Enterprise Compensation Management with SAP ERP HCM

Jeremy Masters is the co-founder and managing partner of Worklogix, a management and technology services firm specializing in enterprise application development and implementation support for HCM solutions. For 15 years, he has worked with the latest talent management and self-service functionality within the SAP ERP HCM suite, including Performance Management, Enterprise Compensation Management, ESS/MSS, Succession Planning, E-Recruiting, and the SuccessFactors cloud functionalities. He regularly presents at SAP Insider events and is also the co-author of the following SAP PRESS books: Implementing Employee and Manager Self-Services in SAP ERP HCM, SAP ERP HCM Performance Management, Enterprise Compensation Management in SAP ERP HCM, and E-Recruiting with SAP ERP HCM. You can reach him via email at jmasters@worklogix.com. Christos Kotsakis is Vice President of Information Technology at Star-wood Hotels and Resorts Worldwide, which together with its subsidiaries, operates as a hotel and leisure company worldwide. Prior to joining Starwood Hotels and Resorts, Mr. Kotsakis was an associate partner in the Human Capital Management practice at IBM Global Business Services where he led the design and implementation of large-scale, global HR transformation projects using SAP HR. In the past 10 years, Mr. Kotsakis has managed more than a dozen project teams, spanning across HR functionality, including Performance Management, Compensation Management, and eRecruitment. He also has extensive experience in software development; self-service technology; enterprise portal implementations; including the SAP NetWeaver Portal, and related technologies. You can reach him via email at chris-tos.kotsakis@emedianet.com.

* 1 ... Introduction ... 21 * 1.1 ... Target Audience ... 22 * 1.2 ... Book Layout ... 22 * 1.3 ... Product Releases ... 24 * 1.4 ... Summary ... 24 * 2 ... Compensation Management Overview ... 25 * 2.1 ... Compensation Planning Overview ... 26 * 2.2 ... Salary Benchmarking ... 28 * 2.2.1 ... Determining Which Jobs to Evaluate ... 29 * 2.2.2 ... Update and Extract Job Data ... 29 * 2.2.3 ... Selecting Providers for Survey Participation and Analysis ... 30 * 2.2.4 ... Updating Salary Structures and Developing the Budget ... 30 * 2.3 ... Budgeting ... 31 * 2.4 ... Compensation Planning ... 32 * 2.4.1 ... Eligibility ... 33 * 2.4.2 ... Guidelines ... 34 * 2.4.3 ... Proration ... 35 * 2.4.4 ... Planning and Review ... 36 * 2.5 ... Calibration ... 37 * 2.5.1 ... Realizing Calibration Objectives ... 39 * 2.5.2 ... Revising Proposed Recommendations ... 39 * 2.6 ... Payroll ... 39 * 2.7 ... Employee and Manager Review ... 40 * 2.8 ... Off-Cycle Increases ... 40 * 2.9 ... Summary ... 41 * 3 ... Baseline Configuration and Infotypes ... 43 * 3.1 ... Building Blocks ... 43 * 3.1.1 ... ECM Activation ... 44 * 3.1.2 ... Compensation Area ... 45 * 3.1.3 ... Compensation Plan ... 48 * 3.1.4 ... Compensation Review ... 49 * 3.1.5 ... Compensation Review Item ... 51 * 3.2 ... Eligibility ... 57 * 3.2.1 ... Compensation Program ... 58 * 3.2.2 ... Eligibility Variant ... 63 * 3.2.3 ... Eligibility Grouping ... 64 * 3.2.4 ... Appraisal Rule ... 67 * 3.2.5 ... Eligibility Rules ... 68 * 3.2.6 ... Eligibility Override ... 70 * 3.3 ... Guidelines ... 71 * 3.3.1 ... Guideline Variant ... 71 * 3.3.2 ... Guideline Grouping ... 72 * 3.3.3 ... Proration ... 74 * 3.3.4 ... Guideline Matrix ... 76 * 3.3.5 ... Guidelines ... 81 * 3.4 ... Compensation Plan Attributes ... 83 * 3.4.1 ... Plan Attributes ... 83 * 3.4.2 ... Plan Payroll Data ... 84 * 3.5 ... Long Term Incentives (LTIs ... 88 * 3.5.1 ... Stock Unit ... 89 * 3.5.2 ... Vesting ... 90 * 3.5.3 ... Exercising ... 91 * 3.5.4 ... LTI Plan Attributes ... 92 * 3.5.5 ... Life Events ... 96 * 3.6 ... LTI Infotypes ... 98 * 3.7 ... Summary ... 101 * 4 ... Compensation Budgeting ... 103 * 4.1 ... Budgeting Overview ... 103 * 4.2 ... Life Cycle ... 105 * 4.2.1 ... Preparation ... 105 * 4.2.2 ... Initialization ... 114 * 4.2.3 ... Maintenance ... 128 * 4.2.4 ... Closure ... 131 * 4.3 ... Locking ... 132 * 4.4 ... Infotypes ... 134 * 4.4.1 ... Infotype 1000 (Object ... 134 * 4.4.2 ... Infotype 1001 (Relationships) ... 134 * 4.4.3 ... Infotype 1500 (BS Element Management ... 135 * 4.4.4 ... Infotype 1520 (Original Budget) ... 135 * 4.5 ... Configuration ... 136 * 4.5.1 ... Defining Reference Currency ... 137 * 4.5.2 ... Defining Budget Types ... 137 * 4.5.3 ... Define Budget Periods ... 138 * 4.5.4 ... Set Budget Control Parameters ... 140 * 4.6 ... Summary ... 141 * 5 ... Process Administration ... 143 * 5.1 ... Process Overview ... 143 * 5.2 ... Prepare ... 145 * 5.2.1 ... Eligibility Rules ... 146 * 5.2.2 ... Budgets ... 149 * 5.2.3 ... Salary Ranges ... 149 * 5.2.4 ... Guidelines ... 151 * 5.2.5 ... Compensation Worksheet Proofing ... 153 * 5.2.6 ... Prerequisites for Multilevel Approvals ... 154 * 5.3 ... Plan and Review ... 156 * 5.4 ... Calibrate ... 157 * 5.5 ... Activate and Communicate ... 159 * 5.6 ... LTI-Specific Processes ... 163 * 5.6.1 ... Process Life Events ... 164 * 5.6.2 ... Handling Stock Splits ... 166 * 5.7 ... Summary ... 168 * 6 ... Self-Service ... 169 * 6.1 ... Delivered Compensation iViews ... 170 * 6.1.1 ... Compensation Planning ... 171 * 6.1.2 ... Compensation Approval ... 181 * 6.1.3 ... Compensation Review iView in Enhancement Package 4 ... 182 * 6.1.4 ... Salary Development ... 185 * 6.1.5 ... Salary Data ... 187 * 6.1.6 ... Long Terms Incentives ... 189 * 6.1.7 ... Compensation Eligibility ... 190 * 6.1.8 ... Compensation Guidelines ... 192 * 6.1.9 ... Compensation Adjustments ... 193 * 6.1.10 ... Salary Survey Data ... 194 * 6.1.11 ... TCS ... 197 * 6.2 ... Summary ... 199 * 7 ... Business Add-Ins (BAdIs ... 201 * 7.1 ... BAdI Overview ... 202 * 7.2 ... BAdI Group: Compensation Planning and Administration ... 206 * 7.2.1 ... HRECM00_GUIDELINE (Determine Guidelines ... 207 * 7.2.2 ... HRECM00_GDEGP (Determines Guideline Grouping ... 208 * 7.2.3 ... HRECM00_MATRIX_SEGM (Method for Matrix Dimensions ... 209 * 7.2.4 ... HRECM00_CARGP (Default Compensation Area ... 211 * 7.2.5 ... HRECM00_CP1GP (Default First Program Grouping ... 212 * 7.2.6 ... HRECM00_CP2GP (Default Second Program Grouping ... 213 * 7.2.7 ... HRECM00_ELIGIBILITY (Determine Micro eligibility ... 213 * 7.2.8 ... HRECM00_ ELIGP (Determine Eligibility Grouping ... 214 * 7.2.9 ... HRECM00_CALCBASE (Determine Calculation Base ... 215 * 7.2.10 ... HRECM00_EFFDATE (Determine Effective Date ... 216 * 7.2.11 ... HRECM00_SALARY (Determine Salary, Compa-Ratio, and Percent in Range ... 217 * 7.2.12 ... HRECM00_ACTIVATION (Enhance Activation Routine ... 219 * 7.2.13 ... HRECM00_CONSISTENCY (Provides Additional Online Validation ... 220 * 7.2.14 ... HRECM00_EE_CURRENCY (Determine Employee Currency ... 221 * 7.2.15 ... HRECM00_BDG0001 (Initialize Budget Values ... 222 * 7.3 ... BAdI Group: LTIs ... 223 * 7.3.1 ... HRECM00_GRANT_INFO (Extract LTI Pan Grant Information for Outbound iDoc ... 223 * 7.3.2 ... HRECM00_EXERCISE (Accept Inbound Processing for Exercise Confirmation iDoc ... 224 * 7.3.3 ... HRECM00_STKUN (Determine Stock Unit for Review Item ... 224 * 7.4 ... BAdI Group: Job Pricing ... 225 * 7.4.1 ... HRECM00_PARTICIPANT (Extract Participant Info for Outbound iDoc ... 225 * 7.4.2 ... HRECM00_AGEDATA (Aging of Survey Market Data ... 226 * 7.4.3 ... HRECM00_STATSTYPE (Get Value for a Statistical Pay Group of an Employee ... 227 * 7.5 ... BAdI Group: Compensation Statements ... 227 * 7.5.1 ... HRECM00_CRS (Extract Compensation Data for Compensation Review Statement ... 228 * 7.5.2 ... HRCMP00TCS0001 (Read TCS Data for SAP-Defined Subcategory (PAY) ... 228 * 7.5.3 ... HRCMP00TCS0002 (Read TCS Data for Customer-Defined Subcategory (PAY) ... 229 * 7.5.4 ... HRCMP00TCS0003 (Read TCS Data for SAP-Defined Subcategory (CMP) ... 229 * 7.5.5 ... HRCMP00TCS0004 (Read TCS Data for Customer-Defined Subcategory (CMP) ... 230 * 7.5.6 ... HRCMP00TCS0005 (Read Person s TCS Data for Customer-Defined Category ... 230 * 7.5.7 ... HRCMP00TCS0006 (Authorization Checks for TCS ... 231 * 7.5.8 ... HRPDV00TCS0001 (Read Data for SAP Subcategory (PDV) ... 231 * 7.5.9 ... HRPDV00TCS0002 (Read Data for Customer-Specific Subcategory (PD) ... 232 * 7.5.10 ... HRBEN00PAY0013 (Read Data on Subcategory Defined by SAP (Benefits) ... 233 * 7.5.11 ... HRBEN00TCS0001 (Read Data on Customer-Defined Subcategory (Benefits) ... 233 * 7.6 ... BAdI Group: Other ... 234 * 7.7 ... Summary ... 235 * 8 ... Advanced Topics and Additional Enhancements ... 237 * 8.1 ... Hot Topics ... 238 * 8.1.1 ... Handling Growth and Organizational Promotions During Planning ... 238 * 8.1.2 ... Higher-Level Manager Planning ... 240 * 8.1.3 ... Workflow Approvals ... 242 * 8.1.4 ... Initialization and Reallocation of Budget Funds ... 243 * 8.1.5 ... Lack of Migration Path Available from Old to New Compensation Functionality ... 244 * 8.1.6 ... Clean Master Data ... 245 * 8.1.7 ... Handling Off-Cycle Increases ... 246 * 8.2 ... Additional Enhancements ... 246 * 8.2.1 ... Budget Reallocation Program ... 247 * 8.2.2 ... Budget Analyzer ... 247 * 8.2.3 ... Enhanced Compensation Planning User Interface ... 248 * 8.2.4 ... Compensation Scorecards ... 249 * 8.2.5 ... Compensation Statements ... 250 * 8.2.6 ... Compensation Proxy Manager ... 251 * 8.3 ... Summary ... 252 * 9 ... Authorization Management ... 253 * 9.1 ... Important Authorizations Used within ECM ... 254 * 9.1.1 ... P_PERNR ... 254 * 9.1.2 ... PLOG ... 257 * 9.1.3 ... P_ORGIN/P_ORGINCON ... 259 * 9.1.4 ... P_HAP_DOC ... 261 * 9.1.5 ... S_SERVICE ... 263 * 9.1.6 ... S_RFC ... 265 * 9.1.7 ... Summary of Main Authorization Objects Used in ECM ... 267 * 9.1.8 ... Activation Switches in T77S0 ... 268 * 9.2 ... Standard Roles in ECM ... 269 * 9.3 ... Using Structural Authorizations with ECM ... 271 * 9.3.1 ... Overview ... 271 * 9.3.2 ... Function Module RH_GET_MANAGER_ASSIGNMENT ... 272 * 9.3.3 ... Context-Sensitive Authorizations ... 273 * 9.4 ... Data Privacy ... 275 * 9.5 ... Summary ... 277 * 10 ... Job Pricing ... 279 * 10.1 ... Getting Started ... 280 * 10.1.1 ... Pay Categories ... 280 * 10.1.2 ... Compensation Job Groupings ... 283 * 10.2 ... Market Analysis ... 285 * 10.2.1 ... Vendor Setup ... 286 * 10.2.2 ... Data Import ... 289 * 10.2.3 ... Job Matching ... 298 * 10.2.4 ... Aging ... 299 * 10.2.5 ... Job Composite Creation (By Individual Job ... 301 * 10.2.6 ... Job Composite Creation (En Masse ... 304 * 10.2.7 ... Salary Structure Adjustment ... 307 * 10.3 ... Salary Survey Participation ... 310 * 10.4 ... Application Support ... 311 * 10.5 ... Summary ... 312 * 11 ... Integration Components ... 313 * 11.1 ... Overview ... 313 * 11.2 ... Module Integration ... 315 * 11.2.1 ... Integration with Personnel Administration (PA ... 315 * 11.2.2 ... Integration with Organizational Management (OM ... 316 * 11.2.3 ... Integration with Performance Management (PM ... 318 * 11.2.4 ... Integration with Payroll (PY ... 319 * 11.2.5 ... Integration with Personnel Cost Planning (PCP) and Simulation ... 322 * 11.2.6 ... Integration with SAP ERP Financials ... 323 * 11.3 ... Platform Integration ... 323 * 11.3.1 ... ESS and MSS ... 324 * 11.3.2 ... SAP NetWeaver BW ... 325 * 11.4 ... Vendor Integration ... 325 * 11.4.1 ... Payroll ... 326 * 11.4.2 ... Salary Surveys ... 326 * 11.4.3 ... Banks and Brokerages ... 326 * 11.5 ... Summary ... 327 * 12 ... Global Considerations ... 329 * 12.1 ... Project Team ... 329 * 12.1.1 ... Regional and Country Representation ... 330 * 12.1.2 ... Regional Leadership ... 330 * 12.1.3 ... Communication ... 330 * 12.2 ... Global Challenges ... 331 * 12.2.1 ... Global Employment ... 331 * 12.2.2 ... Currency and Exchange Rate ... 332 * 12.2.3 ... Language ... 334 * 12.2.4 ... Budgeting ... 337 * 12.2.5 ... Proration ... 337 * 12.2.6 ... Mandated and General Increases ... 338 * 12.2.7 ... Data Privacy ... 338 * 12.3 ... Summary ... 339 * 13 ... Reporting ... 341 * 13.1 ... ABAP Reports ... 342 * 13.1.1 ... Audit Report for Budgets ... 344 * 13.1.2 ... Display Compensation Planning Progress ... 346 * 13.1.3 ... Display Compensation Planning Changes ... 346 * 13.1.4 ... Summarize Compensation Planning Changes ... 347 * 13.1.5 ... Salary Survey Participation ... 348 * 13.1.6 ... Data Extraction for Salary Survey Participation ... 348 * 13.1.7 ... Hay PayNet: Data Extraction for Salary Survey Participation ... 350 * 13.1.8 ... Defaults for Pay Scale Reclassification ... 351 * 13.1.9 ... Time Spent in Each Pay Scale Type/Area/Group/Level ... 352 * 13.1.10 ... Compa-Ratio Analysis ... 352 * 13.1.11 ... Compare Actual Base Salary to Planned Compensation ... 352 * 13.1.12 ... Pay Grade Structure for Jobs ... 354 * 13.1.13 ... Display Pay Grade Structure ... 354 * 13.1.14 ... Display Pay Scale Structure ... 355 * 13.1.15 ... Planned Labor Costs ... 357 * 13.2 ... Ad Hoc Query ... 359 * 13.2.1 ... Transaction ... 360 * 13.2.2 ... User Group ... 361 * 13.2.3 ... Infosets ... 361 * 13.2.4 ... Queries ... 364 * 13.3 ... Business Warehouse (BW ... 366 * 13.3.1 ... BI Content Area: Compensation Administration ... 366 * 13.3.2 ... BI Content Area: LTIs ... 368 * 13.3.3 ... BI Content Area: Budgeting ... 368 * 13.3.4 ... BI Content Area: Job Pricing ... 369 * 13.4 ... Summary ... 370 * 14 ... Lessons Learned ... 373 * 14.1 ... Summary ... 382 * 15 ... Resources ... 383 * 15.1 ... Solution Documentation on SAP Service Marketplace ... 383 * 15.2 ... SAP Online Help ... 385 * 15.3 ... SAP Notes on SAP Service Marketplace ... 386 * 15.4 ... SAP Developer Network (SDN) SAP Community ... 390 * 15.5 ... HR Expert ... 391 * 15.6 ... Annual Conferences ... 393 * 15.7 ... User Communities ... 393 * 15.8 ... LinkedIn ... 393 * 15.9 ... Internet Search Engines ... 394 * 15.10 ... Summary ... 394 * ... The Authors ... 395