Basic ecm configuration

SAP Enterprise Compensation
Management (SAP HR ECM 5.0)
K. Nguyen – Tu
Feb 2006

Enterprise Compensation
Management (ECM 5.0) – “How To
Configure Basic Compensation In
24 Hours”

Purpose
To understand the Enterprise Compensation
Management configuration IMG node
Being able to do basic configuration of the
module
Example Scenario:
In compensation management, the easiest and
most straight forward compensation plan is the
annual merit cycle. This document will guide you
through on how to configure this.
K. Nguyen - Tu -- 2
http://www.saphelpbykevin.com

Management
IMG > Personnel Management >
Management
We need to first activate the
Management by executing
“Activate Enterprise
Compensation Management” or
using SM31 and edit table T77S0
for entry group HRECM and Sem
Abbr ECOM.
There is a node called
“Compensation Management”.
This is for the old compensation
management, not to be confused
with Enterprise Compensation
Management
K. Nguyen - Tu -- 3

ECM 5.0 – Budgeting
IMG > Personnel Management
> Enterprise Compensation
Management > Budgeting
Define Reference Currency for
Budgeting
Define Budget Types
Define Budget Periods

K. Nguyen - Tu -- 4

ECM 5.0 - Budgeting
Define Reference Currency For Budgeting
You are defining the default / reference currency to be used when you
create a budget structure.
Example: Your main corporate office is located in the United States. You
have regional offices globally, such as Hong Kong and France. When
you create your budget structure, the main currency to be used on
allocation would be USD, however when it reaches down to the node of
these regional offices, you could change it to use HKD or EURO. At then
same time, you could also leave it as USD, and still be able to plan for
each individual in their own local currency. SAP will handle the currency
conversion automatically. In this IMG step, you are defining the general
default currency to be used overall.

K. Nguyen - Tu -- 5

ECM 5.0 - Budgeting
Define Budget Types
You are defining the type of budget you will need to use. Whether
it is merit, bonus, stock options, spot awards, etc. For our
example, we will create one called “MBUD” for Merit Budget.
Mon. Budget (Monetary Budget Indicator)
Determine if the budget is link to a currency
Allocat. (Allocatable Flag)
Determine if the budget is could be allocated

K. Nguyen - Tu -- 6

ECM 5.0 – Budgeting
Define Budget Period
Defining the period of which the budget
will be validate to assign awards to. In
later steps, you will link the budget type
and budget period together.
Key Date Field
Is the date in which the currency
conversion will happen. If left blank, it will
default to the budget start date.
Example: If you have a quarterly bonus
system, you would normally create a
budget period expanding quarterly time
frame. For Annual Merit, you could create
a budget period which last the entire year
or fiscal year.
K. Nguyen - Tu -- 7

ECM 5.0 – Compensation
Administration
IMG > Personnel Management > Enterprise
Compensation Management > Compensation
Administration
Define Compensation Area
Define Compensation Area Feature
Compensation Plans & Reviews
Eligibility
Guidelines
Plan Attributes
Compensation Programs
Other Settings

K. Nguyen - Tu -- 8

Administration
Is used to group employees to a similar
compensation process.
Example: You could create a regional
compensation area called EMEA, APAC,
North America, etc. With it, you will later
tie it in the compensation feature to
countries. For EMEA, you could tie
France, Germany, UK to the
compensation Area EMEA.
Generally, compensation areas will
mirror country grouping (MOLGA) to give
the flexibility later on.

K. Nguyen - Tu -- 9

Administration
Feature
With the compensation area define
earlier, this is where you tie the a
decision tree factor.
Example: If using MOLGA (Country
Grouping) as your main decision tree,
MOLGA 01 – Germany will be passed
the compensation area DE – Germany.
You could also base the decision tree
on personnel areas, employee groups,
etc. In our example, we will base it on
MOLGA.
K. Nguyen - Tu -- 10

ECM 5.0 – Comp Admin >
Comp Plans & Reviews
IMG > Personnel Administration > Enterprise
Administration > Compensation Plans & Reviews
Define Compensation Plans
Define Compensation Reviews
Define Compensation Review Items
Assign Compensation Review Item Attributes


Define Compensation Plans
You are defining the type of
compensation plans you will have
and is it linked to what type of
compensation category. The
compensation category will
determine how calculation will occur
and what infotype it will be posted to
when the plan get activated on the
employee. For our example, we will
create Merit Adjustment and link it to
the Salary Adjustment category.
Available Compensation Categories
are:
Salary Adjustment
Infotype 0008
Regular Bonus
Infotype 0015
Off-Cycle Payment
Infotype 0267
LTI Grant
Infotype 0761


Define Compensation Plan Review
We are identifying the review period and
personnel selection period. This will
later allow you to link the compensation
plan we had created earlier to this
compensation review period.
Example: Earlier we had created the
compensation plan called “Merit
Increase”. We will now create review
cycle spanning from 01/01/2006 to
12/31/2006. When we, in later steps,
link the two together, this will
essentially allow us to do the Merit
Increase planning for the review period
01/01/2006 – 12/31/2006.
You could create it quarterly, monthly,
or even weekly. It all depends on your
review cycle. For Ad-Hoc type, you
could select “Anytime Review”.

Define Compensation Review Item
Using the Compensation Plan & Compensation Review Period
established earlier, we now will link them together.
Example: Annual Merit Review will link to RV06 (review period
01/01/2006 – 12/31/2006). Or Quarterly Bonus will link to Q106
(review period 01/01/2006 – 03/31/2006).


Assign Compensation Review
Attributes
Once the linkage between
compensation plan and compensation
review period has been established,
you will now assign rules / attributes
pertaining to it.


Assign Compensation Review Attributes
(Cont’d)
Default Effective Date
The effective date for this compensation
plan.
Example: The Compensation Plan is
Annual Merit and it is linked to the Review
period 01/01/2006 – 12/31/2006. If the
effective date is “Fixed Date”, what ever
date you specify in here will be the new
start date for the employee’s new annual
salary after increase. Or if the effective
date is “Anniversary Date”, you could
further select to use what date type off
infotype 0041 to determine his/her
anniversary date. The new start date for
his/her salary will be on that date for the
review period planning year.


Assign Compensation
Review Attributes (Cont’d)
Evaluation of Eligibility
The eligibility key date is the date
for evaluating the eligibility for the
employee. Usually you would like
to determine eligibility at the start
of the review period.


Assign Compensation
Review Attributes (Cont’d)
Guideline Key Date
Similar to the evaluation of
eligibility key date, you are
specifying a key date to
determine guidelines. Leave
this blank if you do not plan to
use guidelines.
If Fixed Date is select, you are
specifying when to use as the
key date. If effective date is
selected, you are asking it to
use the plan effect date to
calculate guidelines. If select --
K. Nguyen - Tu
18

program period date, you are

Attributes (Cont’d)
Other Key Dates
Calculation Base Key Date is the
date of when you would like the
system to base calculation off.
Example: If this is an Annual Merit
Increase plan and the effective date
for this plan is set to 12/31/2006. The
date you enter here tells the system
to take the annual salary of the
employee as of what date to
determine calculation. If the planning
leader decide to give a 3% increase,
which annual salary record should it
look at to determine 3% off?. Usually
you would default this to the
beginning of the review cycle.
Curr Conv Key Date http://www.saphelpbykevin.com

Similar to above, it tells the system as

Attributes (Cont’d)
Processing and Activation
Parameters
Budget Type: You are now linking
to the budget type you created
earlier.
Reason for Change: If this is
linked to a salary adjustment
plan, what is the basic pay
(infotype 0008) reason code you
would like to specify on the
record. If it is linked to a bonus
category plan, you will see the
reason code associated to
infotype 0015. All of the values
for the field “Reason For Change”
are configured in the payroll data
configuration. K. Nguyen - Tu --
20

Personnel Administration > Payroll

Eligibility
Administration > Eligibility
Define Eligibility Rules Variants
Define Eligibility Groupings
Define Eligibility Grouping Feature
Define Appraisal Rules
Define Eligibility Rules


Eligibility
Define Eligibility Rule Variants
You are creating the rules variants to be
used later in establishment with eligibility
grouping to define the rules attribute to
determine eligibility.
Example: Annual Merit Increase, Bonus
Eligibility, etc.


Eligibility
Define Eligibility Grouping
You are creating grouping names to be
used in a decision tree later. Usually
grouping will be a type of employee group
or category. Salaried, Executive, Hourly,
etc.
Example: For our example, we will use
Salaried Employees (SALR)


Eligibility
Define Eligibility Grouping
Feature
Using the grouping define earlier, you will
now link them through a decision tree.
Example: The employee record has to be in
Compensation Area “US”, with employee
group “1 – Regular” in their organizational
assignment (infotype 0001), to be pass in the
eligibility grouping called “SALR – Salaried
Employees”.
You could base your decision tree upon
various decision factors. Such as Personnel
Area, Personnel Sub-Area, Employee Group,
Employee Sub Group, MOLGA, Pay Type,
Pay Area, etc. To keep it simple, most will
use the first 5 from the list above.

Eligibility
This first screen of eligibility rules,
we are linking one or more
groupings into the variant bucket.
We will be able to define
individual rules pertaining to each
of the grouping.
Earlier you specified the
employees has to be in
Compensation Area “US” and
Employee Group “1 – Salaried” to
be part of the SALR – Salaried
Employees grouping. Now you
are specifying all those SALR
grouping belongs to this particular
variants. K. Nguyen - Tu -- 25

Eligibility
(Cont’d)
Here, we are setting attributes
/ rules to each of the variant /
grouping combination. In your
Salaried Adjustment variant,
you have grouping SALR.
With that two combination, you
will need to specify the rules
for it. Later on you will identify
what compensation plans will
use this variant you’ve just
created.

Eligibility
Define Eligibility Rules (Cont’d)
Minimum Service Criteria
How long the employee needs to be
hired into the system prior to be
eligible
Salary Criteria
What Compa-Ratio ranges or %
ranges of their salary against a salary
structure they need to be in to be
eligible.
Other Eligibility Criteria
How many hours worked they have
done to be eligible
Waiting Period
Base upon date off their infotype
0041, how many days, months, or
years they need to wait prior to be
eligible.


Guidelines
Administration > Guidelines


Guidelines
Define Guidelines Variants
Similar to define eligibility variant, you are creating a
bucket in which you will later associate one or more
grouping to.


Guidelines
Define Guidelines Grouping
Similar to define eligibility grouping, you are defining
groups of employees to differentiating guidelines


Guidelines
Define Guidelines Grouping Feature
Similar to define eligibility grouping feature, you are
defining the decision tree to associate the grouping for
guidelines


Guidelines
Define Guidelines
Proration Rules
When guidelines are applied to
an individual, the proration
rules will prevent them from
being able to receive full
amount.
Example: The guideline
suggest 5% increase. One
employee was hired into the
company, but only worked 6
months. The system will
prorate and suggest only 2.5%

Guidelines > Matrix
Define Methods For Matrix
Dimensions
You are defining what dimension(s)
you will use to base the guidelines
upon (i.e., Age, Appraisal Rating,
Compa-Ratio, Length of Services,
Percentage Range, or MBO
Appraisal)
Note: If the dimension involve
“Appraisal”, there are two version of
appraisals you could use to configure.
The basic version uses infotype 0025.
The configuration for it is located at
Personnel Administration > Payroll
Data > Appraisals


Guidelines > Matrix
Define Matrix Dimensions
At each of the Method of Dimensions you’ve identified
earlier, you will link those to the matrix dimension you are
creating here. Usually, you will use the same description
between the two.


Guidelines > Matrix
Define Matrix Dimensions
Segments
Using each of the matrix
dimensions you’ve created,
you are now defining the
values for that dimension.
For example, If the person
performance appraisal was a
“C”, from a system
perspective, he falls between
2.002 and 3.001 value.
Note: Segment field is a four
characters alphanumeric field


Guidelines > Matrix
Define Guidelines Matricies
At each of the guideline
matrix, you are now specifying
how many dimensions will you
base the calculation upon. Are
you base it against
performance appraisal and
compa-ration to determine a
return amount? Or will you
base upon Age and
Performance Appraisal?
Matrix Relevance Indicators
allow you to specify the return
suggested amount will be in
actual number (i.e. USD
amount) or a percentage.

Guidelines > Matrix
Assign Matrix Values
Earlier, you identified how many
dimensions you will use on the
guideline matrix. This IMG node will
assign the amount or percentage of
suggested increase to each of the
segment values you’ve configured
earlier.
This step tell the system to return a
suggested amount to the
compensation module for the rating.
If a person performance appraisal as
a “C”, in the table (picture bottom
right) determine what % to return to
the compensation module. In this
case 3% suggested increase to his
base salary.

Guidelines
Define Guidelines
Similar to eligibility variant,
grouping, and rules relationship
explained earlier, define guidelines
allows you to link a variant to one
or more guideline groupings. At
each of the combination of variant
and grouping, you will specify the
rules associated to it.


Guidelines
Define Guidelines (Cont’d)
Compensation Guideline
You will specify what matrix to use,
what prorating rules to use for this
variant & grouping combination.
Guideline Amounts, Guideline
Percentages, Guidelines Number
If no Guideline Matrix is suggested
(above), you could specify an across
the aboard value regardless of
dimension.
Example: If you had done your guideline
grouping to saying the person needs to
be in Compensation Area “US” and
Employee Group “1 – Salaried”, return
grouping SALR. With that, any
employees fall into this condition, will
receive the suggested matrix or amount
configured here.


ECM 5.0 – Comp Admin > Plan
Attributes
Administration > Plan Attributes


Attributes
Administration > Plan Attributes
Assign Compensation Plan Attributes
Assign Compensation Plan Payroll Data


Attributes
Assign Compensation Plan
Attributes
Near the beginning of this deck, we
had configured compensation plan,
and then we configured eligibility, and
most recently we just finished with
guidelines. Now, we are linking all
those together.
For a specific compensation plan,
what eligibility rules variant it should
and what guidelines variant it should
base suggested calculation on.
We had already link budget type and
review period to this compensation
plan earlier.


Attributes
Assign Compensation Plan
Payroll Data
In here, you are linking the wage
type and calculation function
module to use for the
compensation plan.
Depending on the type of
compensation plan, it will store
the wage type against IT0008,
IT0015, or IT0267.


Comp Programs
Administration > Compensation Programs
Define First Compensation Program Grouping
Define First Compensation Program Grouping Feature
Define Second Compensation Program Grouping
Define Second Compensation
Program Grouping Feature
Define Compensation Programs


Comp Programs
Define First Compensation Program Grouping
Define First Compensation Program Grouping Feature
Define Second Compensation Program Grouping
Define Second Compensation Program Grouping Feature
Similar to eligibility grouping and grouping feature used in
earlier node, the compensation program grouping allows
you to identify additional filter level for your compensation
plans. In the last configuration item “Define Compensation
Program”, you are creating a two dimensions grouping for
the compensation plans you’ve created. You could bucket
one or more compensation plans a unique combination of
the first and second program grouping. Each employees
needs to have infotype 0758 record and identified with the
1st program grouping and 2nd program grouping. Using
that, the system will know you are eligible to use one or
more of the compensation plans.

ECM 5.0 – Done With
Configuration!
We are now finally done with all the ECM configuration. Now let’s look at the
master data personnel record.
Access via PA30 transaction, we will look at infotype 0759 where the
compensation plan awards are stored, infotype 760 where you could override
the eligibility rules at the individual level, and 0758 where the individual are
assigned the compensation program grouping.


ECM 5.0 – Master Data
Infotype 0758 – Compensation Program
This infotype tells the system, what plans you are allowed
to be awarded. Based upon the two dimensions grouping,
it will return one or more plans.
In a way, this is similar to eligibility check


Infotype 0759 – Compensation Process
This is the infotype which stores the compensation plan awards
for the individual. You see the effective date, the compensation
review item (which linked to the compensation plan). The status
of the process (planning, approved, activate, reject). The award
amount and currency of the amount.


Infotype 0760 – Compensation Plan Eligibility
Override
Override eligibility rules at the individual level.
Example: Based upon the grouping and features you’ve
configured for eligibility, it determines if the person is eligible or
not eligible for a particular plan. This infotype will allow you to
reverse it


ECM 5.0 – Sample MSS View.
The Planning Leader Total Budget
Amount, Distributed Budget
Amount, and Remaining Budget
Planning Status (In
Planning, New,
Submitted, Approved,
Activated) and
Ineligible Status


Effective Date of the
new record if
Apply Suggested approved and
Configured Guidelines activate.
or type in the %
suggested increase, it
will auto recalculate as
shown


At the individual employee level, more details are
shown.
Employee’s Appraisal Info
Merit Adjusted Info
Salary Data
Photo Picture (if stored)
Job Market Survey Data, if used
Eligibility Info
Employee’s Organizational Assignment Info


Fin!
Done!


Basic ecm configuration

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to Basic ecm configuration

Similar to Basic ecm configuration (20)

Recently uploaded

Recently uploaded (20)

Basic ecm configuration