Topic 61: Compensation Management

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Set Control Parameters

In this step, you can determine the control paramters for Compensation Administration.

Standard settings
The SAP standard settings include the required default values.

Recommendation
We recommend that you do not change the standard settings.
Activities

If you want to use settings other than the standard, change the parameter to meet your requirements.

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Compensation Packages

In this section of the Implementation Guide (IMG), you set up the environment for your compensation components and packages.

This includes the following activities:

Defining your compensation components
Defining wage types for your long-term incentives
Setting up the wage types' environment
Defining compensation packages

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Define Compensation Components

In this step, you define your compensation components. Components represent the types of compensation that you offer to your employees. For example, base pay, bonus, stock options, incentives.

They are also used for compensation packaging and reporting.

The system supports the following compensation categories:
1 = Fixed
2 = Variable
3 = Long-term incentives

These categories are fixed and cannot be changed. Your components should be defined in such a way that they fit into these categories.

Example
Component Category
Base pay Fixed
Bonus Variable
Executive incentive Long-term incentives

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Activities
1. Determine which components you require in your organization for each of the categories
2. Choose New entries
3. Enter a four-character identifier for each component
4. Enter a description
5. Enter the appropriate category for each component
6. Save your entries