The SuccessFactors Compensation module is designed for an annual merit process that includes merit pay, bonus, and stock awards, and currently does not have a module that addresses the needs of hourly employees. Unlike salaried employees who receive merit increases once a year, hourly employees’ performances are sometimes evaluated monthly, bi-weekly, or quarterly, and they are moved from one hourly rate to another in the pay scale structure. In this article I show how, with custom configuration, you can achieve this functionality.

Most manufacturing companies with an hourly workforce use a deliberate progression process to increase or decrease the hourly wages of these employees. This process, commonly referred to as job-step progression, is where hourly employees move from one step to another with a commensurate change in hourly wage. This progression process can be monthly, semi-monthly, weekly, bi-weekly, or quarterly depending on the payroll cycle for these employees. This means that a new worksheet needs to be launched monthly (or semi-monthly), weekly (or bi-weekly), or quarterly to evaluate and change the hourly employees’ pay rate.

The progression process can also differ based on the location or division within the same organization. It is a consistent process in organizations with hourly workforces, with which the compensation team designs different processes and compensation plans for hourly progression.

This article discusses different options to configure hourly progression in the SuccessFactors Compensation module, which can vary based on an organization’s process. The Pay for Performance tool is critical for helping companies achieve great financial results and reward the right candidates.

The SuccessFactors Compensation module is concentrated around how companies allocate salary, bonus, stocks, and one-time, lump-sum disbursements. However, my focus is on the hourly progression cycle and how a company can build its progression processes into the SuccessFactors Compensation module plan template. In this article I give step-by-step instructions for how to effectively create an hourly progression compensation plan.

Designing a SuccessFactors Compensation Plan Template

A compensation plan template, often referred to simply as a compensation plan, is an XML file that contains all the guidelines, eligibility rules, and configuration applied to a compensation process. The compensation plan template is the basis for compensation worksheets. Usually the best practice or standard compensation plan template is organized into three sections (or tabs):

1. Salary
2. Bonus
3. Stock

Configure the Compensation Plan Templates

The hourly progression process does not need to include the bonus or stock tabs. You can comment out these two sections in the XML template or delete the XML lines altogether. Figures 1 and 2 show the lines of codes that need to be removed or commented out to hide the bonus and stock tabs.

Figure 1

Comment out (delete) these lines of XML code to hide the Bonus tab

Figure 2

Comment out (delete) these lines of XML code to hide the Stock tab

You also may want to comment out or remove the boxed lines of code in Figure 3 to remove the bonus and stock information from the summary section of the compensation statement.

Figure 3

Comment out (delete) these boxed lines of XML code to hide the bonus and stock summaries

In general, it is advised as an HR process best practice that you create only one compensation plan per process (e.g., one compensation plan for the hourly progression, one plan for merit, and one plan for annual incentive bonus) and address delta differences via eligibility rules and guidelines. However, many companies follow different processes for their hourly employees and one compensation plan may not accommodate all of them. It is essential to sit down with your team at the beginning of the project to find out about the different processes across location, domain, or business functions. Once these options have been scoped out and taken into consideration, you will have a better idea of how many compensation plans need to be created to meet the company’s requirements.

Design Compensation Worksheets

Let’s discuss the design of the compensation worksheet. Hourly progression cycles vary from organization to organization. Also, in the same organization there could be different progression cycles based on location or business function. There are a few basic differences in an hourly progression cycle worksheet as compared to a merit process worksheet. For example, some key components of compensation, such as compa-ratio and budget allocation, are extremely important for a standard merit process but not required in an hourly progression worksheet. Table 1 lists some basic differences between a merit worksheet and a progression worksheet.

Identify Standard Fields and Create Custom Fields

When using SuccessFactors, you need to work with your project team to decide the fields that you need to display in the hourly progression compensation worksheet. A merit compensation worksheet can have multiple tabs (e.g., Employee Information, Current Salary, Merit, Promotion and Lump Sum). However, an hourly progression compensation worksheet only has two main tabs:

• Employee Information
• Progression Information

Figures 4 and 5 show examples of standard merit worksheets, and Figure 6 shows an example of an hourly progression worksheet.

Figure 4

Example of a merit worksheet with multiple tabs displayed

Figure 5

Example of a merit worksheet (continued)

Figure 6

An example of an hourly progression worksheet

In Figure 6, apart from the Employee Information for hourly employees, you need to display the Progression tab (e.g., weekly, bi-weekly, quarterly, or monthly) and the Final Hourly Rate. Table 2 lists some examples of fields (with attributes) that make up a Progression tab in a worksheet.

Create a Lookup Table and Attach It to the Worksheet Fields Using Formulas

It is very important to display the current pay scale structure for hourly employees in the compensation worksheet. A regular pay scale structure consists of pay scale area, pay scale group, pay scale type, and pay scale level. The hourly amounts are tied to different pay scale levels (also known as steps). Supervisors can select the new pay scale group or level and employees should be moved to a new group or level based on the employee’s evaluation.

In this example I show how to:

1. Store the pay scale structure in the New Level field with a lookup table named PayStructure.
2. Create another lookup table (named PayScaleHourly) to store the calculations for step progression.
3. Create a hidden field named newLevel and reference the lookup table from this field.
4. Write a formula to make sure that, when a new pay scale level is selected for an employee from the New Level field, an amount automatically defaults (based on the lookup table) in the New Level Amount field in the compensation worksheet.

Step 1. Store the Pay Scale Structure in the New Level Field

Pay scale structures are stored in SuccessFactors via lookup tables. A lookup table can be referenced in the Design Worksheet tab for the field where these values need to be shown as drop-down options.

The first step is to create a lookup table named PayStructure (not covered in this article) and to store all the new play level names in this table. To store the pay level names in the table, go to Admin Tools > Compensation >Action for all Plans >All Plans > Lookup Table (Figure 7).

Figure 7

Create a lookup table in Admin Tools

In this example, a Lookup table named PayStructure has been created with an hourly pay scale structure. This is referenced for the New Level field in the compensation worksheet (i.e., when this option is chosen from the New Level field drop-down options in the design worksheet the Pay scale structure loaded in the PayScaleHourly lookup table appears).

Figure 8

The lookup table for PayStructure in Admin Tools

Reference a Lookup Table for a Specific Field in the Compensation Worksheet

Now let’s go to the design worksheet for a specific compensation plan in Admin Tools to reference a lookup table in the compensation worksheet. In Admin Tools, go to Compensation Home > select the plan name on the left side (Figure 9) > Plan Setup > Design Worksheet (Figure 10).

Figure 9

Select the compensation plan

Figure 10

The Design Worksheet for a new compensation plan

Open the Design Worksheet tab and select Design Worksheet (Figure 10) and you see configuration options for all worksheet form fields (Figure 11). Select the field from where you want to reference the lookup table. In this example I selected the New Level field, and also the Read-only Yes radio button and the String Column type. In the Formula box you can see that the lookup table (PayStructure) is referenced.

Figure 11

The PayStructure lookup table is referenced by the field New Level

When the compensation plan is launched (Figure 12) and the drop-down values are selected for the field New Level, the values stored in the lookup table show up in the plan worksheet (Figure 13).

Figure 12

The Quarterly Progression section of the compensation plan worksheet

Figure 13

Choose the new pay level

Figure 13 shows the Quarterly Progression section of the compensation plan worksheet with the drop-down value selected from the field New Level. This drop-down is displayed from the lookup table created in Figure 7.

Step 2. Create a New Lookup Table Named PayScaleHourly

Next I create another Lookup table, named PayScaleHourly by following the steps described above for creating a new Lookup table. In this lookup table to store the new step or level name, the start hourly value, the maximum hourly value, and the increase value. Some examples are shown in Table 3.

Step 3. Reference the Lookup Table PayScaleHourly From a Hidden Field

Next, let’s go to the design worksheet for the compensation plan in AdminTools (Figure 14). Again, the Column Name field on the right is auto-populated. Select the Read-only Yes radio button and the String column type. In this example this lookup table is referenced from a custom hidden field named newLevel.

Figure 14

The lookup table is referenced from the custom hidden field newLevel

Step 4. Reference a Lookup Table for a Specific Field in the Compensation Worksheet

In this example, this lookup table value is compared with the New Level field (Figure 12), and the New Level Amount defaults in the New Level Amount field as shown in Figure 14.

Figure 15

View of the new compensation worksheet with the custom fields

In Figure 15 you see the compensation worksheet with New Level selected and with the default amount in the New Level Amount field from the lookup table PayScaleHourly.

Tip!

I recommend that you create lookup tables for storing hourly pay scale structures. Do not use either the standard Salary Ranges or the Job Code & Pay Grade Mapping options available under the Salary Plans tab (Figure 16) as these two options are only used for merit plans and for salaried employees.

Figure 16

Standard Salary Plans available options

Define Eligibility Rules

Eligibility rules are defined in Admin Tools. Eligibility rules are important and need to be defined correctly to make sure a supervisor or manager can only see hourly employees listed in the hourly progression worksheet. A supervisor or manager could have direct reports made up of a mixture of salaried and hourly employees. An eligibility rule should be created to filter only hourly employees to ensure that only this type of employee is displayed in the worksheet. You can filter hourly employees based on fields used to define the employee grouping. This requirement of defining a filter may differ from organization to organization and also from one HRIS application to another.

Here are few examples of fields that are typically used to define employee grouping:

• Job Code
• Employee Group
• Employee Sub Group
• Employee Type

Figure 17

An example of an eligibility rule to filter hourly employees via the Job Code field

Best Practices for Creating a Route Map for the Job-Progression Process

For hourly progression compensation worksheets, there are usually two levels of operators involved in the route map: compensation administrators and supervisors. In some instances, based on company processes, second-level managers may be involved as the final approvers. The operators listed in Table 4 are usually involved in a typical hourly progression route map.

Tips and Tricks for Designing Custom Fields

In an hourly-progression or job-step progression worksheet there is a need to create many custom fields since the standard compensation process in SuccessFactors is designed to cater only to the merit process. Here are some helpful tips for creating custom fields to meet your company’s requirements.

Design a Custom Field to Store Eligibility Rules for Progression or Ratings

Hourly progression employees are not usually evaluated based on merit ratings. Every organization has its own process for evaluating hourly employees’ eligibility for progression. Unlike in the merit-pay process, a performance form template is generally not linked to an hourly progression worksheet (although this may be the case if the organization’s process requires it to do so). Additional custom fields can be created to store eligibility ratings and they can be populated via the UDF.

Design a Custom Help Text Field

Custom help or warning text fields can be configured to help the supervisor take appropriate action in evaluating an employee’s progression. In this example, the organization’s compensation policy doesn’t allow the increasing of an employee’s rate by more two steps during one progression cycle (Figure 18). To achieve this requirement, a Warning Message field is configured to warn supervisors who try to increase an employee’s salary level by more than two pay levels. If an employee is currently in Pay Scale Level 2, for example, and the supervisor wants to move this employee to Level 8, a warning message is displayed to deter the supervisor from taking this action.

Figure 18

A custom field Warning Message is created to warn supervisors if they try to increase the hourly rate for any employee by more than two steps

In this example (Figure 19) the employee is in PS Group 8 with a Current Level of 0.

Figure 19

The current compensation worksheet view before the change

In Figure 20 if the supervisor tries to add more than two levels from the New Level field drop-down values, the system gives a warning message for any level selected above Level 12.

Figure 20

Select the drop-down value from the New Level field

In Figure 20, PS Group 08, Level 24 is selected and a warning message is displayed (Figure 21).

Figure 21

A warning message is displayed when Level 24 was selected

Similar warning messages or help text fields can be configured to help supervisors create a better evaluation process and to reduce the likelihood of errors when evaluating employees.

Rinky Karthik

Rinky Karthik serves as a Project Manager, HCM SuccessFactors, for the People LoB for itelligence and has 16 years of SAP HCM and SuccessFactors experience. This includes many global implementations, including support and upgrade of various SAP on-premise modules and SuccessFactors modules in diverse roles, like Solution Architect, Lead Consultant, and Project/Program Manager. Rinky has an MBA in Human Resources and she comes with a strong project management background; as such, she has managed a variety of global projects for clients in different domains. She has extensive experience with SAP SuccessFactors’ SAP Launch and SAP Activate implementation methodologies, and is a Certified SuccessFactors consultant in Recruitment Management, Recruiting Marketing, Learning Management Solution, and Employee Central. Rinky is a frequent contributor to SAP SuccessFactors blog forums, HR Expert, and a regular speaker at a variety of SAP/SuccessFactors conferences.

You may contact the author at rinky.karthik@itelligencegroup.com.

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