Compensation Fundamentals Flashcards
Describe the Compensation Package Structure
A comp package is comprised of grades and plans
- Compensation Grades provide guidance with reference pay ranges (Compensation Profiles allow for localization)
- Compensation Plans provide various types of pay components
Describe the role of Compensation Partner
- View worker HR and events data
- View worker compensation data
- Initiate and view compensation events
- View contact information
Describe the role of Compensation Administrator
Very similar to the Comp Partner role. Biggest difference is the ability to configure comp plans, packages, eligibility rules, etc.
- View worker HR and events data
- View worker compensation data
- Initiate and view compensation events
- Set up all compensation components
- Run compensation audits
How do you create Compensation eligibility rules?
TASK: Create Compensation Eligibility Rule
Name it and specify logic (e.g. Management Level is 7-Supervisor or 8-Individual Contributor)
Describe the 5 different ways eligibility rules are used
1) Automatically populate / defaulting compensation components during a staffing transaction (primary use)
2) Assign unique compensation targets to different employee populations for most plan types as well as grades and benchmark jobs
3) Create exception rules for bonus, merit or stock processing
4) Create multiple guidelines in a compensation matrix
5) Roll out or remove compensation plans (allowance, bonus, commission, merit, and stock)
Explain how default compensation from position works
An alternative to using Comp eligibility rules.
Default comp needs to be assigned for each created position (via the Change Default Comp sub-process)
If using both comp eligibility rules and default comp from position, the default comp from position will override the eligibility rules.
POSITION MGMT - you can assign default comp directly to an unfilled position
JOB MGMT - default comp will populate for anyone hired into the supervisory org, but since positions are created only during the hire, no reporting is available for unfilled positions
What are the differences between using eligibility rules vs. default from position
1) When using default from position, a default salary plan requires an amount, currency, and frequency be entered. The data can be edited at the employee level during the staffing transaction.
Describe how comp elements, comp element groups work
COMPENSATION ELEMENTS are the smallest unit of compensation for a worker in a specific position. Comp elements connect compensation and payroll.
Workday uses compensation elements to determine the amount, currency, frequency, and other attributes of a worker’s compensation. Compensation elements are linked to compensation plans.
When linked to a plan that is assigned to an employee, WD can determine which earnings to use to pay the employee.
Earning determine how compensation will be taxed, whether it adds to Gross, and when it is paid (and more!)
COMPENSATION ELEMENT GROUPS
1) Can group elements that you define as “Total Base Pay”
2) Gives you an ability to group and organize your comp elements to be used when creating custom reports, or in compensation eligibility rules
Describe the compensation components that use compensation elements / element groups, how they use them, etc.
COMPENSATION ELEMENTS link compensation and payroll
When linked to a plan that is assigned to an employee, WD can determine which earnings to use to pay the employee.
Earning determine how compensation will be taxed, whether it adds to Gross, and when it is paid (and more!)
COMPENSATION ELEMENT GROUPS
1) Can group elements that you define as “Total Base Pay”
2) Gives you an ability to group and organize your comp elements to be used when creating custom reports, or in compensation eligibility rules
Explain Compensation Grades and Grade Profiles
COMPENSATION GRADE: A standard compensation range for a given job or job level. Gives guidance when entering salary or hourly pay rates be defining minimum, midpoint, and 3-5 segments (tertiles, quartiles, or quintiles). Required for the compensation bases of “Total Base Pay”
COMPENSATION GRADE PROFILES: Used to create localizations (variations within a grade due to location or some other criteria) and allow you to assign more granular compensation ranges to employees.
e. g. COMP GRADE X: Default range USD
* COMP GRADE PROFILE A: Alt Range EUR
* COMP GRADE PROFILE B: Alt Range CAD
How do you assign compensation grades to job profiles?
Edit Job Profile > Compensation section > Compensation Grade … select the desired grade.
What is “compensation basis”?
Groups compensation components to define estimated earnings for different employee populations.
E.g.
- On Target Earnings US: Includes salary plans, commission plans, bonus plans.
- On Target Earnings UK: Includes salary plans, allowance plans, commission plans, bonus plans.
Workday uses the value associated with the grouped compensation components:
1) As the basis for percentage-based allowance, bonus, period salary, and stock plans; and compensation packages.
* Example: You can define an allowance plan to be 10 percent of total cost to company.
2) To define how Workday manages merit changes for an employee, or other processes that change compensation.
You can either change an employee’s compensation at the individual plan level or manage by basis total. If you manage by basis total, Workday automatically distributes the new total amount across the plans that make up the compensation basis assigned to the employee.
Workday delivers 3 compensation bases:
1) TOTAL BASE PAY: Includes all salary and allowance plans defined as base pay for the position’s compensation grade or grade profile.
2) TOTAL SALARY and ALLOWANCES: Includes all salary and allowance plans assigned to a position.
3) ELIGIBLE EARNING OVERRIDE: For bonus plans and processes only. Includes customer-defined currency amounts at the employee level that can be used as the basis for bonus calculations.
You can create and manage your own compensation bases with these tasks:
- Create Configurable Compensation Basis
- Create Calculation Compensation Basis
- Maintain Compensation Basis
- Edit Configurable Compensation Basis
You can then view the compensation basis value for employees using reports and processes such as the Compensation Basis Analytics report.
How do you differentiate between Request Comp Change, Propose Comp, and Propose Comp Change BP’s?
Request Compensation Change allows changes to all compensation data.
Propose Compensation is a sub-process of the Hire BP.
Propose Compensation Change is a sub-process of the Change Job BP.
How do you initiate a compensation change?
Request Comp Change BP can be initiated via:
1) Edit Position BP
2) Itself
3) Web Service (via integration)
4) Request Grade Change (mostly for comp partner / admin)
Propose Comp Change is initiated as a sub-process of the Change Job BP
How are exchange rates managed and viewed?
TASK: Maintain Currency Conversion Rates
Can be managed via manual entry or by loading via EIB. For a lot of currencies, may consider a 3rd party provider integration to update / manage.
Default Currency is set via the Edit Tenant Setup - System page.
Describe actual end dates vs. expected end dates? How are they used?
On the Actual End Date, the compensation plan will no longer be assigned to the worker vs. the Expected End Date is when the plan is anticipated to end.
What are the implications of correcting compensation events?
When you make a correction, you need to review later (effective dated) staffing events, moves, reorgs, etc. in a worker’s history to determine the impact of the correction and fix the later events if necessary.
Explain the Initiate Stock Process BP
Used to issue a stock grant to all employees participating in a particular stock plan.
Can be initiated any time.
Can be configured to require an approval by board members.
How do you give an Ad-hoc stock award?
TASK: Request Stock Grant
Can be initiated any time.
Configured targets will pre-populate, but, can be edited.
Bonus Plan Options: Weighting
Weighting (Matrix or Scorecards) is available when Bonus Plan with Multiple Performance Factors is selected.
- The total weight between all compensation matrices and scorecards must equal 100%
NOTE: If an employee were to exceed 100% in their achievement (e.g. delivered a project ahead of schedule, exceeded a $ sales target, etc.) the weighted funding can exceed 100%, e.g. 110% of the $10k target would mean this high achiever would receive a bonus payout of $11k.
Bonus Plan Options: Company Scorecards
Identifies the scorecards used to calculate the employee’s bonus award during the bonus process. You must enter at least 1 scorecard.
Bonus Plan Options: Bonus Plan Modifiers
Provides the ability to modify the bonus award at the plan, matrix only, individual performance, or compensation scorecard level.
Gives the company flexibility to fine-tune an employee’s performance bonus.
Individual / Team (Org) / Company modifiers can be used to adjust the pool and employee award amounts.
Bonus Plan Options: A Compensation Matrix
Allows you to tie an employee’s overall performance, for a selected type of performance review, to their bonus award.
Provides guidance based on the employee’s performance, as well as other optional factors.
Can be used with either a percent or amount based bonus plan, single or multiple targets, and can be weighted or not weighted.
Bonus Plan Options: Tranches
In the Tranches tab, you can define bonus plans to be distributed in predefined portions or installment amounts.
WD calculates the portions or installments by prorating the overall bonus target using a tranche percent.
a) Enter the Tranche number (E.g. 1, 2, 3, 4)
b) Enter the Target Percent for each amount. The column must add up to 100.
How do you create a Bonus Plan
TASK: Create Bonus Plan
Plan Type: Amount or Percent-Based Plan
Configure as relevant (eligibility, targets, link bonus process to employee review / company scorecard / bonus plan modifier / proration and/or waiting periods for eligibility, tranches, etc)
Explain the Initiate Bonus BP
A bonus plan does not give an EE additional compensation. It simply identifies an employee as an eligible participant, so when the Bonus Process is run the employee is included.
The Initiate Bonus BP is what is used to run a bonus a process.
How do you configure and initiate a Bonus Processing?
Edit the Initiate Bonus BP Definition, configuring it according to the needs of your business (e.g. approvals).
To initiate the BP, from the Related Actions menu off the Compensation Plan, select “Initiate Bonus Process”.
How do you configure and distribute Bonus Pools
Workday automatically calculates pool amounts using a bottom-up calculation.
Workday uses the plan definitions selected during the Initiate Bonus Process step and the employees identified in the Manage Impacted Employees step to calculate the individual employee target amounts.
Workday adds the individual employee target amounts to determine the estimated cost and the initial pool amounts.
You can change the initial pool amounts and adjust the pool amounts for individual bonus plans.
CONFIG OPTIONS can include:
- Top-down or Bottom-up funding of the bonus pool
- Pool controls such as holdbacks, allowing overages, and displaying pools
- The option to change funding at the bonus plan level
- The ability to change funding at the supervisory organization level
How do you Propose bonus Awards?
Propose Employee Bonus Award is one of the last steps of the Initiate Bonus Process BP.
Generally completed by the manager (but depends on your BP configuration, role assignments, etc.) a task will show up in the Inbox.
You can use “Autofill” to apply recommended targets.
From there you can make any changes and review the impact to your budget.
Once complete, Submit to continue.
From there an approval may be required (depending on config) and eventually funding.
How do you initiate a One-Time Payment?
AD-HOC
1) Use related action off employee’s name and select OTP
2) TASK: Request One-Time Payment
3) Initiate a Hire or Term and have the Request One-Time Payment sub-process in the overall process
GROUP OTP
1) Use EIB to upload for multiple employees
How do you Review Future Payment Plans?
Future Payment Plans are used to specify a target amount that can be paid out to the employees over several Bonus and OTP’s, and eventually “True Up” to pay off any remaining balance owed to the employees.
Can Define:
1) Who is eligible (via eligibility rules)
2) The target amount, whether it can be overridden
3) What bonuses, OTPs should be included when calculating the overall future payment target amount
How do you run the True-Up Process?
TASK: Complete Future Payment True Up Bonus
What are the available options for the Configurable Grid?
The Composite Column provides read only data about the employee (aka “Row header”) e.g. Name, Title, Image
There are several options available for the Individual Columns (aka “Columns”) and the Group Columns (aka “Tabs”) such as:
- Column Group (name of tab in the grid)
- Read Only / Editable / Advanced
- Label Override
- Display Options
How do you create a Configurable Grid?
TASK: Create Grid Configuration
How do you run the Configurable Grid Audit Report?
The report is used for verifying that the grid includes fields that the merit or bonus plans indicate should display as read only or be editable during the process.
Run the report
Enter an effective date
Select the relevant Grid Configuration
BLOCKER: Applies to fields that the plan indicates are editable and must be added to the grid configuration.
WARNING: Applies to fields the plan indicates should display as read only but are missing from the grid. Consider adding these fields.
Describe the Coordination of events functionality for Termination and Parallel Process
Coordination of Events is an automatic process that handles Terminations, Request Compensation Change, Propose Compensation Change, Request Grade Change, and Request Job Change BP’s as part of merit, bonus, or stock process.
Termination rules can be created for the Merit, Bonus, or Stock Processes.
WD allows parallel events to occur only for the Merit Process and not the bonus or stock processes.
