Prorating in compensation planning

At the planning rule level, you can decide whether a salary increase should be prorated for specific resources.

Possible scenarios:

  • Resources who have been hired within the last 60 days of the current review period should not receive a merit increase (they should not have a budgeted amount).
  • Resources who were hired within the last 60 days of the current review period should get a catch-up increase along with the current period's increase. They should have a budgeted amount greater than 100% prorated over 14 months.
  • Resources who receive a salary increase within the review period should be prorated as of the date they received the increase. For example, if your review period is 04/01/2018 to 03/31/2019 and a resource was promoted 12/31/2018, the salary increase can be prorated to the three months since the promotion.
  • Resources who did not receive a merit increase in the previous review period due to poor performance should not get any catch-up merit increase, in addition to the increase they may or may not get for the current review period.

Compensation and prorating

  • Prorating is defined at the budget calculation level on a planning rule. So you could prorate the budgets for one rule, but not for another. You could even prorate for one eligibility group but not another on the same planning rule.
  • If you do not want to give an increase to resources hired after a certain date in a review period, the eligibility group used in budget calculations should include a criterion of Start Date < Date. For example, if you have a review period of 04/01/2018 through 03/31/2019, to exclude resources hired after 01/31/2019 from the award, use a criteria of StartDate < 01/31/2019 in your budget calculation eligibility group.
  • To prorate newly hired resources, specify the range of dates for which the system should prorate new work assignments. The range of dates does not have to coincide with the review period. For example, to prorate newly hired resources that started before the review period who were not included in the last review period, you can specify a range of dates with a start date that precedes the review period.

    For example, if your review period is 04/01/2018 through 03/31/2019, to prorate resources that were hired as of 02/01/2018 from their start date, specify a work assignment date range of 02/01/2018 through 01/31/2019. A resource hired 03/01/2018 would be prorated based on 13 months (from 03/01/2018 to 03/31/2019). Resources hired after 01/31/2019 would not be prorated and would not be included in the awards if your eligibility group excluded them. A resource hired on 11/01/2018 would be prorated based on 5 months.

  • To prorate employees who received an off-cycle salary increase from the date that the increase became effective, specify reason codes for which to prorate budgets. The system prorates only work assignment changes associated with those action reasons and with effective dates within the review period.

    For example, if the review period is 04/01/2018 through 03/31/2019 and a resource was promoted with a reason code of PROMOTE on 12/31/2018, the budget would be prorated over three months.

    If a resource has more than one work assignment change over the review period, the proration is based on the most recent change. For example, MID-YEAR MERIT, PROMOTION.

    Note: To ensure that the budget calculations include only the resources you want included, designate different reason codes for salary increases related to the normal salary awarding cycle than for off-cycle salary increases. Only include off-cycle reason codes in your proration calculations.

  • If you choose proration for a planning rule, the lump sum flat amount will be automatically prorated using the same proration factor used for the merit amount.

  • The proration factor, or the percentage by which a resource's budget is prorated, is calculated by dividing the number of days of month from the proration "as of date" to the end of the review period by the number of days or months for the review period.

    For example, if the review period is 04/01/2018 through 03/31/2019 and the proration is counted in months, the review period number of months is 12.

    • A resource who started 03/01/2018 will have a proration duration of 13 months, with a proration factor of 13 / 12 = 108%.
    • A resource who started or got a promotion increase on 12/31/2018 will have a proration duration of 4 months, with a proration factor of 4 / 12 = 33%.
  • If you select proration for a planning rule, you can also prorate the guidelines and the minimum threshold validations.

    Prorate the guidelines if managers are expected to specify prorated award amounts. For the system to prorate the awards for the managers, do not prorate the guidelines. If the manager specifies an award, it gets adjusted by the proration factor.