Tag Archives: ECM

Top Tips Integrating SAP HCM Core and SuccessFactors Compensation and Variable Pay

Compensation, SAP HCM, SuccessFactors, , , , , ,

This is what happens when you fly on a brand new Delta jet. So new that they haven’t even registered Wi-Fi. At least this blog has come out of it – hope you find it useful! I have jotted down a few of my top tips (so far) when integrating and implementing SuccessFactors Compensation and/or  SuccessFactors Variable Pay.

  • Data, data, data! OK, do we need to go through this again? Regardless of the systems being integrated, we are always attacking the same gremlins, aren’t we? As Compensation professions (or those IT Professionals supporting Compensation), there’s nothing like going through a compensation process to see how painfully obvious it is that the integrity of your core HR data is vital in your talent management processes – especially compensation.  Take, for example, an employee’s FTE % (sometimes referred to as employee percentage). If incorrect, this one data element can wreak havoc on your merit, merit budget, and incentive calculations.
  • If SAP HCM core is your system of record, be sure you are using the existing SAP provided integrations. With Integration Add-Ons 1.0 and 3.0 for SAP ERP HCM and SuccessFactors HCM Suite, both the SuccessFactors compensation and variable pay modules have pre-delivered content. You will need to time this integration with your current Foundation UDF “User Data File” file that you are using.
  • Be kind to your PI (Process Integration) middleware resources. Take them out to lunch and buy them a pizza since you will need their help. The integrations provided by SAP are SAP PI based and will need to be activated in your middleware environment. This is often a project plan task forgotten in the plan and will end up biting you if you don’t plan for it.
  • If you are migrating from ECM (Enterprise Compensation Management), don’t try to do too much with this. The new integration uses staging tables and is entirely decoupled from ECM. You may end of leveraging IT0759 or IT0761 so LTI handling, if you still intend to interface to your stock plan provider.  Also, you may need to do some incentive number-crunching for segments (e.g. “legs”, “assignments”, “rows”, etc.) in a custom infotype. You should consider keeping your existing bonus engine if your incentive plans have not been able to simplify / conform to the SuccessFactors variable pay model.
  • Don’t forgot that all of your compensation and variable pay templates need to have the <comp-group id=”xxxx”/> tag in the XML if you are sending your data from SAP HCM, where xxxx is a string with no capitalization. As the time of this writing, this can only added via the XML configuration. This tag is important since it tells the SuccessFactors system which forms (that use that template) to update during a refresh from SAP HCM. Like any tags of an XML template for compensation in SuccessFactors, the placement of this tag is very particular near the end of the XML. Read the SuccessFactors documentation carefully and be careful when you are downloading/uploading or editing the template in Provisioning.
  • Remember the power of the pay matrix (e.g. salary ranges) which drives everything from the compa-ratio and range penetration, as well as guidelines (if included as a dimension). Don’t try to interface this over ( not worth it) –  this would just be an upload every year.  If a range range/midpoint changes, the onus would be on your SuccessFactors compensation administrator to manually update that. This shouldn’t happen once the process has started unless there was an error or your compensation manager is trying to make your life more interesting…
  • Think carefully how you will leverage the Executive Review. Unlike the name implies, this functionality isn’t necessarily just for executives, but rather for calibration purposes in general. Based on Role-Based permissioning, you can define a group with display access and a group with edit access. I will be talking about this topic during the ASUG Compensation SIG (login required) later this month. If you are a SuccessFactors customer, please plan on joining me for this learning event!

That’s it for now.  Please send along any questions and comments in the area below.

Oh, and Worklogix is a Silver Sponsor at the upcoming SAP SuccessFactors conference, SuccessConnect.  If you are in Vegas, please visit us in booth #35.

Sending you my best,

Jeremy  @jeremymasters

ECM Nugget: “Lock Objects” in transaction PECM_PROCESS_SUPPORT

Budgeting, Compensation, ECM, SAP HCM, Talent Management, , ,

I wanted to share a useful piece of information about the use of the “Lock Objects” functionality in the program RHECM_PROCESS_SUPPORT_FOR_PLNG (transaction code PECM_PROCESS_SUPPORT) since it seems to come up in every ECM deployment that Worklogix is involved in.

Transaction PECM_PROCESS_SUPPORT for process support during ECM cycles
Transaction PECM_PROCESS_SUPPORT for process support during ECM cycles

First, there is a common misunderstanding that it’s about locking employee records. However, the “Lock Object” flag is only about locking Budgets (i.e., budget units)

Imagine you have an organizational structure having the depth of 4 hierarchical levels and the top node is A, subordinate from A is B, subordinate from B is C, and subordinate from C is D. Since Enhancement Pack 5 (EhP5), SAP ECM supports the employee-level budgeting approach (bottom-up).  This means we have 1) the budget structure as a mirrored org structure (BU-BU and BU-O) and 2) the employee budgets (BU-P).

Whenever a manager is logged into Manager Self-Service doing compensation planning, certain objects get locked. The system locks the employee itself (i.e. P and IT0759), the budget unit (BU) connected to the employee is locked (BU-P) and finally the budget unit (BU) connected to the org. units where the manager is the chief of is also locked. This leads to the dilemma that two functions of the Process Preparation Report (transaction PECM_PROCESS_SUPPORT) mitigate:

1) Option Update Planning and Budgets: Whenever an employee is turning eligible / ineligible, the employee budget is getting created or deleted. Therefore also the roll-ups are getting refreshed. This refresh doesn’t work when any manager is logged-into the Compensation Planning / Approval iView within the portal locking a budget connected to the org unit.

2) Option Recalculate Budget: Functionality doesn’t recalculate budget whenever any manager is logged into the Compensation Planning / Approval iView within the portal locking a budget connected to the org unit.

Dependent on how the compensation cycle is setup (is it a global or country compensation review; global organization or just within a region/country) the likelihood is high that there is at least one manager logged into Manager Self-Service during an ongoing compensation cycle. To bypass this dilemma, SAP has recently implemented the “Lock Object” flag. Whenever the flag is unchecked, the system is not checking any longer if a budget unit connected to an org unit is locked by a user or not. It always pushes changes into the database. Again, the “Lock Object” flag has nothing to do with locking an employee. It’s only about locking the budget structure by managers.

Here are the pros and cons of this functionality.

Pros:
As usually at least one manager is logged into MSS all the time, this facilitates the update of budgets significantly. Simply uncheck the flag and budget structures can be updated all the time. Additional programs which may kick out (or prevent) managers to perform budget updates are not needed any longer.

Cons:
The manager experience can be a bit tricky with these budgets, and proper communication should be made available to managers involved in the process. Let’s take an example where a manager who is logged into MSS and initially sees a budget of 100,000 USD. While the manager is logged in, you execute PECM_PROCESS_SUPPORT to perform a recalculate budget which reduces the budget in a lower org unit for example by 10,000 USD. This update is not immediately visible to the manager, but rather only when he/she opens another iView and then returns to Compensation Planning / Approval iView to get a refresh. This means that a manager who plans to keep his org unit budget at 100,000, but  in reality he only has 90,000, because someone executed PECM_PROCESS_SUPPORT in the meantime.

I would recommend to always use PECM_DISPLAY_BUDGETS to monitor any potential inconsistencies in the budget structures which can always be repaired using the button “Update Spent Amounts” in the budget audit report in case they exist.

Audit Report for Budgets

Hope this helps you. 

Top Ten Gotchas when Implementing SAP Enterprise Compensation Management (ECM)

Compensation, ECM, SAP HCM, Self Services, Talent Management, Variable Pay, ,

Thought I would share a few lessons learned around Compensation management using SAP ECM (Enterprise Compensation Management), but these could be used for any compensation system.

  1. ECM supports the annual compensation (“focal review”) process, but not the off-cycle (ad hoc) increases associated to promotions, laterals, downgrades, etc. Don’t force the off-cycle process in the tool or it will turn ugly.
  2. Ensure budgeting requirements are well understood early in the project between the compensation and project teams.  For example, what is the budget/organizational freeze date (or, is there a freeze date?), can budget funds be re-allocated during planning, what  do you do with terminated employees during the cycle, etc.
  3. Don’t rely too much on “macro-eligibility” to drive your compensation eligibility rules. Infotype 0758 (Compensation Program) is where “macro-eligibility” is defined.  Putting too much intelligence in this infotype is a recipe for disaster because you are at the mercy of master data maintenance (PA30/PA40 transactions).  Bake your eligibility requirements into your “micro-eligibility” rules (including the eligibility BAdI) since you have absolute control over the logic.
  4. Listen carefully to the requirements around compensation planning and approvals. For discretionary plans, ensure that the system is configured to handle the appropriate workflow and business logic to handle compensation worksheet level approvals, routing and escalation rules.
  5. Ensure that all your process inputs (market data, performance ratings, potential ratings, etc.) are configured prior to the compensation worksheet being opened to management.
  6. Agree with the compensation team on which master data will be entered by them in Production versus input by IT in Development (and transported to the upper environments).  Time-sensitive information such as Business Unit Results, Black Sholes/Fair Market Value, Bonus modifiers/kickers, etc. should be controlled by the business in the Productive environment.  This data may also be very confidential as well, for “comp’s eyes only”.
  7. Give the compensation team the ability to proof the compensation worksheets before releasing to management.  Seems a given, but worth it’s own line.
  8. Conduct your system testing with a dedicated QA system with unmasked employee/compensation data. (This may not be realistic for all companies due to budgetary and/or environment  constraints, I understand, but shoot for the stars and maybe you will reach the moon.)
  9. Just because functionality is offered, doesn’t mean you should use it. Test the waters within a demo environment with the compensation team to ensure they really do want all the functionality offered. There is nothing wrong with hiding functionality until if (or when) it’s needed. For example, the Compensation Profile is neat but also can backfire on you if you expose too much data that’s difficult to explain (or – even worse – wrong!)
  10. Don’t over-engineer the stock granting process.  At maximum, collect and split the stock recommendations, but all other activities (vesting management, exercising, life events, etc.) should be handled by your stock plan administrator.

Until next time!

Jeremy

@jeremymasters

SAP and SuccessFactors Compensation Management Q&A

Cloud, Compensation, HR2014, PaaS, SAP HCM, SAPInsider, SuccessFactors, Talent Management, Variable Pay, , , , , ,

Yesterday, SAPInsider hosted a Q&A on SAP and SuccessFactors Compensation Management.  You can view the full transcript here. It is always challenging and fun to do these live Q&A blogs because when you are in the “hot seat”, you need to think (and type!) fast.  Because we only had less than two weeks of marketing for this online event, I was skeptical on the amount of attendees who would show up, but the turnout was a lot higher than I thought. I did see a ton of questions flood in but was only able to answer an hour’s worth.

Compensation

Some takeaways from my chat were the following:

  1. Customers are still confused about the longevity of SAP ECM (Enterprise Compensation Management). I had to (again) reinforce that SAP will not be stopping support of this module. In fact, there is a program called “Customer Connection” which SAP exclusively has for listening to the user community for minor enhancements to the product.
  2. SAP is currently building an integration between SAP HCM On premise and the SuccessFactor’s Variable Pay module. One of SAP’s Product Managers for Compensation/Variable Pay, Deeksha Mittal, was nice enough to join me in on the conversation to articulate some high level timelines for this. She mentioned: “we are working towards an integration between Variable Pay and SAP HCM as well and is definitely on the roadmap for 2014. By the end of 2014 (your next planning cycles) you should be able to take advantage of the integration between Variable Pay and SAP HCM.”
  3. Regardless of using on premise or cloud compensation, customers’ pain points are focused in similar areas, such as: data integrity, process efficiencies (workflow/approvals), and integration with payout process (payroll and/or data extract to equity 3rd party administrator). It doesn’t matter where you deliver your compensation – these themes follow us regardless of platform.
  4. As in other modules, customers who have implemented on premise solutions  are trying to understand how extensible SuccessFactors Compensation/Variable Pay is. I briefly mentioned the introduction of the MDF (Meta Data Framework) as well as SAP HANA Cloud Platform as ways that SAP/SuccessFactors are opening up the platform. Will cloud compensation ever be fully customizable? No, but these tools can be evaluated by the customer to see if their processes’ complex and/or unique logic can be incorporated into SuccessFactors’ technology.
  5. Some mention was made with respect to  future modeling capabilities coming in SuccessFactors. Deeksha Mittal mentioned: “At present, the SuccessFactors Compensation & Variable Pay modules provide flexible ways for defining budgets. We are definitely looking at more advanced modeling features that will help HR to develop more effective comp and bonus plans that are in-line with the company’s financial and HR goals.”

I think it would be beneficial to do another compensation session later in the year since there was so much interested. I will talk to SAPInsider about that.

And hope to see some of your this year HR 2014 in Orlando or Nice, France. I will be doing several sessions this year, including one on compensation: “A guided tour of compensation management functionality: On-premise vs. cloud”

Please remember to follow me on Twitter @jeremymasters

 

Until next time!

Jeremy

Attention All Comp Geeks: Conference Time, 2013!

Compensation, Talent Management, , , ,

Hear ye, Hear ye, calling all Compensation geeks… will you be joining me at the WorldatWork Conference in Philly at the end of this month?  There’s still time to register.

WorldatWork

Total Rewards 2013
Total Rewards 2013

The annual WorldatWork conference will be held April 29-May 1, with loads of great information for those in the Compensation profession.  This is the quintessential event for Total Rewards Professionals. Check out the quick schedule of the event here and the complete list of workshops here.

This year, I am happy to be presenting a case study with one of our customers, Perrigo, on how we used technology (specifically SAP’s Enterprise Compensation Management module) to deliver a best-in-class compensation solution for their employees, managers, and HR Professionals worldwide. Our session is at 9-10am ET on Tuesday, and official session title is: “Leveraging HR Technology to Build a Strategic Human Capital Platform” (Session Code T07T1). I am privileged to be presenting with Stacey Petrey Ed.D., CCP, VP of Global Compensation and Benefits, Perrigo. Stacey is a compensation visionary and truly understands how technology can support the needs of the business.

I have been lucky to be part of an organization (Worklogix) that has one of its core competencies in Compensation. We have several robust solutions, including a Compensation solution that will knock your socks off.   I have authored five books from SAP PRESS including Enterprise Compensation Management. For a full list of my titles, you can also check out my author page on Amazon.

Some of the other sessions that I plan on attending (and why!) include the following:

“New Frontiers in Reward Design: Six Key Learnings from Behavioral Economics” (Session Code: C19T5)  by David W Cheatham, CCP, Director Compensation, Coca-Cola Company.  I know David from compensation work we did with The Coca-Cola Company, and am always impressed with what he has to say.

“Fantasy and Reality in Academic Research on Rewards” (Session Code: C09T2) by Barry Gerhart, Ph.D., Professor, University of Wisconsin; Kevin F Hallock, PhD, Director Institute for Comp Studies, Cornell University; Gerald E Ledford, Jr, Senior Research Scientist, Center for Effective Organizations; Michael H. Schuster, Ph.D., CHRS, Professor and Consultant, U.S. Coast Guard Academy.  I am always intrigued at what academia can teach us in the business world.  Of course, I am also always supportive of anyone from my alma mater, Cornell.

“Perception Is Reality: The Importance of Pay Transparency to Employees and Organizations” (Session Code: C07M3) by Robert J Centonze, CBP,CCP, CEBS, VP Global Compensation & Benefits, Campbell Soup Company; Nora E Costa, CCP, GRP, Sr. Director, Corporate Compensation, CVS Caremark; Rena Rasch, Ph.D., Manager, Research, Kenexa High Performance Institute; Mark A Szypko, CCP, GRP, Managing Director Compensation, Kenexa, an IBM Company.  I like the topic as well as the mix of speakers between industry experts and analysts.

“From New Technology Smog to Cloud 9: An Overview of Today’s Hot Technologies and What’s Right for Your Organization”, Session Code: T05T5 by Kimberly L. Seals, CCP, Senior Partner, Mercer. Love the title, and session topic is just up my alley.

Will I see you there?  If so, please be sure to say hello at my session, or anytime during the conference. If not, I will be providing some coverage on my Twitter account @jeremymasters.

See you soon (I hope)!

Jeremy

 

Live Q&A: Link pay to performance with Enterprise Compensation Management and SAP ERP HCM

SAP HCM, , , ,

On Tuesday, October 25, 2011 from 12:30pm – 1:30pm EDT, join me on the Insider Learning Network’s HR Forum, and learn about Enterprise Compensation Management (ECM). You will be able to ask me questions during this hour on any ECM topic. Bring your lunch, log in, and ask away! Looking forward to seeing you all online at that time.

You will need to register ahead of time. Here is the link to register for the Q&A. Also, if you do, you will also be able to access the free download (which is Chapter 4 of my SAP PRESS book on Enterprise Compensation Management with SAP ERP HCM): http://sapinsider.wispubs.com/ECM

Enjoy, and see you all online!