FAQ: Compensation Reviews

When initiating a compensation review process, you configure:

A
Process Period End Date
.
A merit, bonus, or stock
Compensation Snapshot Date
.
An
Organization Snapshot Date
.

Workday uses eligibility rules in effect as of the

Process Period End Date

to:

Determine which employees to include in the process.
Ensures that valid compensation data exists as of the applicable
Compensation Snapshot Date
.
Processes the
Organization Snapshot Date
to determine included organizations.

You can include terminated employees in a compensation review process that includes bonus awards. Select the

Include Employees Terminated During Process Period

check box when initiating the process. Workday includes terminated employees subject to rules configured on the bonus plan and on the

Maintain Compensation Review Participation Rule Sets

report.

You can also select

Include Active Employees in Waiting Period

on the merit or bonus plan. When employees are assigned both the plan and in the waiting period on the

Process Period End Date

, Workday includes them with a target of zero.

Workday uses this order of precedence to derive merit and bonus targets for each employee:

The merit pool displays the increase amount, based on the compensation matrix. If you know what your budget is, you can adjust the merit pool to match it.

Workday uses the most recently entered performance rating, either from an in-progress or a completed performance review, when:

A compensation matrix is associated with the merit plan and isn't for reference only.
The performance review template has a period end date relative to the frequency of the plan before the
Process Period End Date
. For merit, this is 1 calendar year before the
Process Period End Date
, regardless of the
Process Period Start Date
.
The performance review rating is either complete or was entered after you initiated the compensation review and before the
Process Period End Date
.

If Workday can't find a performance review rating, it reads the default target on the plan. Workday doesn't retroactively revise the award if the performance review is updated after the

Process Period End Date

.

Workday calculates the overall rating for the specified review templates. Workday then matches this result to the performance level on the compensation matrix to determine the recommended merit increase. If the matrix definition includes pay range segments, Workday determines which segment the employee's salary falls into, based on assigned grade.

If you've already distributed the merit pool to organizations, you can select

Business Process

Cancel

as a related action off the event. Alternatively, you could ask all the managers to award more or less than their designated pool amount. If incorrect pool amounts are likely to be an issue, add a step to the business process to review the merit pool before sending it to the managers.

For a completed process, select

Business Process

Rescind

as a related action off the event.

If incorrect employee changes are possible, consider adding a step at the organization or location hierarchy level before completion.

Yes. You can select these organization types from the

Configure Participation

button on the

Initiate Compensation Review Process

business process:

Cost Center
Custom Organization
Location Hierarchy
Supervisory

Workday displays the organization types you select when you initiate the process.

Workday considers different pay periods during calculations, and converts all salaries into the reference frequency specified during the compensation review process.

Yes. Configure named sets of process options on the

Create Compensation Review Options

and

Create Compensation Review Process Template

tasks.

Yes. Select the

Additional Adjustment and Promotion Awards as Percent of Current Primary Compensation Basis

check box when you initiate the process. If selected, Workday adds awards to the Primary Compensation Basis (PCB) instead of compounding the award.

Example: Brendt's PCB is 100,000. He receives a 10% merit increase, a 2% additional adjustment, and another 2% for his promotion. With the check box selected, Workday:

Sums all of Brendt's awards: (0.10 + 0.02 + 0.02 = 0.14).
Calculates his new PCB: 100,000 + (100,000 * 0.14) = 114,000.

If left blank, Workday calculates Brendt's new salary in these cumulative steps:

100,000 + (100,000 * 0.10) = 110,000.
110,000 + (110,000 * 0.02) = 112,200.
112,200 + (112,200 * 0.02) = 114,444.

To the day. Workday calculates employee days as:

proration rule / days in the review period.

To calculate the proration, Workday uses

Process Period End Date

specified when you initiate the process and goes back exactly 1 year.

Yes. You can select the

Process Period Start Date

for each merit or bonus plan on the

Initiate Compensation Review Process

task. Workday displays the

Days in Period

for reference.

The default is the difference between the

Process Period End Date

and the plan frequency. You can select a date up to 15 months before the

Process Period End Date

.

The process period start and end dates determine how Workday divides proration segments and employee eligibility. Setting a

Process Period Start Date

also affects merit and bonus plan eligibility for plans with either of these options enabled:

Include Employees Terminated During Process Period
Include Active Employees Assigned Plan During Process Period

Workday determines plan eligibility and the value of the default target as of the merit effective date. Planners can edit the future target if:

The plan allows individual overrides.
The employee is in the process with a related merit plan not managed by basis total.
The employee is still eligible for the plan as of the merit effective date.
The employee isn't being promoted into a position that removes the related plan, such as from Bonus Plan A to Bonus Plan B, or the PCB.

Planned targets for promoted employees don't transfer to the

Change Job

process from the

Review Promotions in Merit

task.

Workday uses the

Effective Date

specified when you initiate the compensation review process as the date the new salary takes effect.

Example: The Compensation Administrator initiates the compensation review process on February 15 and specifies April 1 as the

Effective Date

. The process completes on March 10. The employee salaries in Workday reflect the change on April 1.

On the Effective Date, Workday replaces the old salary with the new salary from the merit increase.

Example: The Compensation Administrator initiates the compensation review process on February 15 and specifies April 1 as the

Effective Date

. An employee has a salary of 50,000, and the manager approves a 10% raise to 55,000 as part of this process. The process is complete on March 10, and the salary remains 50,000, awaiting the April 1 effective date for the raise to take effect. On March 15, the HR Partner requests an immediate base salary change for the employee, from 50,000 to 60,000, effective March 15. Workday warns that this increase will be superseded. On April 1, the employee's merit increase replaces her current salary. Her merit increase was 55,000. On April 1, her salary is set at 55,000, instead of the previous 60,000 paid between March 15 and March 31.

Workday determines what the employee's salary will be on the applicable

Compensation Snapshot Date

and uses that salary throughout the process. Workday doesn't recalculate the result of the percentage increase on the date the salary change takes effect. The formula for determining the new salary is:

old salary + (old salary * merit increase %) = new salary

.

Example: The Compensation Administrator initiates the compensation review process on February 15 and specifies April 1 as the

Effective Date

and March 31 as the

Merit Compensation Snapshot Date

. On February 15, Workday determines the employee's salary will be 50,000 on March 31. When the manager gets the compensation review event for the employee, she sees a salary of 50,000 and gives a 10% increase. The new salary is 55,000. The increase is approved, the process completes March 10, and the salary remains 50,000. On April 1, the employee's merit increase replaces her current salary. Since her merit increase was 5,000 (

10% * 50,000

), her salary starting on April 1 is 55,000.

If the merit plan has the

Manage Basis Total

option selected, yes. If not, changes to the compensation basis during a compensation review update only salary and hourly plans.

Example: An employee is assigned:

Merit plan A.
Manage Basis Total
isn't selected.
Allowance plan B. The PCB is Total Base Pay.
A base pay plan that is a salary plan.

Workday applies the merit increase percent only to the salary plan, increasing it by the percentage specified.

To ensure that updates to a compensation basis affect plans other than salary or hourly, configure

Manage Basis Total

on both:

The merit plan.
A custom compensation basis that includes both the base pay plan and any other plans you want to include in the calculation.

A referral bonus is a one-time payment rather than part of a bonus plan. To pay a referral bonus: