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Archive for the month “April, 2012”

9- The Compensation Infotypes

All the things that make up ECM on the SAP R/3

In this chapter, we will cover all the infotype and objects that are relevant to ECM. This will give us an understanding of what are the elements to look for in case of troubleshooting or just learning how the system works.

There are many compensation infotypes. It is important to remember that they are new and don’t use any of the old compensation infotypes. The ECM infotypes are:

The employee infotypes specific to ECM are:

Employee Infotype Description
0758 Compensation Program
0759 Compensation Process
0760 Compensation Eligibility Override
0761 LTI Granting
0762 LTI Exercising
0763 LTI Participant Data

The object types for budgeting are:

Object types Description
BU Budget units
O Organizational units

The relationships for budgeting are:

Relationships Description
A300 O is financed by BU
B300 BU Finances O
A003 BU belongs to BU

The transactions for ECM are:

Transaction Description
PECM_START_BDG_BSP Start budget administration
PECM_GENERATE_BUDGET Generate budget from organizational hierarchy
PECM_INIT_BUDGET Upload budget values from Personnel cost planning
PECM_CHK_BUDGET Check and release budget
PECM_CONV_BDG_STKUN Convert budget stock unit
Compensation Administration  
PECM_CHANGE_STATUS Change compensation process status
PECM_CREATE_COMP_PRO Create compensation process records
PECM_UPD_0008_1005 Update basic pay from planned compensation
PECM_PRINT_CRS Print compensation review statement
PECM_CREATE_0758 Create compensation program records
Long Term Incentives  
PECM_PROCESS_EVENT Process event for LTI grants
PECM_CONV_LTI_STKUN Convert LTI grant stock unit
PECM_PARTICIP_IDOC Export LTI participant data
PECM_GRANT_IDOC Export LTI grant data
PECM_EXERCISE_IDOC Import LTI exercising data
Job pricing  
PECM_START_JPR_BSP Start job pricing
PECM_QUERY_SURVEY Extract data for survey participation

We will start reviewing them in details in later sections.

9.1      Infotypes

9.1.1       Infotype 0758- Compensation Program

Infotype 0758- Compensation program is a required infotype for any employee to be a part of the compensation process. If this infotype is not present then the employee are excluded from any compensation plans.


Figure 9.1   Compensation program

The infotype has a validity period. It has the compensation area, first program grouping and second program grouping.

An employee can have more than one compensation program infotype. This can make them eligible for multiple compensation programs.

This concept is similar to how SAP Benefits is set up. This is new in ECM and is not a part of the old compensation management.

The compensation specialist will run the transaction PECM_CREATE_0758 when it’s time to start the compensation cycle. This program will create the primary compensation program record only. If there are other compensation programs that the employee is eligible for, then they would need to be created manually.


Figure 9.2   Creating compensation program records

9.1.2       Infotype 0759- Compensation Process

This is a very important infotype. This infotype is created when either the manager saves the record when they select the eligible employees or the compensation specialist runs a report that creates the records en masse.

This record doesn’t show the validity period but has the effective date, it also has the status that starts with planned and is Active at the last stage. It also has the salary adjustment or bonus amounts.


Figure 9.3   Compensation process(Monetary awards)

For non-monetary awards like the LTI, the same infotype captures the number and the unit.


Figure 9.4   Compensation process infotype (Non-monetary awards)

The compensation process record can be created by the manager via the MSS for every employee. It can also be created in advance by the compensation specialists. They can also apply the guidelines so that the manager doesn’t have to do that step too. The manager just needs to make some discretionary adjustments to what has been proposed. The compensaiton specialist executes the transaction PECM_CREATE_COMP_PRO for the relevant population and relevant compensation plan.


Figure 9.5   Mass creation of compensation process records

There is an option to ‘Bring salary to minimum’. This might be useful in case there might be people who might to in a higher pay level but their salary is lesser than the minimum. To fix this inconsistency, selecting this option will at least get the employee’s salary within the range.

9.1.3       Infotype 0760- Compensation Eligibility Override

The eligibility configuration takes care of most of scenarios but then there are exceptions. The exception can be when an employee transfers from another organization and has been promised that they would be in that plan. There can be instances where there is a M&A and there is a need to provide some overrides rather than change the configuration for the first year. There needs to be a close monitoring of every overrides since overrides are always something that the auditors would like more information on and the due diligence done before the override was created.

The screen Figure 9.6 shows the validity period of the infotype, the compensation area and plan for which the override has been made for and whether the override is to make someone eligible or to make someone ineligible. If the eligible date is left blank, then the employee is eligible for the entire validity period of the infotype.


Figure 9.6   Compensation eligibility override

This infotype will be used by the compensation specialists and the manager doesn’t need to have access to it.

9.1.4       Infotype 0761- LTI Granting

In case of the monetary awards, when the award is activated, it creates either a record in IT 0008 or IT 0015 or IT 0267. But in case of LTI or non-monetary award that is not the case. The corresponding infotype that is created when the award is activated is infotype 0761 LTI Granting. The end date of the validity period defines the expiration date of the LTI award. The screen Figure 9.7 shows all the information that will be captured when the LTI award is activated. If there is any need to override the configured exercise price, vesting rule or exercise window rule, then it can be done manually on this infotype.


Figure 9.7   LTI Grant

9.1.5       Infotype 0762- LTI Exercising

This infotype can be maintained either manually or via an interface from the broker. The tax calculation function is available for US andGermanyonly.


Figure 9.8   LTI exercising data

The LTI functionality is more robust than the previous versions and continuously being improved.

9.1.6       Infotype 0763- LTI Participant Data

This infotype stores the participant data. It is sent to the brokers too to let them know if that employee is an insider, director and if the employee has a substantial percentage of ownership. This information is needed for statutory reporting reasons in theUS.


Figure 9.9   LTI Participant data

9.2      Objects & Relationships

The Budget structure unit (BU) is specific to ECM. The standard infotypes like 1000 Object and 1001 Relationship are used along with infotypes 1500 BS element management and 1520 Original budget. Both this infotypes can’t be managed using the R/3 transactions and are for display. They have to be managed by budget transactions.

Each budget unit has another infotype 1500 that stores more information in the background as shown in the screen Figure 9.10


Figure 9.10   Budget structure details- Infotype 1500

Though it’s not directly used, the infotype 1520 is also created.


Figure 9.11   Infotype 1520- Original budget information

The budget relationship is really the only relationship that used within ECM.  The first relationship A/B003 helps in creating the budget structure hierarchy.


Figure 9.12   Budget structure hierarchy

The other relationship is between the budget units and organizational units. The budget unit finances the organizational unit for the amount or numbers. The financed numbers are store on the additional data pad.


Figure 9.13   Financing infotype


Figure 9.14   Additional infotype is stored for each relationship

9.3      Transactions

9.3.1       PECM_UPD_0008_1005- Update basic pay from planned compensation

The planned compensation holds the salary structure. When you execute the transaction PECM_UPD_0008_1005 for the given population, it will change the pay structure component of pay grade area, pay grade type, pay grade and pay grade level. It will NOT change the salary. This can happen after a job or a position has been re-evaluated and requires the grading to be changed. If the pay has to be changed, then pay change actions as defined in the system need to be executed as a subsequent task.


Figure 9.15   Basic Pay to Planned compensation

9.3.2       PECM_GENERATE_BUDGET- Create budget using the program

This transaction helps in creating the budget similar to the way it can be done by using the Portal. You can specify the budget type, budget period, organizational hierarchy and levels. In case of LTI, you can specify the stock units.


Figure 9.16   Generate budget

9.3.3       PECM_INIT_BUDGET- Upload Budget amounts using PCP

If you have also implemented Personnel cost planning module, then you can provide the budget values based on the scenario you have created in PCP.


Figure 9.17   Upload budget amounts using PCP

9.3.4       PECM_CHK_BUDGET – Check and release budget

You can check and release the budget if the structure and amounts look correct. You can always run it in the test mode first before releasing it. If you have release the budget but not yet used it, then there is also a chance to reset it to planning and make changes. Once it’s released and there are awards that have made against that budget, it is not really possible to reset it or make any changes.


Figure 9.18   Check and Release budget

9.3.5       PECM_CONV_BDG_STKUN- Convert LTI grant stock unit

There might be a scenario where you have awarded stocks to your employees. Before they are exercised, the company announces a split. This split would also mean that the budget should be adjusted for the split and going forward new stock units should be awarded. This can be done using this transaction.


Figure 9.19   Convert budget stock units

9.3.6       PECM_CHANGE_STATUS- Change compensation process status

This transaction is very useful when compensation specialist wants to change the status of infotype 0759. Normally the manager is expected to do this on an individual basis. But if the manager is not available for any reason, the compensation specialist can use this transaction and move it to the next status. It might also be that at a key date, if there are no rejects then all the submitted awards are approved en masse.

There is one status change that has to happen using this and that is changing the status from Approved to Active. This is the most significant change since it finally creates records that impact the payroll and employee recieving the award.


Figure 9.20   Compensation process status change

9.3.7       PECM_PROCESS_EVENT- Process Events for LTI plan grants

The manager can handle the LTI grants for the compensation related processes. But there are other events that can impact the LTI grants. There are instances where the grants have to be cancelled or vesting rules have to be overridden, etc… The compensation specialist needs access to this transaction so that they can make a mass change or a change on an individual.


Figure 9.21   LTI grants

9.3.8       PECM_CONV_LTI_STKUN- Convert infotype 0761 after stock split

The employee might have already been awarded the stock. Then the stock split is announced. This means that employee’s award in terms of number of units and type of units can change. This change will be affected by using the transaction for the relevant LTI plan.


Figure 9.22   Convert infotype 761 after stock split

9.3.9       PECM_PARTICIP_IDOC- Export LTI participant data

LTI process will include brokers who can actually sell the awards. The brokers would need the participant data. You would need to give the receivers information, the LTI plans and employee population that needs to be sent.


Figure 9.23   Export LTI data

9.3.10     PECM_GRANT_IDOC- Export LTI grant data

Once broker establishes the employee population, the employee’s grant data is sent across. This will make sure that the broker has all the required grant information. This will also allow the employee to exercise their awards.


Figure 9.24   Export LTI grant data

9.3.11     PECM_EXERCISE_IDOC- Import LTI exercise data

The broker sends an inbound feed to ECM with the details related to the awards the employee has exercised. Company needs it for tax purposes. This information will update the infotype 0762 where all the exercising data is stored.


Figure 9.25   Import LTI exercise data

9.3.12     PECM_QUERY_SURVEY- Salary survey participation

Companies take part in survey and need to give data to the provider. This can become a very easy task if job pricing maps the jobs too.  It’s just a matter of running this report and providing the output file to the vendor.


Figure 9.26   Send salary survey particiaption report

9.4      Summary

This chapter provides a quick reference to all the different objects in R/3 including the ECM infotypes, objects, relationships, transactions etc… We have covered the R/3 transactions related to budgeting, compensation administration and job pricing. We have also reviewed all the important infotypes  related to portal transactions.


Will Lars save SAP?


Will Lars, the Superhero, save SAP?

8- Awarding Employees

Awarding the employees for their hard work and efforts is very important.

The objective of this chapter to cover the process of awarding employees eligible for compensation plans. We will explore the 2 ways of awarding. We will introduce Manager Self-service for the first time. We will also see how the compensation specialist can affect that change. We will take the happy path and explain the entire configuration. Then in subsequent chapters pick up as many exceptions as possible.

The whole purpose of compensation planning is to award the employees for their contributions. Each company has different approach to this. Some companies are more decentralized and allow managers that lower levels to make decisions on the awards, the other are more centralized and the decision making takes place at a higher level in the organization. In some companies, the lower level manager does initiate the award but then it has to go through hoops of approval. Most of these processes are supported by the system with some limitation. The limitations come from the fact that it is very difficult to create a system where processes are not standardized. For example, if Sales wants are much decentralized system and IT wants a very centralized system, it will become difficult to build one consistent system efficiently and maintain it efficiently.

During the awarding process, all the items come together. We will see the budgeting information, we will see eligible and ineligible employees, we will see where the guidelines are applied. We will also see how the compensation plan, compensation review and compensation review items play into the mix.

8.1 Manager Approval Process

The portal provides a great front-end for the manager to process awards to the employees. The manager will need to login to the Manager Self-service.

Figure 8.1 Manager Self-Service starts

There are many things that a manager can do with MSS. We will navigate to the compensation management section. Manager Self-service • Planning • Compensation Planning

Figure 8.2 Navigate to Compensation Planning

Clicking Compensation Planning launches the page Figure 8.3. You will now see the Compensation Reviews that we have configured. We have chosen the ‘Annual Review’ below. After selecting the process, we select the employees based on the organizational unit they belong to. We then move to on to Plan mode.

Figure 8.3 Select the employees for award process

Before we move out of the screen, let’s review the screen in a little more detail.

It lays out the steps at the top of the screen. In our case, there are 4 steps:

  • Select- Select the employees to be reviewed
  • Plan- Plan their award
  • Review and Send- Review and send the award proposal to the one up manager
  • Completed- See the overview and changed status.

It’s important to select from the list of Compensation Review, which review we want to do. In our case, it’s Annual Review. After that you need to select the employees and click Plan, the page Figure 8.4 comes up.

The compenation review items are represented by the tabs. Each compensation review item will show the eligible and ineligible employees along with the relevant budget information.

Typically, an employee is reviewed for merit plan and bonus plan. If the employee is on a higher side of their pay range, then there might be an option to provide a lump sum merit bonus to avoid them from crossing over the pay range. Also if the organization feels that there needs to be equity adjustment that has to be made any male/ female pay alignment or other kinds of adjustment then an equity adjustment can be given separately. These different adjustments are helpful since it helps in reviewing each categories different and managing them appropriately.

Figure 8.4 Annual Review with multiple plans

The executives are sometimes awarded with Long-term incentive plans or stock options. This award can be included in the Annual review cycle. If an employee under a manager is eligible, the manager can award the employee.

Figure 8.5 Annual Review with Stock Options Plan

Before we move on, let’s see what else is on the screen.

You would continue to see the steps to complete on the top. The ‘Show Statistics’ and ‘Show Additional Information’ provide information to the manager to help them make their decision. The manager can see the budget information on the screen itself. The can also click on the employee or position to see extended information on them.

All the compensation review items that we saw in the previous screen Figure 8.5 have been configured using the path in the screen below Figure 8.6.

Figure 8.6 IMG path for adding review items

Each of the compensation review items are maintained here so that they can be reviewed when the manager is in the MSS.

Figure 8.7 Adding a compensation plan to the compensation review as a compensation review item

8.1.1 Configuration of the Portal Screens:

The employees seen in the team viewer are not directly controlled by configuration for ECM but are driven more so from the portal configuration.

What you see in the team viewer is controlled by the configuration in the Object and Data provider section of the IMG.

Figure 8.8 Object and Data Provider

Changing the column headings for the Portal

We will see how we can change the column name. We can change the default column name from Employee to Employee name’ by following the configuration path below and changing it on the screen Figure 8.9

IMG • Integration with other mySAP components • Business Packages/ Functional Packages • Manager Self-Service (mySAP ERP) • Object and Data Provider • Data Provider • Define Columns

Figure 8.9 Changing the column names on the Portal

Changing the employee population displayed

Under each compensation review items, the standard SAP configuration will show all eligible as well as ineligible employees who are the subordinates of the manager. Currently it will show all the employees with a column that shows whether they are eligible or not.

Figure 8.10 All employees displayed

If you want to see only the eligible employees, please refer to SAP note 919298 for detailed steps.

8.2 Employee Record Update

When the manager saves an employees award, it creates the infotype 0759 in the R/3 system.

Figure 8.11 Compensation Process Infotype 0759

The awards normally follow an approval process. ECM doesn’t provide any standard workflow to handle approvals hence any workflow requirements has to be done as a custom development. The different status are Planned, Submitted, Approved, Rejected, Active. When the record is being created for the first time and has not yet been saved, the portal will show the status as New. Once it’s saved, the status will become Planned. Then it gets submitted to the manager’s manager, the status is Submitted. Depending on decision, the record will either be Rejected or Approved. Till this point, everything is happening within ECM. All the approved records need to be paid and this is when the last step happens. It can’t be done by the managers but it needs to be done by the compensation specialist. They ensure that at the right time, the status is moved from approved to active.

Figure 8.12 Activating the award

Once the compensation specialist runs the process in test mode, they can check if there were any errors or issues. If the result is as you expect, then remove the test run flag and let the program make updates to the right infotypes viz Basic Pay, additional payments, off-cycle payments or any other infotype as per the activation BAdI.

The selection criteria are very flexible. It also allows for the employee selection based on an Org structure. The compensation specialist can make any change to the status of the award using this program. It is important to review the importantOSSnotes.

8.3 Technical Points

The configuration of different plan attributes is a critical part.

Figure 8.13 Configuration of plan attributes

Based on the compensation area, the compensation plans are available for maintenance. Each plan is displayed with its start date and end dates.

Figure 8.14 Different Plans

We select the plan we want to maintain. The core attributes are eligibility of the plan, guidelines associated with plan and rounding rules for the plan. Also the plan can have different attributes in different time period. This scenario can happen when there is a change in company policy for th plan.

Figure 8.15 Setting up the compensation plan attributes

Payroll integration is very important. We can select the plan we want to maintain in the similar steps for configuring the payroll data.

Figure 8.16 Plan selection for payroll configuration

We also need to define the wage type that needs to be updated on employee’s IT 0008, 0015 or 0267 when the compensation award is activated. This is defined here and one wage type can be captured. If more wage types need to be captured, then custom solution needs to be used.

It is also required to provide the calculation base for calculating the increases.

If a particular reason is associated with compensation that needs to be captured for the off-cycle payments, it needs to be provided here.

Figure 8.17 Setting up payroll attributes and off cycle reason if necessary

If the calculation base is not based on standard annual salary calcuations, ECM provides the BAdI HRECM00_CALCBASE to design the custom program.

Figure 8.18 Business add-in for calculation base

There also other BAdI that are available to provide flexibility but it comes at a cost of creating your own code and testing it out. ECM has been cognizant of the fact that your might want to use the standard feature most of the time and only use custom code for exception. Though once the BAdI has been activated, it will always be executed, ECM provides the routine from within the BAdI to call standard feature.

Figure 8.19 Other setting to assist in checking consistency before making the award

Implement this Business Add-In to define additional customer-specific consistency checks. Whenever the manager performs an action in the Manager Self-Service Compensation Scenario, consistency checks are performed on the changed or selected data. The standard routine already inlcudes several checks, for example guideline and budget checks, before you can save the data.

This Business Add-In consists of the method described below, to which you can add customer-specific checks. These checks can be used to reject data records and generate error messages. To allow checks involving more than one person or plan, the method is not called for each record separately, but only once per dialog step receiving the complete set of records in internal tables.

For Example: You want to ensure that the effective date for a particular compensation plan is within the months in which the employee’s anniversary falls. If the manager enters a date outside this period, the system should generate an error message.

Figure 8.20 Business add-in for check consistency of data

Implement this Business Add-In to change the activation process and determine the new records of secondary infotypes. It consists of the methods described below.

ACTIVATE_PROCESS: During the activation process, the system does not only change the status of the infotype Compensation Process (0759) record in the standard coding, but also creates or updates a record of a secondary infotype. Depending on the plan category, this can be either infotype 0008, 0015, 0267 or 0761. This method enables you to replace the update or creation of the secondary infotype during the activation, for example by an update of a customer-specific infotype. The other part of the activation, that is, the modification of the status of the 0759 record to Active, remains unchanged.

For Example: You want to process compensation plans that on activation should not update any of the standard secondary infotypes but a customer-specific infotype. In this case, you must implement method ACTIVATE_PROCESS.

You want to apply a rounding rule on updating infotype 0008 records when a salary adjustment is activated. In this case, you must implement both methods ACTIVATE_PROCESS and CALC_SAL_ADJUSTMENT.

Figure 8.21 Business add-in to make changes to infotypes updated with activation of the awards

Implement this Business Add-In to make changes concerning the evaluation of an employee’s base salary and salary-related quantities.

For Example: The employee’s salary should be evaluated based on the data stored on a customer-specific infotype.

The compa-ratio or percent-in-range should be calculated using reference or minimum, maximum salary values stored in a customer-specific table.

Figure 8.22 Business add-in with evaluation of employee’s base salary and salary related quantities

When a manager is awarding an employee using the standard MSS transaction, it is important to test it thoroughly before releasing it. The following kinds of errors are easy to fix.

Figure 8.23 Missing eligibility configuration

The table series beginning with T71 is used for ECM. These tables are populated using by configuration but the errors refer to a table. You might need to use transaction SE16 to see the content of the table and decipher which configuration needs to be fixed.

There are multiple SAP notes that are very useful and should be reviewed and its impact well-understood to design a good system.

8.4 Summary

In this chapter, we have covered the different configuration relate to compensation plan configuration. The MSS has been introduced for the first time with some of the navigation aspects. We also reviewed how the R/3 configuration plays out on the Portal for compensation review, compensation review items, budget, eligibility and guidelines.

15- Appendix

Important information you might need.

The objective of this chapter is provide theOSSnotes that are very important along with the entries for important resource websites. Introduce BPX community.

15.1   Important ECM SAP Notes

The following are some of the important ECM SAP notes.

SAP Note # SAP Note description
1121960 Extension of help text for Anytime Review flag
1164142 Extend package interface PAOC_ECM_ADM_BL
919298 Compensation Planning ECM displays ineligible employees
886465 Survey Data upload does not store the 60th percentile
878336 ECM Function modules: parameter to ease BAdI implementations
879720 FAQ Enterprise Compensation Management
921064 Runtime error when removing job match
891774 Runtime error in IMG step Define Guideline Matrices
605114 Authority check for Compensation approval process
1141686 Incorrect data is displayed in the TCS

15.2   List of Infotypes

Infotype number Infotype name
0758 Compensation Programs
0759 Compensation Process
0760 Compensation eligibility override
0761 LTI granting
0762 LTI exercising
0763 LTI Participant data
1001 A/B300- Financing of org units
1001 A/B003- Belongs to (Budget unit to budget unit structure)
1500 Budget structure element management

List of Objects

Object type Object Description
BU Budget Unit

List of tables

List of tables Table description

15.3   Transaction codes

Transaction code Transaction name
PECM_START_BDG_BSP Start Budget Administration
PECM_GENERATE_BUDGET Generate budget from organizational hierarchy
PECM_INIT_BUDGET Upload budget values from personnel cost planning
PECM_CHK_BUDGET Check and release budget
PECM_CONV_BDG_STKUN Convert budget stock unit
PECM_CHANGE_STATUS Change compensation process status
PECM_CREATE_COMP_PRO Create compensation process records
PECM_UPD_0008_1005 Update basic pay from planned compensation
PECM_PRINT_CRS Print compensation review statement
PECM_CREATE_0758 Create compensation program records
PECM_PROCESS_EVENT Process event for LTI grants
PECM_CONV_LTI_STKUN Convert LTI grant stock unit
PECM_PARTICIP_IDOC Export LTI participant data
PECM_GRANT_IDOC Export LTI grant data
PECM_EXERCISE_IDOC Import LTI exercising data
PECM_START_JPR_BSP Start job pricing
PECM_QUERY_SURVEY Extract data for survey participation

15.4   List of BAdI

BAdI Name BAdI Description
HRECM00_ACTIVATION Replace activation procedure or new infotype determination
HRECM00_BDG0001 EC budgeting
HRECM00_CACLBASE Replace determination of calculation base salary
HRECM00_CARGP Replace evaluation of compensation area
HRECM00_CP1GP Replace evaluation of first compensation program grouping
HRECM00_CP2GP Replace evaluation of second compensation program grouping
HRECM00_EFFDATE Replace increase or award effective date
HRECM00_ELIGIBILITY Replace or extend eligibility check
HRECM00_ELIGP Replace evaluation of eligibility group
HRECM00_GDEGP Replace evaluation of guideline grouping
HRECM00_GUIDELINE Replace or extend guideline evaluation
HRECM00_MATRIX_SEGM Define axis for matrix guideline
HRECM00_SALARY Replace evaluation of salary and salary related quantities

Would SAP become the next RIM? No way but…

RIM, the maker of blackberry, was the market leader just a couple of years back. It had products and services that seemed unbeatable. It had a strangle hold on the enterprise segment. But today, it’s struggling to survive and many have written it off.

SAP growth, technology changes

SAP is the market leader, has product and services that seems to be unbeatable, has a strangle hold on the enterprise segment. And it has not really come up with anything new lately like RIM. It’s been 20 years (1992). SAP released their break-through product R/3 and since then have been adding layers and layers of products above it. I think they consider it ‘modular’ and that idea has brought them till this point. I am concerned that they have not made any fundamental change to R/3. They haven’t changed it at all. But I think we are reaching the inflection point, tipping point or whatever else it’s called.

SAP has been trying to change but I don’t see the drastic change it needs. It has not yet embraced the internet or cloud as much as it should. One of the example is their acquisition of SuccessFactors. SAP has their own Performance Management product (of course R/3 based) but they still paid more than a billion dollars to get into the cloud space. It now has to figure out how they will integrate it into their roadmap. It has (I think cloud-based) ‘OnDemand’ product suite trying to get traction.

SAP is a great company. Small innovations and improvement might not be sufficient to keep it a leader. It has to make a big leap. They have to realize mobile, cloud and internet have changed the game already. Niche players like are already making huge inroads in SAP markets. Before someone pushes them into a corner like Apple did to RIM, they have to really re-invent themselves. They have to move on from R/3 to new R/3 (Simple, cloud-based and mobile).

7- Guidelines Setup

Guidelines help in achieving fair distribution of available resources, providing managers with boundary conditions and ensuring that the whole organization is in alignment

In this chapter we will understand what are guidelines, how are they setup, how they can help in controlling the budget. ECM provides a very robust framework to setup guidelines and manage them on an on-going basis.

 Like all the different components in ECM, Guidelines are independently setup and subsequently assigned wherever required. They are setup irrespective of eligibility setup, compensation program setup etc… The same guideline can be used by multiple plans. It’s normally a good practice to align the guidelines to eligibility and compensation plans. This will allow us to keep all of them in sync if something where to change for a plan.

SAP has been very diligent to make things as aligned as possible. If you review the guidelines configuration, it is very similar to eligibility configuration.

Guidelines are optional. If you don’t want a compensation plan to have guidelines, then it’s not necessary to design and define them at all.


Figure 7.1   Compare Eligibility configuration with Guidelines configuration

There are different logical pieces of building a guideline.

  1. Grouping employees
  2. Defining guideline
  3. Special setup- Proration
  4. Defining Guideline Variants

The configuration of the above pieces doesn’t necessarily happen in the same order.

7.1      Defining guideline groupings

Guideline grouping is a way of grouping different employees together that may have same award guidelines e.g. all executives bonus should have similar bonus guidelines, all salaried employees should have similar bonus guidelines…

  Hourly Salaried Executives Others
Annual Merit Guideline   Yes Yes  
Annual Bonus Guideline   Yes Yes  
Annual Stock Guideline     Yes  
Above & Beyond Guideline Yes Yes   Yes

It is always a good idea to keep the eligibility and guideline grouping similar even if it mean repeating configuration or creating some redundant groups in either one of them. This will be helpful in the long run when you will need to create more plans, modify plans, troubleshoot issues etc.

Do we need different groupings even if the guidelines are same?

If the annual merit guidelines for Executives are the same as Salaried, we could have one grouping. But it is a good practice to keep them separate and provide the same guideline to each one. This will help in managing the plans effectively. When there is a change for executive and salaried employee guidelines, it is not required to maintain the features again and have to transport it then.

There are 2 methods to manage guideline groupings

  1. Standard requirements via Feature CGDGP
  2. Custom requirement via BAdI HRECM00_GPEGP

Guideline Grouping —> Feature CGDGP OR BAdI HRECM00_GDEGP

7.1.1       Feature CGDGP

The following steps describe the creation of the Feature CELGP.

Step 1. Create the name for the Guideline Grouping. Please note that each Guideline Grouping is unique to each Compensation Area.


Figure 7.2   Naming the Guideline Groupings

Step 2. Eligibility Groupings are assigned to specific employee groups/ subgroups using the Feature CGDGP


Figure 7.3   Feature CGDGP assignments


Figure 7.4   Process Feature CGDGP decision parameters

This is a very versatile feature that would be required for global compensation planning. This decision tree contains compensation areas, First compensation program grouping, second compensation program grouping, pay structure, job, enterprise and personnel structure. This will assist in creating employee groupings in their smallest details to effectively manage eligibility for programs.

Versatile Feature CGDGP

The Feature CGDGP is very versatile. It has numerous parameters to create a very flexible and exhaustive Eligibility grouping assignments. Our example uses Employee Groups and Subgroups. It can also use the Organizational structure or other elements in the feature:


Figure 7.5   Feature CGDGP using Pay Scales.

7.1.2       BAdI HRECM00_GDEGP

The Business Add-in HRECM00_GDEGP can be used instead of the Feature CGDGP where the feature is not sufficient to provide the required Guideline Groupings. The BAdI will help in defining unique population of ‘Expatriates’ and their guidelines being different from other employees with the same group. The way the BAdI is implemented, it can still allow you to use the feature for everything else and the additional code can be written for exceptional cases.  


Figure 7.6   Business Add-in for Guideline Groupings

There can be multiple implementations for the BAdI but the one that matters is the one that has been activated.

7.2      Defining Guidelines

There are multiple options to provide guidelines to the manager on how to distribute their awards. These guidelines are setup by the compensation/ HR departments to ensure that manager’s discretion to award is bound by certain constraints that an organization faces.

Guidelines can be:

  1. Fixed percentage ranges
  2. Fixed amount ranges
  3. Matrix ranges
  4. For stocks, fixed number ranges

The matrix ranges provides the most flexibility for the defining guidelines. It allows different parameters to do determination of guidelines. E.g. If an employee receives more than 5 point performance rating and has compa-ratio below 1 then the guideline is different then someone who received 8 points performance rating and has a compa-ratio that is higher than 1.


Figure 7.7   Configuration of the guideline

The Guideline matrix is separately defined since it provides many more parameters and is attached here once it’s been setup.

Proration rule is defined to help in prorating the guideline. If an employee has been with the company for 6 months then the guideline should be appropriately prorated to suggest 50% of the award in comparison to an employee who has been with the company for the full year. Proration also has many parameters and hence it’s configured separated and then attached here.

7.2.1       Defining Matrix guidelines

Matrix guideline is very important component since it allows the companies to manage the awards process and keeping unusual awards contained.

SAP delivers the following methods that can be used out of the box:

Method Description
APPR Appraisal
CRAT Compa-ratio
MBOA MBO appraisal
PIR Percent in Range
SERV Length of service

Though, method AGE might not be something that can be used inUSA, in other countries inAsiaandEurope, it is legitimate.

The methods are implemented using function modules. We can create new methods or copy the existing function modules and modify to create more methods.


Figure 7.8  Delivered Matrix methods

These methods are used to define the dimensions of the guideline matrix. If the guideline is

    Below or equal to 1 Above 1
Ratings 4-6

15% – 20%

10% -20%


20% – 25%

18% – 25%

Compa-ratio and ratings will form the dimension segments when building the Guideline Matrix.

7.2.2       Define dimension

The details of the dimensions can be added to ensure that we get the right level of clarity. With compa-ratio we don’t need to define anything further. With MBO, we need to clarify which appraisal element we are using. With Length of service we would like to clarify that we want the length of service in months (unit of measurement). The screen Figure 7.9 allows you to select the dimension that you would like to use. The list of dimensions will increase as you implement your own functions apart from the standard delivered ones. The dimension date shift can allow for more comparison. E.g. you could have one dimension that calculates the compa-ratio for the employee in the current period and another dimension that calculates the compa-ratio of the employee a year before. This can also be used for appraisals where if a person receives excellent ratings for 2 consecutive years might have a different guideline as compared to the one who receives excellent rating in one of the years. This kind of dimensions can be achieved by using the date shift parameter.


Figure 7.9   Defining the compa-ratio dimension

The method parameter in Figure 7.10 allows us to enter the appraisal element number.


Figure 7.10   Defining the Performance dimension

7.2.3       Defining Matrix Segment

Defining each matrix segment can be a lot of work. There is a lot of upfront work that needs to be done by compensation specialist to ensure that the segments are correctly defined to allow the guideline definition to the granularity required. Each dimension values have to be reviewed and segmented as shown in Figure 7.11. The compa-ratio is grouped GT01 if the compa-ratio is greater than 1. The compa-ratio is grouped LE01 if the compa-ratio is less than or equal to 1. It’s important to note that the ranges are inclusive. Hence we have the GT01 defined the minimum result as 1.001 and not as 1.000. The values can have up to 3 decimals.


Figure 7.11   Matrix Dimension Segment- Compa-ratio

There can be more elaborate segments like in case of performance ratings.

Segment Description Minimum result Maximum result
1 Unsatisfactory                     2.999
2 Below average 3.000 4.999
3 Satisfactory (Target) 5.000 6.999
4 Above average 7.000 8.999
5 Excellent 9.000 9.999

It is important to note that we could also use the satisfactory segment as the Target (or the default). We will review this later.

7.2.4       Defining the Matrix

Finally it’s time to define the matrix. For Annual bonus, we would like to have guidelines based on the compa-ratio and performance. A person who is already higher in the pay range and higher performance would be eligible for a higher bonus range since their merit increase could be capped.

We can have a maximum of 3 dimensions in the matrix. If you consider that each dimension has 5 segments, then the matrix will have a total of 125 defaults that need to be setup. If you include that you want to specify a range then the entry values will become 375. Hence it’s a balance between allow manager discretion and management control.

There are 3 default types, amount, percentage and number and each can have minimum, maximum and default. You can define whether you just want a default without a range or a combination of them. Depending on that you would be provided entry fields. You can only select amount or percentage or numbers.


Figure 7.12   Setting up the Matrix

If you select amount, you can also specify the Unit of Time, if you are referring to amount as yearly, monthly…

7.2.5       Setting Up the Matrix Values

This can be one of the most tedious tasks if there are a lot of values to be entered and if the matrix is big. It might have hundreds of values.


This view (V_T71ADM23) is available for maintenance in the production environment. If there are change to the values in subsequent years, they don’t have to be transported but are to be changed in the production environment. Based on the current date, only the relevant values will be displayed. If you want to see all the values for different date ranges, the [Expand/ Collapse] button on the screen need to be used.


Figure 7.13   Completing the Matrix as per the business requirement

7.2.6       Defining Proration

The default value in the compensation guidelines can be automatically prorated using the SAP standard proration program. It has some limitations but is overall a good way to approach the complex topic of proration.

If the employee remains in the same plan but has a change in guidelines during the plan period, then the proration rule can make the necessary calculations automatically.


There is an employee whose compa-ratio was less than 1 during the first 165 days but during the plan period, the employee’s position changed making their compa-ratio greater than 1. The limitation is that the employee’s base salary will be calculated only once for the plan period and doesn’t get adjusted. 17.5% but then it becomes 15%

Calculated percentage

(165/365) * 17.5% + (200/365) * 15.00% = 16.13%

If we consider a salary of  $100,000, the prorated guideline default will be $16,130.


Figure 7.14   Proration Rule

7.2.7      Defining the guideline variant

The guideline variant is a combination of the guideline grouping, guideline and proration rules. The guideline variant is the end state of the guideline process. Only one Guideline variant can be assigned to one compensation plan.

7.3      Configuration Steps

7.3.1       Goto IMG

Personnel Management •EnterpriseCompensation Management • Compensation Administration • Guidelines


Figure 7.15   All the Guideline configuration

The guidelines have more configuration due to the definition requirement for the matrix and also the proration rules.

7.3.2       Create Guideline Variant

The guideline variant should be aligned to the compensation plans. It is a good idea to copy and create a new guideline variant for each plan even if the plans use the same guidelines functionally. This would avoid any guideline changes made to one plan inadvertently changes the guideline for another plan.


Figure 7.16   Compensation Guideline Variant

It’s important to note that guidelines are specific to compensation area. If you have created guidelines in other compensation area, you can’t copy them to a different compensation area but need to recreate them.

7.3.3       Create Guideline Groupings

The grouping can be similar to the eligibility grouping, there might get more specific. Some companies might want to have a little bit different guideline for Executives who have been with the company for more than 10 years and the ones who have just joined and the ones who are expatriates. Hence even though they were all eligible as ‘Executives’ they would still have different targets when it comes to guidelines.


Figure 7.17   Compensation Guideline Grouping

Within the same compensation area, we can only have one setup of guideline groupings. Hence it’s important to reiterate that a lot of consideration has to be given by the compensation specialist on all the different groups that will require different guidelines across all the plans associated with this compensation area.

7.3.4       Create the Feature CGDGP

The feature will define each of the guideline groupings. The enterprise structure, personnel structure, pay structure and organizational structure fields are available to define the feature.


Figure 7.18   Guideline Feature

These groupings are expected to be stable. Any change will necessitate quite a bit of analysis on the impacts to the existing plans using these groupings.

7.3.5       Define Guideline Proration Rule

This is a newer functionality in ECM and it was not a part of the old compensation management. The proration can be on a daily basis or monthly basis and the result thereof can be rounded as required. The proration applies to the guidelines (and not to the actual salaries).

If an employee has been in the plan for the whole year:

Jan to April- guideline default – 10%

May to Dec – guideline default- 15 %

Prorated guideline- (4 months with 10%) + (8 months with 15%) = 13.33%. If we use days instead of months, the calculation will be more specific. But sometime it’s preferred to use the months to avoid any dependency on the exact date of the transaction.

If the rounding type is set to round up, then the 13.33% will be rounded up to 14%


Figure 7.19   Proration Rule

7.3.6       Matrix Guideline

There are multiple configuration items for defining the matrix guidelines

Define methods for matrix dimensions and BAdI

There are standard SAP delivered methods that we can use. In case we want to define new dimensions to capture the business unit a person is working in, then we can define the method as Z001- Business Unit. The next step is to write that method in the BAdI. In the screen Error! Reference source not found., you would need to click create and start with the creation of the new method.


Figure 7.20   Creating custom method for getting the business unit of an employee

The custom method creation will need a good ABAP programmer. The BAdI builder screen Figure 7.21 gives a glimpse of the coding that is relevant to the programmer.


Figure 7.21   BAdI builder for creating new method for matrix dimension

Matrix dimensions

The matrix dimension specifies the return values along with any parameter that might be required. If we are using the method Length in Service, we will need this step to specify that we need the length of service return in years (rather than day or months). In other cases we will just specify the method without any other detail e.g. compa-ratio.

Matrix segments

The matrix segment creates segment of the dimension. The compa-ratio can have values from 0 to 2. We could divided it into 2 segments, one segment is greater than 1 and other segment that is less than or equal to one.

If we want to create different segment for the same method, we should create a different dimension using the same method and create new segments.

Define guideline matrix

The guideline matrix defines the dimensions that will be used for the guideline matrix. There can be a maximum of 3 dimensions. The guideline can be in amounts, percentages or numbers. You can select any one for the given matrix. Also you can select whether you plan to define the minimum, maximum and/or default.

Assign matrix values

The last step is to assign the values for each cell of the matrix. This will be used when the manager applies guidelines for the employee.

7.3.7       Define Compensation Guideline

Finally we define the guideline for a guideline variant for each of the guideline grouping.


Figure 7.22   Create compensation guideline

The guidelines have validity dates. Hence if there is a change in guideline, all that needs to be done is that new validity period needs to be selected and new guideline need to be configured.

In cases where we don’t want to define the guideline matrix, we can directly enter the amount, percentage or numbers when we create the guideline itself. All the people in the guideline grouping will get the same value.


Figure 7.23   Compensation Guideline for the Executives

If within the same guideline variant, we would like to give all the salaried employees a flat guideline of 10% default, then we don’t need to define the guideline matrix, but just provide the 10% in the guideline percentages.


Figure 7.24   Compensation guideline for the salaried employee

If there are still further requirements to create custom guidelines, then ECM provides a BAdI. Like all the other BAdI, you can define the custom logic for the guideline that can’t be defined using the standard settings, but use the standard guideline wherever possible. You need to set the  PROCESS_STANDARD = ‘X’ within the BAdI to use the standard routine.


Figure 7.25   More flexibility available using Business add-in

7.4      Summary

We have reviewed all the aspects of guidelines in detail here. We have seen how guideline variant, guideline groupings, guidelines, proration, guideline matrix work. We have also seen the different BAdI that are available and how they can call the standard configuration wherever needed. This will provide all the background that you would need to setup the guidelines.

6- Eligibility Design

From each according to his ability, to each according to his needs!- Karl Marx

 Defining and configuring eligibility is one of the core requirements of any compensation plan. If the eligibility is not defined, then everyone in that compensation area would be eligible. Though eligibility definition is optional, it is pretty much certain that you would need to define it. Actually it’s more helpful not to define eligibility for development and testing, than it’s in production environment. We have touched upon the macro eligibility with compensation programs. In this chapter we will focus more on micro eligibility. We will:

  • Explain the concepts of eligibility
  • Explore the different options available to define eligibility

In ECM, the key terms used in defining eligibility are eligibility variant, eligibility grouping and eligibility rule. The eligibility variant will be defined based on the combination of eligibility grouping and eligibility rule. We will discuss them in subsequent sections.

6.1      Defining Eligibility grouping

Compensation plan eligibility grouping is defined by the organizational attributes of an employee and answers the question: “Who is an eligible employee for which portion of the overall compensation plan?” For example, salaried employees might be eligible for annual bonus programs; executives might be eligible for stock option programs, and so on. These distinct compensation plan components result in different eligible populations, based on different employee types. This concept is illustrated in Figure 6.1   Who is Eligible for which Portions of the Compensation Plan?.


Figure 6.1   Who is Eligible for which Portions of the Compensation Plan?

Eligibility groupings can be created using the standard method feature CELPG or the custom method BAdI HRECM00_ELIGP.  Eligibility groupings are defined for each compensation area. These groupings should be carefully done and balanced. If there are too many, it will increase the maintenance, if there are too few, we might not be able to provide granularity for plan eligibility. We will describe each on of them in a little more details in the next section.

6.1.1       Using Feature CELGP

Before we create the feature, we need to setup the eligibility grouping that we plan to have.

  • Specify a short name and long description of the eligibility grouping, as shown in Figure 6.2   Naming Eligibility Groupings

Figure 6.2   Naming Eligibility Groupings

Once we have created the eligibility groupings, we need to find the way to define them. If our personnel structure (employee group and subgroup) matches this requirement, then we can use them to create the feature. As we plan to use the compensation area consistently, we can create the decision tree under the compensation area based on employee group and employee subgroup that groups the Executives, salaried and others.


Figure 6.3   Feature CELGP assignments


Feature CELGP is very versatile. It has numerous parameters you can use to create flexible and exhaustive eligibility grouping assignments. Our example uses Employee Groups and Employee Subgroups, but you can also use pay structure or other elements, as shown in


Figure 6.4   Process Feature CELGP Decision Parameters

The decision parameters shown in Figure 6.4 provide flexibility that can be very useful for developing global compensation programs. It contains Compensation Area, First Compensation Program Grouping, Second Compensation Program Grouping, pay structure, Job, and enterprise and personnel structure. It will assist you to create employee groupings that are granular enough to effectively manage eligibility for programs in your organization.

If the eligibility grouping of Executive, Salaried, Hourly and others has defined by pay grade, we can create the feature CELGP based on the pay structure parameters.


Figure 6.5   Feature CELGP using Pay Scales

The objective of reviewing the different options here is to highlight the fact that since each implementation is different, ECM provides the functionality to align it to each SAP HR implementation and each company policies. Once it’s been defined, one has to be very cautious in changing them and study the change impact.

6.1.2       BAdi HRECM00_ELIGP

You can use BAdI HRECM00_ELIGP instead of Feature CELGP if it is not sufficient to provide the required eligibility groupings. Like most of the BAdI in ECM, you can call the standard feature from within the BAdI. This allows for handling the exception in the BAdI but the rest of the decision-making process can be setup using the feature.

The BAdI can be initialized as seen in Figure 6.6. It will need a good functional design along with an ABAP developer to deliver the requirements.


Figure 6.6   Business Add-In for Eligibility Groupings

We should now be able to setup the core eligibility framework. We should have all the eligibility groups in place to begin the actual definition of eligibility rules.

6.2      Defining Eligibility rules

Eligibility rules can be defined for every eligibility group. An eligibility variant groups eligibility rules for each group that need to be assigned to a specific compensation plan. E.g. for the annual bonus plan, an executive has 2 months waiting period and a salaried employee has a 6 months waiting period. To accomplish this, we would create on eligibility variant “Annual Bonus”. We would define the eligibility rule for eligibility grouping of Executive with 2 months waiting period. Within the same eligibility variant, we will define the eligibility rule for eligibility grouping of Salaried with 6 months waiting period. An eligibility variant for “Annual Bonus” will then be assigned to the compensation plan “Annual Bonus Plan” to be effective.

The screen Figure 6.7 shows the different options available on the eligibility rule.


Figure 6.7   Configuration of an Eligibility Rule

The eligibility rules can be defined based on:

  • Not eligible

You will be surprised to find the “Not Eligible” flag. This is very helpful to take care of the exceptions.

Minimum length of service:

You can set up a requirement for a minimum length of service. It might need at least 5 years of service before qualifying for a stock options plan. The calculation is based on formula already setup in IMG • Personnel Management • Personnel Administration • Evaluation Basis • Calculation of Employment period • Calculation Process • Define Calculation. This is integration with the Personnel administration. The calculation of service can be setup based on different criteria e.g. it can include or exclude sabbatical leaves.

Salary criteria:

There are 2 methods that are available. One is the salary range and other is compensation ratio (Compa-ratio). Depending on the preference, you can decide what you want to use.

You can define that only those employees are eligible who are getting paid between the midpoint of the salary range and maximum of the salary range. This will be defined by entering the minimum as 50% and maximum as 100%. The system calculates the salary percentage using the formula (current sal. – min. in range)/(max. in range – min. in range) * 100. In terms of compa-ratio, the calculation is employee’s salary divided by reference salary of the level. For e.g. if the reference salary of a level is 75,000 and the employee’s salary is 77,000, then the compa-ratio is 0.96 (72,000/ 75,000)

Minimum working hours of the employee:

The minimum working hours is compared to the number of working hours on IT 0007. If the minimum working hours is set to 32 hours/ week, then a part-time employee with 20 working hours would not be eligible for this plan.

Waiting period before an employee can become eligible:

We can define a waiting period before an employee can become eligible. We can specify it from the hire date or calculate it with the infotype 0041 Date types. 

Employee’s performance (appraisal rule)

The Appraisal Rule is defined separately because it has a lot more variables. The appraisal rule can be created based on the old appraisal system or new Management by Objective (MBO) system. When we use the old appraisal system, it’s easily done by defining the Appraisal model e.g. Annual Performance Review.


Figure 6.8   Setting up Appraisal Rule

With Management by objective system, there are more choices. The evaluation can be for the overall rating for the template or for the second or third level element in the appraisal.


Figure 6.9   Setting up appraisal rule with MBO

Let’s review an example of annual bonus plan. We will create an annual bonus eligibility variant. This variant will have 3 eligibility rules, one for each grouping.

  • Executive



Executives are eligible for an annual bonus, after a one month waiting period after they are hired and if they have a performance rating of at least 4.


Figure 6.10   Executive Employee Eligibility Rule

Salaried employees are eligible after a two month waiting period and if they have a performance rating of at least 4.


Figure 6.11   Salaried Employee Eligibility Rule

Hourly employees are not eligible for the annual bonus.


Figure 6.12   Hourly Employee Eligibility Rule

The PERF appraisal rule is defined as in Figure 6.13   Performance Appraisal Rule


Figure 6.13   Performance Appraisal Rule

Eligibility rule periods

Eligibility rules are date sensitive. If necessary, you can change current parameters to different dates. That is, if salaried employees’ eligibility waiting period changes from two months to one month for the year 2009, you can change the period and apply the new rule.


Figure 6.14   Eligibility Rule Periods

Let’s now look at the concept and definition of eligibility variants.

In addition, there can be custom requirements on which micro eligibility is based.

6.3      Defining Eligibility Variants

Each compensation plan has an eligibility variant assigned to it. The eligibility variant is a combination of macro and micro eligibility, that is, it is a combination of eligibility groupings and eligibility rules.


Figure 6.15   Methods of defining Eligibility Variants

We can define as many eligibility variants as we want. It is not necessary that they all have to be used immediately. They can remain in the system and can be used subsequently.

Though the same eligibility variant to be reused for different plans, it is preferable to use one eligibility variant for one plan. This is to ensure that if we need to change the eligibility on one plan but not the other, we don’t have to make changes or accidentally apply the change to all the plans.

Eligibility Override

The standard eligibility definitions are expected to take care of most of the scenarios but like in any other things in life, there are exceptions. ECM provides with the simplest of the solution, it provides with an eligibility override at an employee level. There can be scenarios where an employee has been transferred from one country to another. In this cases, the employee might not fulfill all the country specific eligibility criteria but is still expected to be eligible for some of the compensation plans. This is accomplished by creating an infotype 0760 and specifying the plan.

The same logic can be reversed and if there are employees who come up as eligible but they need to be made ineligible, we can still use IT 0760.

6.4      Eligibility Rule Configuration

Follow this sequence of steps to configure eligibility rules beginning with the IMG:

Personnel Management •EnterpriseCompensation Management • Compensation Administration • Eligibility

The screen shown in Figure 6.16 is the eligibility configuration.


Figure 6.16   Configuration for Eligibility Rules

Step 1: Define eligibility rule variants within a compensation area. Each compensation will have it’s own set of eligibility rules. We can’t copy eligibility variants across different compensation areas. We can translate the description in other languages if required. You can add more variants anytime you need them. They are created in line with the compensation plan that are going to be used for.


Figure 6.17   Define Eligibility Variants

Step 2: Define eligibility groupings

The eligible groups are defined here. There is a lot of work that needs to be done in the background to ensure that all the groups have been considered. You can only assign eligibility rules for each of the groups defined here. If there is anything that gets missed, it will be a lot of work to make changes. The eligibility groupings are used in all the eligibility variants. If it’s changed, it will impact all the variants.


Figure 6.18   Define Eligibility Groupings

The above process just defines the shell, the feature CELGP provides the actual employee population that will be assigned to eligibility grouping. It can be any combination of the decision fields available. But there are some caveats. If the eligibility doesn’t work as expected, you would need to check the compensation area feature and tweak some decision fields to avoid any overlap.


Figure 6.19   Define Eligibility Grouping Feature CELGP

Step 4: Define appraisal rule.

We will define the appraisal rule name first and then define the details of the appraisal rule. Again, we can define it based on the plan or create more readable titles.


Figure 6.20   Define Appraisal Rule


Figure 6.21   Setting up Appraisal Rule

The rule can be defined for the old appraisal system or new management by objective. The range of ratings can also be included as a part of the rule.

Step 6: Define eligibility rule.

Everything comes together when we are defining the eligibility rule. We will first choose a compensation area and the eligibility variant to which this rule belongs to. Then we will create the rule with the eligibility group along with the eligibility parameters.


Figure 6.22   Define Eligibility Rule


Figure 6.23   Executive Employee Eligibility Rule

Step 7: If eligibility can’t be define using standard configuration, activate the Business Add-In.


Figure 6.24   Eligibility Business Add-In

6.5      Summary

Designing eligibility rules is a challenging task. There are many options that are available that to implement standard eligibility but we can also use the BAdI. There is quite a bit of configuration that needs to be done to leverage the complete functionality.

We have covered the following topics:

Eligibility variant

Eligibility groupings

Eligibility rules

Appraisal rules

Eligibility BAdI

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