validation is enabled for the No Styles Format address style of the selected geography level. Use the Manage Geographies task and the Manage Geography Validation action.

Create a Zone

Configure your zones so that an address is part of only one zone. If an address is part of multiple zones, the salary changes that include zone-based differentials can't figure out which zone applies. Thus, they can't apply any differential. Also, configure the zones for a zone type at the same level to minimize or prevent zone overlaps. For example, if Zone 1 is at the State level, then define the other zones at the State level also.

Here's how you create a zone:

  1. On the Manage Zone Types page, search for and select your new zone type. If you click the zone type, you open a read-only page with details of the zone type configuration. You can't add zones from that page.

  2. Click Next.

  3. On the Manage Zones for Zone Type page, click the Add icon.

  4. On the Create Zone page, enter the general information.

  5. Associate geographies with your new zone.

    1. Click the Add icon.

    2. On the Add Geography dialog box, search for and select the geography that you want to add.

    3. Click Save and Close.

    4. Review the start dates of the associated geographies. The start date is automatically set to the current system date when you associated the geography. You can edit the date, as needed.

    5. When you're done associating geographies, on the Create Zone page, save and close your new zone.

  6. When you're done adding zones to your zone type, on the Manage Zones for Zone Type page, save and close your zone type.

Reference

The Salary Range Differentials and Compensation Zones document explains how salary range differentials are processed. It also explains how to configure and apply zone-based differentials. The document (ID 2605772.1) is on My Oracle Support at https://support.oracle.com.

Here's how you configure salary range differentials using the Salary Range Differentials task in the Compensation work area.

  1. On the Salary Range Differentials page, click the Create icon.

  2. On the Create Salary Range Differential page, in the Properties section, complete the required fields.

  3. Select the criteria, such as Location or Compensation Zone.

  4. Select the type.

  5. In the Differentials section, configure the differentials. When your criteria is compensation zone based, you can select a Type of Factor or Grade Rate.

    • Select Factor to configure the differential to apply factors to the existing grade rates.

    • Select Grade Rate to configure the differential to apply alternate grade rates in place of the grade grate associated with the salary basis.

  6. Optionally, for differentials that use compensation zone criteria, enable remote worker address type checking. Specify up to three address types to check in the order that differential processing should consider them. The process stops checking as soon as it finds an address, whether that address is in the first address type or the last.

  7. Save and close the differential.

Reference

The Salary Range Differentials and Compensation Zones document explains how salary range differentials are processed. It also explains how to configure and apply zone-based differentials. The document (ID 2605772.1) is on My Oracle Support at https://support.oracle.com.

Generate Compensation Zone and Address Mapping

For salary range differentials with compensation zone criteria, differential processing has to find the zone and zone type each time someone views and adjusts the salary amount. The process does this by evaluating the addresses maintained for the person against the defined compensation zones. This evaluation can be time consuming, depending on the number of zones, zone types, and address details.

To see correct salary ranges in Oracle Transactional Business Intelligence reports and to optimize differential processing, run the Generate Compensation Zone and Address Mapping process. You can run the process in two modes.

Run Mode Descriptions

Create incremental mappings

Creates mappings between zones and zone types that match the specified parameters and person or work location addresses when something changed or is new

Purge and recreate mappings

Purges all existing mappings and creates them again between the zones and zone types that match the specified parameters and all person or work location addresses

Here's how we recommend that you schedule the process.

Schedule Mode Descriptions

One-Time

Run the mapping process to create all zone mappings for both work location and person addresses. You might use this mode to create a baseline. You might also use it to update work location addresses because they change infrequently.

Recurring

Schedule the mapping process to run on a regular basis to create incremental zone mappings. You might use this mode to update person addresses for remote workers because they can change more frequently. For example, client work locations change as the person moves changes projects.

The generated mappings improve the performance of responsive pages with salary information. The differential process knows the person's compensation zone and can apply the relevant differential to salary range calculations. Here's the high-level process flow.

Data flow for the Generate Compensation Zone and
Address Mapping process

When the mapping isn't available, differential processing finds the zone and zone type for the person or work address and then applies the relevant differential.

Reference

The Salary Range Differentials and Compensation Zones document explains how salary range differentials are processed. It also explains how to configure and apply zone-based differentials. The document (ID 2605772.1) is on My Oracle Support at https://support.oracle.com.