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Administrator Guide
Last Updated: 2025-07-11
Create Compensation Grades

Create Compensation Grades

  • Set up compensation elements and eligibility rules.
  • Create eligibility rules for compensation.
  • Create frequencies.
  • Security:
    Set Up: Compensation Packages
     domain in the Core Compensation functional area.
Grades are guidelines used in determining compensation for a worker. Grades also define the standard compensation range for a given job or job level. You can associate more than 1 compensation basis and pay range to a grade.
  1. Access the
    Create Compensation Grade
     task.
  2. Consider:
    Option Description
    Pay Range Segments
    Enter 3, 4, or 5 to define the number of segments you want the pay range broken into.
    Example: If the pay range is 45,000 - 100,000 USD and you select 3, then the 3 Workday calculated segments are:
    • 45,000 - 63,333 USD
    • 63,333 - 81,666 USD
    • 81,666 - 100,000 USD
    Maximum Pay - Minimum Pay = $100,000 - $45,00 = $55,000.
    Total Range Spread / Number of Segments = $55,000 / 3 = $18,333.
    Use Grade Profiles
    Select this check box if you want to use eligibility rules to create more granular compensation ranges within the grade.
    Example:
    • Default range = 45,000 USD - 100,000 USD
    • New York range = 55,000 USD to 120,000 USD
    If you selected both of these check boxes:
    • Apply FTE%
       on the salary plan.
    • Use 100% FTE for Pay Range Comparisons
       in the Compensation section on the
      Edit Tenant Setup - HCM
       task.
    Workday divides the employee salary by the FTE % before comparing it to the salary range midpoint when calculating these fields:
    • Compa-Ratio
      • Compa-Ratio = 100% FTE Basis Amount / Mid-point
    • Position in Range
    • Pay Range Segment
  3. In the
    Default
     section, consider:
    Option Description
    Base Pay Elements
    Select the compensation elements you want to associate with this grade.
    Workday only includes hourly, salary, and allowance plans categorized as base pay to calculate compa-ratio and target penetration.
    Eligibility Rules
    Select 1 or more rules to use to determine who is eligible for this compensation component or plan.
    When you assign compensation to employees, the eligibility rules determine whether this component is available for selection in the
    By Compensation Rule
     prompt folder.
    If you select multiple eligibility rules, Workday evaluates each rule independently to determine employee eligibility for the compensation component. Employees are eligible if they meet the qualifications of any 1 rule. You can only use individual rules once in the grade and grade profiles.
  4. In the
    Compensation Pay Range
     tab, enter default compensation pay ranges. Consider:
    Option Description
    Calculate Segments
    Select this check box if you want Workday to calculate the values for the segment tops in equal amounts and the midpoint.
    When selected, only the
    Minimum
     and last segment top fields are available for entry. Once you enter these fields, Workday automatically calculates the other segment tops and midpoint.
    Segment # Tops
    This is the top value for the segment. The last segment top is the maximum value for the range.
    Midpoint
    You can enter the midpoint when the
    Calculate Segments
     check box is cleared.
    Workday uses the
    Use Calculated 50%
     option to calculate compa ratio instead of the value you enter here when you:
    • Change the midpoint to be anything other than 50% of the range, and
    • Have the
      Use Calculated 50%
       option selected for
      Compa-Ratio Midpoint
       field on
      Edit Tenant Setup - HCM
      .
  5. (Optional) If you selected the
    Use Grade Profiles
     check box, enter your grade profiles in the
    Compensation Grade Profiles
     tab.
    A grade profile must have a pay range associated with Total Base Pay. You can't change the number of pay range segments for profiles, the number is the same as the grade defaults.
    You can drill down to details on any job profiles that reference this grade.
    Grade profiles don't display if their number exceeds 250.
Workday uses grades to calculate compa-ratio and pay range segments.
If proposed compensation for an employee extends beyond the limits of the reference pay range for the employee's grade or grade profile, Workday issues a warning but permits submission of the proposed compensation. Reviewers and approvers can then evaluate whether to approve the proposal.
To associate a grade to a job profile, use the
Create
 or
Edit Job Profile
 tasks.