You control an employee's fixed base pay and merit increases through fixed compensation plans, and you control the payment of incentive pay, such as bonus payments, performance awards, stock options, and grants, as well as one-time or spot awards, through variable compensation plans.

Employees can be associated with one or more plans of both types.

You associate employees with fixed and variable plans through enrollment in the plans and the plans available for individual employees are filtered through eligibility rules.

Enrolling an employee in fixed and variable compensation plans requires the following:

  • The employee must be hired in a position.

  • The , , and must be specified on the tab on the form. These settings can help determine which plans that are available for an employee based on his or her position and job.

Enroll an employee in a fixed plan and maintain the fixed payment information

  1. Click > > > .

  2. Press CTRL+N to create a new line. The form opens.

  3. In the field, select the compensation action, or the reason for entering the record.

  4. In the field, select the position in which the person works.

  5. In the field, select the plan to enroll the employee in. The plans that are available is determined by the position.

  6. For type plans only, in the field, specify the step in the compensation structure that corresponds to the pay rate to be granted to the employee. The pay rate associated with the step is displayed in the field.

  7. For and type plans, enter the fixed base salary amount in the field. A warning may appear if the pay rate you enter is outside the range specified by the plan.

Note Note

After the information is saved, you cannot modify it directly in the form. This is to help ensure that good records are kept. To change fixed compensation information click the button. You might do this, for example, to specify a merit increase.

Maintain or change the fixed compensation of an employee

  1. Click > > > .

  2. Click the button.

  3. Select , and select an option to change the current compensation information.

Note Note

When you enroll an employee in a fixed compensation plan for the first time, such as when hiring a new employee, the and fields use the effective dates from the selected position. This is the same for promotions. However, you must enter effective dates manually to provide a merit increase or equity change.

Enroll an employee in a variable compensation plan

  1. Click > > > .

  2. Enter the effective dates for the plan in the and fields.

    Note Note

    The can also be set to a date in the past if the employee was hired within the cycle period and was not eligible for a full incentive award.

  3. Select the variable compensation plan in the field.

    Enrollment is complete at this point, unless you want to create exceptions to variable compensation plan elements or parameters for the particular employee that will override the plan rules and provisions.

Specify exceptions to an employee's variable plan enrollment

You can specify that some of the elements of the variable plan that an employee is enrolled in should be overridden in the employee's compensation plan.

  1. Click > > > .

  2. Click the tab and enter any of the following information that applies to the current employee:

    • : Enter a hire rule date to override the date of the employee's enrollment in the variable plan.

    • : Enter an award percentage to override the information defined for the variable compensation plan. The award percentage will be subject to the calculation rules of the plan setup and other settings used to calculate the incentive award. Individual and organizational performance factors are applied when calculating the final award, if enabled by the plan.

    • : Enter an award amount to override the information in a variable compensation plan. This award amount is not affected by any other event process calculations; it represents the actual amount of the award. Individual and performance factors are not applied when calculating the final award.

  3. Click the tab to enter one or more organizational units whose performance will impact the final award, and indicate the percentages of performance contribution for each organizational unit.

Note Note

This does not mean that an employee actually works in more than one organization, it only means that the performance factor is derived from more than one organization.

The sum of the proportions of the organizational units must always equal 100 percent.

Specify occasional awards

  1. Click > > > .

  2. In the , field enter the variable plan to base the award on.

  3. Complete the remaining fields of the form.

Pay for performance

You can activate pay for performance to have the employee's performance rating affect the merit increases and variable awards that are brought about by the fixed and variable plans.

When you enter a rating for an employee, a performance factor is multiplied with the employee's (fixed and variable) target award. For more information about the calculation of the target award, see Set up compensation management.

Activate pay for performance

  1. Click > > > > .

  2. Select the check box.

Rate an employee

  1. Click > , and select an employee to rate.

  2. Click > , and click the tab.

  3. Select a plan in the field.

  4. Select a rating in the field.