3 Ways to Handle Compensation Budget Imbalances Caused by Org Moves

  • by Rebecca M Bartlett, Senior HCM Consultant, Exaserv, Inc.
  • July 22, 2009
Learn the pros and cons of options for budget reallocation – manual and automatic – when you cannot postpone the movement of staff during a compensation planning period.
Key Concept

For many organizations, the compensation planning period is aligned with the end or beginning of their fiscal year. This is a time when many transfers, promotions, and mergers/break-offs occur. Compensation specialists do not necessarily want budgets locked down during this time period – they need budgeted funds to transfer with the reassigned employees. When the funds do not transfer with employees a budget imbalance occurs. This means that one organizational unit has too much funding while another organizational unit has too little.

The most surprising thing to note about SAP Enterprise Compensation Management budgets is that they are static by nature. While there are a few good reasons for this characteristic, it is often viewed as a negative feature by compensation teams because many have a need for organizational flexibility during the compensation planning period.

For example, suppose you handle the budget for two groups in your organization. One group has 10 people while the other group has two. The larger group has the larger budget allocated to it. With no changes, the budgets are static. Now suppose that your company decides to restructure and moves nine people from the larger group into the smaller group. Unfortunately, even though the people moved, the budget did not. Now you have a large budget for a small group and a small budget for a large group. What do you do?

This article explains how you can ameliorate and even prevent budget imbalances. First, I explain the static nature of budgets. Then, I present three mainstream options for overcoming budget imbalances.

Rebecca M Bartlett

Rebecca Bartlett is a senior HCM Consultant with Exaserv, Inc., helping companies develop and continuously maintain optimal and high-performing workforces. She specializes in the design and integration of talent management and SAP applications for employee self-services and SAP functionality for manager self-services. In her current role at Exaserv, Rebecca helps clients across the United States and Europe implement sustainable global workforce development strategies. She applies her insight and knowledge to each endeavor and excels in delivering a positive user experience. Rebecca holds a bachelor’s degree in computer engineering and a master’s degree in business administration.

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