The SuccessFactors Employee Central Pay Structure

[lukemarson]

In my previous blog I talked about the Organization Structure in SuccessFactors Employee Central. In this blog, I am going to turn my attention to the Pay Structure. The Pay Structure is more simplified than how SAP ERP HCM manages the pay structure and is focused more on data definition than the flexibility in payroll processing that the SAP ERP pay structure is designed for.

Pay Structure

The Pay Structure is made up of several Foundation Objects. Like with other Foundation Objects, customer fields can added and associations created between objects. The Pay Structure is not a hierarchical structure, rather it is a set of objects:

• Pay Component Group
• Pay Component
• Pay Group
• Pay Grade
• Pay Range
• Pay Calendar
• Frequency

We can compare this structure to SAP object types:

Foundation Object	SAP ERP HCM equivalent
Pay Component	Wage Type
Pay Component Group	Wage Type Group
Pay Group	Payroll Area
Pay Grade	Grade
Pay Range	Pay Scale
Pay Calendar	Payroll Calendar
Frequency

Some details about each Foundation Object in the Pay Structure

During the implementation of Employee Central, each Foundation Object can be configured to store certain details about the object. This can be used for reference or can be used to populate fields on an employee’s Employment Information record – particularly Compensation Information and Payroll.

Pay Component

A Pay Component is the Employee Central equivalent of a Wage Type. It defines a certain element of an employee’s compensation package, such as salary or a parking allowance. It also defines how the company pays the employee for that specific type of pay. By default, a Pay Component defines:

• Type of the Pay Component
• Whether it is an earning
• Currency of the payment
• Value (if the Pay Component has a pre-defined, fixed value)
• Frequency of payment
• Whether it is recurring
• Whether the value or attributes on the UI can be overridden
• Tax treatment (e.g. taxable or tax exempt)
• Whether it will be displayed in Self-Service access
• Whether it can be used for Compensation planning
• Whether it is a pay target (e.g. a performance-related or target-related bonus)

The screenshot below shows the Base Salary Pay Component.

Pay Component Group

A Pay Component Group is used to group multiple Pay Components. Its value is the sum of the Pay Components associated with the Pay Component Group. A Pay Component Group would typically be assigned as a potential compensation package for an employee. Annualization of an employee’s compensation is performed automatically and the main Pay Component can be used for Compa-Ratio and Range Penetration calculations. The standard SuccessFactors system comes with one Pay Component Group delivered by standard: Annualized Salary.

Pay Group

The Pay Group is used to group employees together that share the same payroll. For example, this could be by region or by employee class. Each Pay Group defines things such as the payroll vendor, number of weeks in the pay period, and the lag. It is the equivalent of a Payroll Area in SAP.

Pay Grade

The Pay Grade defines the grade – the method of defining the compensation for employment for the holder – of Job Classifications and, if Position Management is used, Positions.

The screenshot below shows the Salary Grade 7 Pay Grade.

Pay Range

A Pay Range defines the minimum, mid-point, and maximum salary ranges for – in the standard configuration – a combination of Pay Grade, Geo Zone, and Legal Entity. On the UI it is primarily used to calculate Compa-Ratio and Range Penetration.

Pay Calendar

The Pay Calendar defines the pay periods within a year and is associated to a Pay Group. For example, it defines when the pay period beings and ends, plus:

• The number of payments
• When a pay check is issued
• If the pay period is Off Cycle
• The Processing Run ID and Run Type
• Pay Group that this pay period is associated to

Frequency

Quite simply, the Frequency object defines how often a Pay Component is paid out. The standard system provides a number of frequencies, such as annual, monthly, and weekly.

How does this look in EC?

A majority of this data is not assigned directly to employees. For example, Pay Range is not assigned as it is part of the Pay Grade that is assigned to an employee.

Pay Grade is assigned on the Job Information. Pay Group and Pay Components are assigned on Compensation Information, while Frequency is used to define the frequency of the Pay Components that are assigned in Compensation Information. In the screenshot below the North America Pay Group Pay Group is assigned to the employee, as well as the Base Salary and Performance Bonus Pay Components.

Pay Scale Structure

SuccessFactors offers a Pay Scale Structure that can be used by SAP ERP HCM customers. Unlike the “standard” Pay Structure objects, the objects in the Pay Scale Structure are Generic Objects and not Foundation Objects. The Pay Scale Structure contains four objects:

• Pay Scale Area
• Pay Scale Type
• Pay Scale Group
• Pay Scale Level

All four objects can be assigned to employees on Job Information. Rules can be used to perform indirect valuation based on the employee’s assignment to the Pay Scale Structure in Job Information. This assigns a Pay Component in the employee’s Compensation Information that is defined on the Pay Scale Level object. The screenshot below shows a Pay Scale Level.

Time Recording

When recording time in Employee Central, Pay Components are created based on the time entered. This is not entirely dissimilar from the Wage Types that are generated through time evaluation in SAP (depending on the configuration in T510S).

What’s the link with Payroll?

The data defined in the Pay Structures defines how employees are paid in payroll, whether this be SAP ERP Payroll, Employee Central Payroll, or a third party payroll system. SAP’s packaged integrations for integration of Employee Central to SAP ERP enable this information to be transferred to SAP ERP infotypes (including infotypes 0008, 0014, 0015, and 0041) for use in SAP ERP Payroll or Employee Central Payroll. This data is also included in the packaged integrations for third party payroll systems.

Pay Scale Area and Pay Scale Type are often used for Employee Central Payroll. Pay Scale Level and Pay Scale Group are not required to be used, but can be used if required.

Comparison to SAP ERP HCM

The Pay Structure of Employee Central is much more simplified than SAP ERP HCM. This is partly due to the overall complexity of the functionality in SAP ERP HCM and the use of this information in SAP ERP Payroll. SAP’s processing of Wage Types – such as Processing class, Cumulation class, and Evaluation class – adds complexity to the setup that isn’t required in Employee Central, since it doesn’t process payroll itself (although payroll can be processed in the SAP-built Employee Central Payroll). Once payroll is separated from the process of storing compensation data then the process is significantly simplified.

Summary

The Pay Structure is a far more simplified structure than in SAP ERP HCM and may be too simple out of the box for the needs of some customers. However, the integration with Payroll system may define the suitability more than how the data is defined and stored in Employee Central. Employee Central is focused on storing compensation data and also storing it in a way that can be integrated with other systems for the purposes of payroll. For this need, it serves the purpose very well.

[deeprajrai]

Hi Luke,

Pay Scale Level is an MDF and maintained via Manage Data, the Pay Scale Level field is an hris field in jobInfo. So I'd assume that I need to set up a picklist ID and the Pay Scale Levels created via manage data as picklists values to get it in the dropdown. This however, does not seem to work. Is it done differently?

In time recording (i'm assuming payroll time sheet), how are pay components created based on time entered? After I've set up a positive time recording method, and submitted an overtime the output is the time valuation results which in turn are linked to time type groups.

Congratulations on the 2nd edition of SuccessFactors with SAP ERP HCM.

Thanks,

Deepraj

[Former Member]

Thanks Luke for the document. All your documents for SF are helping us a lot to know about the SF system.

Regards,

Bhagyashree

[lukemarson]

Hi Deepraj,

Thanks for the congratulations!

The Pay Scale Level field on Job Information should read the Pay Scale Level objects that you create in the MDF. I have noticed in my demo system that this does not work as intended.

For Payroll Time Sheet you assign a Pay Component to the Time Type Groups that are used for the output of the time valuation

Best regards,

Luke

[deeprajrai]

Hi Luke,

Thank you. Were you able to display the Cost Center field on the Time Sheet screen? The MDF field visibility is set to yes and I can also see it via manage data with the cost center available on the drop-down to select. We don't have access to the UI, so not sure if I'm missing something. I remember seeing the field on one of the Time Sheet demo's a few blue moons back.

Regards,

Deepraj

[Former Member]

Hi Luke,

Can you also prepare some related document for Time Management? It would be of great help.

Regards,

Bhagyashree

[lukemarson]

Hi Bhagyashree,

I will aim to do that in the coming months.

Best regards,

Luke

[lukemarson]

Hi Deepraj,

I haven't yet tried, but I suspect the field is not part of or not visible on the UI. I plan to look more deeper into this asap.

Best regards,

Luke

[deeprajrai]

Thanks Luke,

I understand the cost centers will be back on the next release.

Regards,

Deepraj

[Former Member]

Hello All,

Just to add here.

I see that the Pay Scale Area and the Pay Scale Type are maintained as the fileds in the CSF SDM. They have the picklists associated with them. In the Demo instance they are maintained having the parent child relation with Country-of company.

Cant they be maintained as the MDF objects in Manage Data.

Any further updates on these.

Kr,

Aadil Bhat

[Former Member]

Hi Luke,

Thank you for this brief on Employee Central Pay Structure.

Can you also document examples on how country specific legal requirements for payroll are integrated with Successfactors ?

An example would be in the UK for absences like Sickness, Maternity, Paternity, SAP has provided standard wage types processing for 'Statutory' Sickness/Maternity/Paternity (SxP)payments as well as provided for customising 'Occupational' Sickness/Maternity/Paternity (OxP) payments.

How do such country legal processes, that are the forte of SAP, integrate with the simplified 'Compensation' data storage and display for Success factors ?

Regards

Venugopal Menon

[lukemarson]

Hi Venugopal,

Employee Central Payroll is SAP ERP Payroll hosted in the Cloud. SAP apply legal updates to Employee Central Payroll. Employee Central can display the different pay components (wage types in SAP ERP Payroll) in the Compensation Information.

Best regards,

Luke

[lukemarson]

Hi Aadil,

The picklists should align with the MDF object instances (records) that are created in Manage Data.

Best regards,

Luke

[Former Member]

Hi Luke

We would like to use Employee Central to inform several wage types for payroll engine.

Checking the pay component structure we can't see how to inform for an employee a wage type, several times for the same day.

Example:

TAXI 18.06.2015  25.10 EUR

TAXI 18.06.2015  32.30 EUR

SAP ERP in infotype 15 leave us using the sequence number with subtype anda date fields to inform several records.

Kr

[lukemarson]

Hi JH,

What sort of pay components are these? Typically pay components are used for salary package components and not really daily. What are you trying to achieve?

EC also has a sequence number, although it is not shown by default but can be enabled. Wht is the importance of sequencing these?

All the best,

Luke

[former_member111028]

Thank you Luke. Exceptionally well explained.

[jjoseph]

Hi Luke,

I am wondering whether there is a EC functionality like the pay scale increase and pay reclassification that SAP HCM offers.

Kind regards,

Joe

[lukemarson]

Hi Joe,

Yes there is. It's called Pay Scale Structure and is covered in the EC Master Implementation handbook found at http://help.sap.com/hr_ec

Best regards,

Luke

[Former Member]

I have component  amount and percentage Is it possible to map in single Pay Component group

Thanks

[lukemarson]

It depends on your requirements. I would need much more detail to determine the correct solution.

[Former Member]

Hi Luke,

I am struggling to replicate IT0008 information from EC. I sent you a quick message on your gmail account with more information.

In short, I am doing a proof of concept to integrate EC, PCC and a custom developed SAP on premise country version for Peru. We've managed to proof the concept and that our payroll driver works perfectly with all of the above. I am however not getting the IT0008 replication to happen. Hope you can help directing me in a direction.

Thanks in advance.

[Former Member]

Hi,

I managed to resolve the IT0008 replication issue. I had a filter on Infotypes per country. IT0008 was added without a subtype. The moment I added the subtype 0 it started replicating.

Thanks for the patience. 🙂

[Former Member]

Hi luke,

pay component can be defaulted using pay structure while hiring ? how?

[former_member52509]

Hi Nicolai,

I have the same problem. Where could you add the subtype?

Thanks,

Noelia.

[olubunmi_awoyemi]

Hi Luke,

Thank you for the article. But how, exactly, do you configure the Pay Calendar in SF? Is it the same way it is done in SAP HCM? I mean do you have to list each  period in the year and for multiple years? For example: Period 1 = Jan 1 - Jan 31; Period 2 =Feb 1 to Feb 28 etc. Or you just indicate a period and input the number of periods per year?

 

Thanks.

 

[lukemarson]

Yes

[lukemarson]

Pay Calendar is configured through Admin Center (Manage Organization, Pay and Job Structures). You define each period for each year of the calendar.

[Dharmin_Thakkar]

Hi luke.marson ,

Is there any way to hide pay component group through business rule? I dont want it to hide through RBP.

Is pay component group calulated 'on the fly'?

 

Regards,

Dharmin

[lukemarson]

Hi Dharmin,

Pay Components can only be controlled through RBPs to show or hide them. Pay Component Groups are calculated on the fly based on the value of the pay components.

Best regards,

Luke

[dvaleri]

Hello Luke!

When defining pay ranges, It is possible that in some cases the midpoint is not really the midpoint between the minimum pay and maximum pay, but an average? Or should always be the midpoint?

Example:
Minimum 10,000
Midpoint 18,000 (instead of 15,000)
Maximum 20,000

Thanks!

[lukemarson]

Hi Dubraska,

I will think it's down to the organization. Typically, the midpoint of the range is considered the competitive market rate for a job, so it doesn't need to be halfway between the minimum and maximum if it represents what you would typically pay someone for that job.

Best regards,

Luke

[dvaleri]

Thanks Like, I understand!

 

I have another question, it is possible that the fields related to the pay scale structure (Pay Scale Area, Pay Scale Type, Pay Scale Group, Pay Scale Level) will be linked to the position, and when hiring or changing position to an employee, the employee data will be completed based on those fields linked to the position? And then when replicating information from Successfactors to SAP ERP, based on the data that employees have in their position, replicate those fields to ERP infotype 0008 (TRFAR, TRFGB, TRFGR, TRFST)?

Additionally, for the pay ranges, i would like to know whether when selecting these four fields (Pay Scale Area, Pay Scale Type, Pay Scale Group, Pay Scale Leve) a default pay range can be proposed, maybe with a cascade picklist

[lukemarson]

The Pay Scale Structure provides standard fields on the employee profile that are integrated to the SAP ERP infotype fields you mentioned. For the position you'll need to add them and then update the sync rule to sync them to the employee's profile.

[puneetLuthra08]

What is the possibility that we have to replicate the Pay Component Group information back to ERP Wagetype of IT0008  ? Is it possible to do ?

[lukemarson]

It can be possible, but it would be a customization of the integration as this isn't something standard.

[emily007]

Hi Luke,

 

What influence does the adjustment percentage in Geozones have on ECP?  Does it influence payroll or does it adjust the pay range applicable in that Geo zone?

[lukemarson]

Hi Emily,

As far as I know, it doesn't impact ECP directly. It's just used to adjust the Pay Range based on the Geo Zone that the employee is in.

Best regards,

Luke

[emily007]

Thank you so much Luke.  I had a feeling that was all influence it had.  Your feedback is much appreciated.

[benos]

Hi Luke,

 

I'm new to SF and I have the following exercise.

 

I have some employees that need to have a different payment frequency (monthly instead of Bi-weekly) do you advise me to change that for each individual employee or to create a group for monthly employees and configure business rules accordingly?

Thank you

[lukemarson]

Hi Beniamin,

The pay frequency is defined on the Pay Component(s) assigned to the employees. I would advise you to create new one or more new Pay Components that are set to bi-weekly. You can then assign these to the existing Pay Component Group or create a new Pay Component Group, depending on your needs.

Good luck!

Luke

[benos]

Luke,

Thank you so much for your tips and guidance.

I was able to make it work, following your instructions.

You rock! 😄

[lukemarson]

Great news! 😁

[Dries_Franssens]

Hi Luke, SAP community,

Not sure if this is answered elsewhere before, but I'd like to know what you do in case you are working with both Pay Grades and Pay Scales.

- pay grades / ranges are used to store min. mid. & max. and are needed for Compa Ratio calculation.
- pay scales store actual reference salary information, but as I understand it cannot be used in standard Compa Ratio calculation.

1) Do you use both Pay Grade / Pay Scale elements?
2) Do you map them at a certain level, i.e. based on higher level Pay Scale Group = Pay Grade?

Any other best practices you recommend?

[lukemarson]

Hi Dries,

1) Yes, this is possible. They serve different purposes in the system. Pay Grade would be used -- as you say -- for Compa Ration calculation, as well as for reporting purposes in some organizations.

2) There is no mapping between Pay Scale Group and Pay Grade, but you could use a Business Rule during Indirect Valuation to take Pay Grade into account, if there is a business need. In general though, they don't often get used together.

Best regards,

Luke