Concept: Compensation Basis
A compensation basis groups together compensation components that define estimated earnings for employee populations.
Examples:
- On Target Earnings US: Includes salary plans, commission plans, bonus plans.
- On Target Earnings UK: Includes salary plans, allowance plans, commission plans, bonus plans.
- Cost to Company: Includes salary plans, allowance plans, and bonus plans.
Workday uses the value associated with the grouped compensation components:
- 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.
- 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 (MBT). If you use MBT, Workday automatically distributes the new total amount across the plans that make up the compensation basis.
Workday delivers 3 compensation bases:
- Total Base Pay: Includes all salary and allowance plans defined as base pay for the compensation grade or grade profile.
- Total Salary and Allowances: Includes these plans assigned to a position:
- Allowance plans.
- Calculated plans.
- Salary plans.
- Period salary plans.
- Unit salary plans.
- Hourly plans.
- Eligible Earning Override: For bonus plans and processes only. Includes customer-defined currency amounts at the employee level used as the basis for bonus calculations.
For employees eligible for more than 1 compensation basis, Workday calculates the amount using the highest ranking basis, called the Primary Compensation Basis (PCB). Workday uses the PCB for reporting estimated earnings.
You can configure and manage your compensation bases, including the
Ranking
, on these tasks:
- Create or Edit Configurable Compensation Basis
- Create Calculation Compensation Basis
- Maintain Compensation Basis
You can then view the compensation basis value for employees using reports and processes such as the
Compensation Basis Analytics
report.Manage Basis Total (MBT)
Managing employees by a compensation basis total simplifies the management of diverse, interrelated compensation components common for companies that operate globally. Rather than updating several individual plans from the bottom up, managing by a basis total enables you to update a single value from the top down. Workday then redistributes the total across the individual plans that comprise the basis. See:FAQ: Manage Basis Total (MBT)
For compensation review processes, select the
Manage Basis Total
check box on the merit plan. If these conditions are met, when you enter 120,000 USD as the merit increase, Workday distributes this sum in this order:
- Applies the award to amount-based compensation plans that don't allow overrides.
- Applies the award to percent-based compensation plans.
- Applies the award to amount-based compensation plans that allow overrides.
- Workday applies any remainder amount to the compensation plans that allow overrides.
If your plan doesn't allow overrides, Workday doesn't distribute the full amount.
Calculation Compensation Basis
A calculation compensation basis augments a compensation basis and is used primarily in support of global operations. A calculation compensation basis can be of these types:
Calculation Compensation Basis Type | Description |
|---|---|
Adjustable Basis | Comprised of variable and guaranteed plans that Workday adjusts during the calculation. |
Guaranteed Basis | Comprised of plans, the sum of which is guaranteed for the worker. Workday can only decrease the guaranteed amount if the worker's PCB amount decreases.
Workday won't exceed a ceiling set on a percentage-based allowance plan. |
Subtractive Basis | Associated with a percentage-based compensation plan. Workday decreases the PCB by the amount defined by the subtractive basis. Workday then calculates the percentage-based plan target amount. |
Variable Basis | Defines the variable amount of the compensation basis. A variable basis can be made up of:
|
Workday uses adjustable, guaranteed, and variable calculation compensation bases as parameters when calculating the compensation basis.
You manage calculation compensation bases with the
Create Calculation Compensation Basis
, Edit Calculation Compensation Basis
, and Delete Calculation Compensation Basis
tasks. Use the Create Configurable Compensation Basis
or Edit Configurable Compensation Basis
tasks to associate calculation compensation bases with a compensation basis. To use a subtractive compensation basis, you must edit a percentage-based compensation plan to include it. Workday decreases the PCB by the amount defined by the subtractive basis. Workday then calculates the percentage-based plan target amount.
Managing employees with a compensation basis linked with a calculation compensation basis changes how Workday calculates plans.
Guaranteed Basis Example: Company A is located in France. The vacation premium is a guaranteed amount and part of the collective agreement. Within Workday, this guaranteed amount can never be reduced unless the employee is demoted. The guaranteed vacation premium amount remains in place through compensation changes while the collective agreement remains valid for the employee.
To guarantee the amount remains in place in Workday:
- Create a guaranteed calculation compensation basis.
- Add the vacation premium plan to the guaranteed compensation basis.
- Associate the guaranteed calculation compensation basis with the worker's PCB.
Subtractive Basis Example: A bonus plan defined as a percentage of the PCB minus commissions.
Variable Basis Example: Sales Incentive plans.