Chapter 12- Managing Year-Round Off-cycle Bonus

Employees are compensated year round over and above their normal remuneration as a token for their work, as a motivation, as a compliment for their achievement, etc…

12   Managing Year-Round Off-cycle Bonus

In this chapter, we will see how the ECM takes care of year round off-cycle bonus awards. We will follow a similar approach that we have taken in previous chapter to go through the process.

We will consider the generic off-cycle process for Recognition programs that most companies have. One has to do a cost-benefit analysis of managing this program using ECM. The cost of additional plans must be weighed in against the potential advantages of having a streamlined process of managing these programs.

<<Configuration setup for recognition rewards> > This should be as heading 2 and the rest under should become heading 3

12.1   Setup the budget

We will setup a separate budget for recognition reward. It will a monetary award.

Figure 12.1   Setup budget for recognition rewards

12.2   Setup the Compensation program

We will create a new compensation plan for recognition rewards that is of ‘Off-cycle bonus’ category. Also note that we will create a similar compensation plan for any other recognition award that we want to capture separately.

Figure 12.2   Setup compensation plan

The pay increase can happen anytime. Hence we will create an anytime recognition reward review.

Figure 12.3   Setup compensation review

We will create a compensation review item ‘Recognition rewards’ using the compensation plan ‘Recognition reward’ and the anytime compensation review ‘RERE’.

Figure 12.4   Setup recognition reward review item

The compensation review item attributes for Pay increase are defined in the screen Figure 12.5

Figure 12.5   Setup recognition reward review item in details

12.3   Setup the eligibility

Anyone in the US is eligible for recognition reward. In this case the macro eligibility is sufficient. That means that anyone with the compensation program record with compensation area 10 and first grouping of ALL and second grouping of ALL are all eligible. There is no need to define micro eligibility using eligibility rules.

12.4   Setup the guidelines

We don’t need any elaborate guidelines since the recognition reward is for $100. We don’t need to create any guideline matrix. We will enter default, minimum and maximum as $100. We will create similar guidelines for all the guideline groupings.

Figure 12.6   Setup compensation guidelines

12.5   Setup the award Off cycle Bonus (IT 267)

We will define the compensation plan attributes along with the guideline variant. The absence of eligibility variant will make the macro eligibility as the only eligibility criteria

Figure 12.7   Setup compensation plan

We will also setup the compensation plan payroll data with the off-cycle reason of ‘Special Payment’.

Figure 12.8   Setup compensation payroll data

It’s very important to include it in the compensation program as shown in Figure 12.9

Figure 12.9   Setup compensation program

<< Executing the recognition rewards> > this should become heading 2 and the rest of the heading 2 below should become heading 3.

Create the budget and setup the budget amounts

Figure 12.10   Setup budget amount

Assign the budget to the highest unit. If anyone is given recognition reward and who is under the Executive Board- USA hierarchy will reduce the budget even though the budget is assigned to the highest level.

Figure 12.11   Setup budget release

When you apply the guidelines, $100 will be awarded. For this particular plan, there are just too many columns and don’t really help. The user can easily reduce the number of columns by clicking on the ‘Personalize’ button and removing redundant columns.

Figure 12.12   Personalization options

Awarding the employees

The manager comes in to do the pay increase and can pick a view to see only the directly subordinate employees.

Figure 12.13   Select the employee

The manager can apply the guidelines and award $100.

Figure 12.14   Grant the award

The award is reviewed and send for approval.

Figure 12.15   Submit the award

The initiator of the award and provide notes that helps the approver.

Figure 12.16   Add a note

Once the award has gone through the approval cycle and it’s in the approved state, the compensation specialist proceeds to execute the compensation process status change transaction. In this case it might also be done on a regular monthly basis. All the awards in the approved status will be changed to Active status.

Figure 12.17   Activate the award

The compensation process record IT 0759 is shown below Figure 12.18

Figure 12.18   Award in infotype 0759

On activation, the additional off-cycle payment infotype 0267 is created with the amount, effective date and reason for the payment.

Figure 12.19   Off-cycle infotype 0267

As awards are distributed, you can review the amount spent when you execute the transaction.

Figure 12.20   Check the budget

For the New Year, you can copy the existing budget and create a new budget. The new budget has all the features of the old budget including the budget amount.

Figure 12.21   Create a new budget structure for the next year

12.6   Summary

In this chapter, we have covered the creating of recognition rewards program. We have also created a budget for the new year based on the previous year’s budget. We have also created a fixed guideline for the budget that can’t be changed.