Compensation Setup: Creating Merit Plans

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1 Compensation Setup: Creating Merit Plans This quick guide will walk you through creating merit based compensation plans for your company s merit cycle. STEP #1: CREATE A NEW COMPENSATION PLAN Navigate to Talent > Compensation Setup. Select the Create New Compensation Plan button. STEP #2: ENTER GENERAL PLAN INFORMATION Details Enter a Name for the new plan. Select either Merit - Annual or Merit - Anniversary from the Plan Type dropdown menu. Select Merit Anniversary to enable the Anniversary Month field in the Eligibility section. Selecting an Anniversary Month will automatically limit the employees included in the plan to only those with a hire date or rehire date that corresponds to the month selected Copyright 2017 Paylocity. All Rights Reserved

2 Compensation Plan Dates Enter a Start Date and End Date for the plan. These dates are utilized in system notifications, which are generated to supervisors once the plan is launched. Use the fields to indicate when the plan will open for input and the date by which the plans should be finalized and approved. Budget Allocation Enter a percentage in the Budget field. The budget percent value is used to calculate the Managers merit budget for their team based on their eligible employees current salaries multiplied by the percentage entered. If 5% is entered and a Manager's eligible employees current total salaries equals $500,000. The Manager's budget for this plan will be $25,000. Payroll Dates Select a payroll calendar rule from the Rule Name dropdown menu. You can review existing payroll calendar rules by navigating to Payroll > Pay Entry Options > Calendar > Rules. The Pay Frequency field is updated automatically based on the frequency associated with the selected calendar rule. Select a Begin Check Date from the dropdown menu. This date corresponds to the first date the merit increase will be reflected on each employee s check. The Effective Date for the merit increase is populated automatically based on the check date selected, but can be overridden. Select Add More to include additional payroll dates. Multiple payroll dates may be required when a plan contains employees with different pay frequencies. For example, a single compensation plan may include employees paid on a weekly basis and employees paid on a bi-weekly basis. The Begin Check date and Effective date can be managed for each group of employees separately.

3 STEP #3: DEFINE PLAN ELIGIBILITY Eligible Population Disable Include All to select specific cost centers from each cost center level displayed. Multiple cost centers may be selected within each cost center level. Pro-Ration By default, No pro-ration for this plan is enabled and employees within the plan will receive the full merit increase. Disable No pro-ration for this plan and enter a Pro-Ration Effective Date in order to pro-rate merit increase amounts based on the number of days an employee is employed within the period. The number of days an employee has been employed within the plan is determined by taking the value in the Pro-ration Period Effective Date and subtracting the employee s Hire Date. The result is then divided by 365. If the number is greater than 1 then the salary increase is not modified. If the number is less than 1, the 2 digit decimal value will be used as the pro-ration value. If pro-ration is less than 25%, the pro-ration column will display 0 and the employee will not receive any increase. Example: If the Hire Date is 2/1/18 and the Pro-ration Period Effective Date is 7/1/18 then the calculation would be as follows: 7/1/18 2/1/18 = 150 Days/ 365 Days =.41. If the increase was 10% the employee would only receive 4.1% as their prorated increase. Ineligible Employees Define the employees that are ineligible for this plan. This feature allows administrators to exclude employees that may not be eligible for a lump sum bonus based on the employee s hire date or the date of the employee s last increase. Employees may also be excluded from the plan based on their Employment Status or Employment Type. To add an Ineligible Employment Date(s): o Select Hire Date, Last Increase, or Both from the Reason dropdown menu. o Select Before This Date or After This Date from the Timeline dropdown menu. o Enter the Date. o Select Add More to add additional Ineligible Employment Dates. To add Ineligible Employment Status(es): o Select an Employment Status from the dropdown menu. o Multiple Employment Statuses may be added. To add Ineligible Employment Type(s): o Select an Employment Type from the dropdown menu. o Multiple Employment Types may be added.

4 STEP #4: ENTER GUIDELINES Plan Guidelines Guidelines display on the manager input dashboard and are displayed in conjunction with the employee s most recent performance rating. These are the recommended minimum and maximum increase amounts and serve as guard rails for the manager to stay within when recommending increases. Enter a Rating Label Enter a Min Increase and Max Increase % value Click Add More to add additional ratings for the merit plan. STEP #5: CONFIGURE APPROVALS The approvals section is used to configure the approval logic for the compensation plan. You may select either Next Level Supervisor or a Specific Approver. Next Level Supervisors are determined based on the organizational chart and a Specific Approver can be inserted at any point in the sequence. Enable No Approvals Required for this Plan if no approvers will be required. For plans with no approvals configured, each group will update to a status of Ready for Payroll once the supervisor has entered and submitted merit increases. Super Approvers Super Approvers are added outside of the approval hierarchy. Super Approvers can submit on behalf of any group supervisor, approve on behalf of any approver, and mass approve a group so that all outstanding approvals for the group will move to approved and the group status will move to 'Ready for Payroll'. Enter the first few letters of the employee to be added as a Super Approver in the Add Super Approver field if applicable. Search results are displayed in the dropdown menu. You may add multiple Super Approvers.

5 Setup Approval Process Select Add New Approver to configure the approval hierarchy or to designate Specific Approvers. Select Next Level Supervisor from the Approver dropdown menu to assign the approval to the direct supervisor of the manager who is entering the merit increases. Adding additional approvers set to Next Level Supervisor will continue to add additional approvers based on the organizational chart, Select Specific Approver to add a specific approver by name. Select Add New Approver to add multiple approval levels in this manner. STEP #6: LAUNCH THE PLAN Select Save as Draft in order to save your progress. The plan will remain in draft status and you may continue to edit the compensation plan. Select Launch to change the plan status to Open and enable managers to start entering their employees merit increases into the plan.