Managing Individual Compensation Distributions (ICD) with Oracle Self Service HR v. R12

1. Oracle HCM Functional    Managing Individual Compensation Distributions (ICD) with Oracle Self Service HR v. R12 Timothy Walsh, Consulting Director Jade Global, Inc.   Contents 1. .......................... Executive Summary 2. .......................... Oracle Individual Compensation Distribution (ICD) Overview 2. .......................... Implementing ICD 4. .......................... ICD Challenges 5. .......................... Assigning Awards Using ICD 5. .......................... Benefits 5. .......................... Lessons Learned 6. .......................... Conclusion 6. .......................... Author Biography Executive Summary Managing Individual Compensation Distributions (ICD) with Oracle Self Service v. R12. Leveraging Oracle HRMS Self Service ICD v.R12 gives managers throughout your enterprise the authority and ability to assign one-time or recurring awards, bonuses, and allowances to qualified employees such as periodic or spot bonuses, sponsored allowances, resettlement compensation, severance payments, and company cars. Our session will include an ICD Overview, Bonus Plan Design, Enrollment Requirements, Setting up Activity Rates and Coverage for the ICD Plan, and Assigning Awards Using ICD. Collaborate 11  Copyright©2011 by Jade Global, Inc.   Page 1 

2. Oracle HCM Functional    Oracle Individual Compensation Distribution (ICD) Overview Oracle Individual Compensation Distribution (ICD) provides managers with ability to assign one-time or recurring awards, bonuses, and allowances using SSHR. The setup of ICD uses elements, which allow distribution through payroll, and the use of FastFormulas for calculations for maximum distribution amounts and/or commission calculations. Security features ensure managers can distribute only to persons within their security profile and/or eligibility profiles. Company branding is done through personalization. Finally, as a standard feature of Oracle Self Service HR, ICD is fully compliant with SOX for workflow approval processes. What you can do with ICD: Using ICD you can give managers the ability to assign one-time or recurring awards such as Periodic or Spot Bonuses, Commissions, Stock option grants, Service Awards, Sponsored allowances, Resettlement compensation and Severance Payments. Examples of other periodic or recurring awards include allowances for special training or a reward for patent filings. Implementing ICD Planning your Compensation As with other forms of plan design within Oracle HRMS, you must take into account the end results required while planning your ICD setups. Some of the common questions you should be asking yourself are listed below. 1.Local or Global in design? Is the award localized to a country or business unit or available to everyone in the organization. 2.Who is eligible? (Eligibility Criteria) An eligibility criterion helps managers from making costly mistakes in awards by filtering their options in SSHR forms. 3.What is the periods/frequency for each? Monetary awards are often driven by payroll periods. Other awards may be continuously recurring or happen once in an employee’s employment. 4.What currency, functional or local? Type of reward and other business factors will determine what to use but general rule of thumb is to use local currency for any monetary awards. 5.What are the limits, minimum/maximums? Planning for limits, minimums and maximums will improve manager data entry validation and reduce errors. 6.What are the approvals required? Is there a single rule or one for each type of ICD award? Remember that routing outside of an employee’s managerial hierarchy requires using advanced tools such as AME. Collaborate 11  Copyright©2011 by Jade Global, Inc.   Page 2 

3. Oracle HCM Functional    R12 Version Differences: Differences in Oracle R12 version also may dictate how you design your ICD plans. For example in version 12.0.x compensation types are show as radio buttons which should deter you from creating multiple variations of the same type of award. See figure #1.   Figure 1 ‐ R12.0.x Select Compensation Type  In version R12.1.x and later, the selection of compensation type has been changed to dropdown lists making more sophisticated plan designs possible. A single compensation type may now have multiple options. The manager’s self-service experience and navigation is also improved. Collaborate 11  Copyright©2011 by Jade Global, Inc.   Page 3 

4. Oracle HCM Functional      Figure 2 ‐ R12.1.x Select Compensation Type  Setup Building Blocks ICD plan creation will follow the same steps as other types of plans such as benefit and compensation workbench type plans. The building blocks are laid down in this order: 1.Define elements to hold each distribution 2.Define eligibility profiles 3.Define plan types 4.Define the plans 5.Define plan enrollment requirements 6.Define standard rates / historical rates 7.Enable SSHR menus / personalization's 8.Use AME for approvals a.Setting workflow options for a) no approvals, b) regular approvals, or c) dynamic approvals ICD Challenges Some of the challenges you’ll face when setting up ICD plans:  Defining Approval Rules for each Plan  Managing unrestricted Life Events Collaborate 11  Copyright©2011 by Jade Global, Inc.   Page 4 

5. Oracle HCM Functional     No out of box reports  Procedure for closing unrestricted Life Events in different environments (with standard benefits, with Advanced Benefits, without either).  Managing unrestricted Life Events – recurring elements will have unrestricted life events in started status and these can cause issues with CWB and OAB open cycles and plan upgrades and personalization's. Assigning Awards Using ICD Assigning awards using ICD is illustrated below. ICD Benefits Individual Compensation Distribution benefits are achieved by Distributing compensation management to line managers, providing managers with better visibility into how their employees are compensated and enabling better management/controls over approval processes. Additionally, ICD can support a more paperless environment thus avoiding PAN processes. ICD is also directly integrated with Oracle Payroll and the data is available for reporting, budgeting, costing. Lessons Learned We would like to provide significant recommendations on key information to help make your Oracle HRMS implementation of ICD a success.  If ICD life event is active during CWB open period then CWB plan will fail to close. (11i issue) Collaborate 11  Copyright©2011 by Jade Global, Inc.   Page 5 

6. Oracle HCM Functional     For plan design or eligibility changes to take effect you must close all unrestricted life events with a status of started.  Use plan design copy feature if you’re defining multiple ICD plans.  Use plan export/import feature to migrate plans between instances. Conclusion Deployment of Oracle’s Individual Compensation Distribution solution enables an organization to efficiently manage individual compensation and more, reducing or eliminating errors from manual processing, significant time and labor savings, all from applications that are built on unified information architecture. This information architecture provides you with a single definition of their employees, suppliers, and products, and all aspects of their business. All of this is done within a secure environment with a configurable notifications and approvals workflow. Overall it will improve your ability to allocate compensation in accordance with enterprise, department and personal philosophies using rules-based modeling, scenarios and analytics. Time will be reduced from the start of processing, down to awarding and distribution, and improved overall retention. Author Biography With functional and semi-technical skills, Timothy has been implementing Oracle HRMS solutions for the past ten years and in the previous 19 years has had various technical positions in government and aerospace industries. Among his Oracle expertise includes methodologies that were used, including Oracle AIM, AIM Fast forward ORACLE Applications: Oracle Human Resources Management System, and Oracle Training Administration. SQL*Plus. Discoverer Administration and Reporting. Timothy is an innovative professional with proven ability to identify, analyze and solve problems to increase customer satisfaction and control costs. He has bachelor’s degree in Business Administration with concentration in Management Information Systems. Having played both user role as well as implementer role, Timothy can easily understand and identify business issues, strategies, and priorities. He has been functional lead on numerous Oracle projects at top companies such as VMWare, Adobe Systems and similar. Timothy can be reached at timothy.walsh@jadeglobal.com, 408-899-7245. Please send any feedback on this paper to timothy.walsh@jadeglobal.com. Neither Timothy Walsh nor Jade Global, Inc. warrants that this document is without error. This document cannot be reproduced without expressed written consent from an officer of Jade Global, Inc., except Collaborate 2011 may make copies and make this paper available as needed for the conference and proceedings. Collaborate 11  Copyright©2011 by Jade Global, Inc.   Page 6