SAP Compensation Administration Application Supports a Total Compensation Strategy

  • by Janet McClurg, SAP HCM Platinum Consultant, SAP
  • December 15, 2003
The Compensation Administration (CA) application in R/3 is designed to link employee performance with company goals. In this first article in a series, the author explains how to prepare for a CA implementation. Using the example of a management incentive plan, she shows how to budget for a compensation/award plan.

Over the past decade, the traditional “entitlement” approach of increasing all employee salaries by a percentage on an annual or otherwise regular basis has been replaced. Compensation plans have evolved instead to a “total rewards” concept, in which all practices and programs are designed to recognize and reward employees for their participation in and contributions to achieving business goals.

One of the most common comments I hear from SAP customers is that they want to determine if compensation awards are being given to the appropriate people and, once given out, whether they have a positive impact on continuing employee improvement and commitment. The Compensation Administration (CA) application in R/3, which is designed to link employee performance with company goals, helps answer those questions. It is a subcomponent of the Compensation Management application.

Janet McClurg

Janet McClurg is an SAP Platinum consultant specializing in the Human Capital Management application. She has worked for SAP for 12 years, the last eight in the platinum consultant role. Janet’s areas of specialization include Enterprise Compensation Management, Performance Management, Organizational Management, Personnel Administration and Succession/Career Planning.

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