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.
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
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 Range||Pay Scale|
|Pay Calendar||Pay Scale|
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.
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.
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.
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.
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.
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
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.
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.