Use the Adjustment Guidelines page to create guidelines for Base compensation types.
Base types include the following components for which you can create adjustment guidelines:
- Merit Increase - An increase to an employee's salary based on a combination of performance metrics and compa-ratio.
- Market Adjustment - An adjustment to an employee's salary to bring the employee's salary up to market levels.
- Cost of Living Adjustment (COLA) - An across the board adjustment to salaries to bring pay in line with cost of living increases.
- Custom Base Types - Organizations can create additional base components. These function like standard base components.
Note: Before creating an adjustment guideline for a base type, administrators must first create the necessary base types in Base Types Administration. See Base Types Administration.
These guidelines can be created as specific amounts, can implement a recommendation matrix or custom formula, and can be discretionary or non-discretionary. Adjustment guidelines can be created by Organizational Unit (OU).
To create a new adjustment guideline, go to See Adjustment Guidelines - Overview.. Then, click the link.
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In the Name field, enter a name for the adjustment guideline. This name is only visible to administrators with access to this page.
Select the appropriate compensation Type and associated Component. Note: The available options in the Components drop-down are based on the selected Type.
Note: If none of the default components work for you, you can create new components by going to .
The details section lets you select the time period to which this adjustment applies and the specific type of bonus.
- Effective Period - Enter the compensation period for this adjustment. The beginning and end dates must match or extend outside of the Compensation Period to which they apply.
- Type - Select one of the following bonus types:
- Specific Amount - This option lets you allocate a specific amount of money to an employee. This can be a percentage of an employee's salary or a specific monetary amount. Use the Adjustment section to enter the appropriate percentage or amount.
- Recommendation Matrix - This option lets administrators configure a merit matrix based on compensation, performance, or succession data that recommends a specific amount based on where the employee is positioned within the matrix. Use the Adjustment section to enter the matrix details.Note: This option is not available for Cost of Living or Market Adjustments.
- Editable Recommendation Matrix - This option lets administrators completely configure a merit matrix that takes into account where an employee stands in their salary range and their performance score and gives compensation managers a recommended increase range. Note: This option is not available for Target components or Equity components that are allocated in Shares.
- Custom Formula - This option is configured in the Adjustment section and can be based on compensation data as well as other performance data. Note: When creating, copying, or editing an adjustment guideline for a base component type that includes a Merit Increase component, base component non-discretionary custom formulas that are set to be dynamically updated in the compensation plan will not update within the task if the formula contains a Merit Increase component and automatic lump sum allocation is enabled. To alert administrators, a warning message appears at the bottom of the Adjustment section when the Custom Formula option is selected in the Details section.
- Type - Select one of the following bonus types:
- Allocation - Select how the adjustment is allocated. Note: This option is only available for Equity adjustment components.
- Shares/Options - This option allocates the adjustment in stock shares or options. Note: When LTI Award is selected as the component type or when Recommendation Matrix is selected as the Type, this option is not available.
- Cash Award - This option allocates the adjustment as a cash award.
- Currency - This option displays the currency for the adjustment guideline.
The Availability guide section applies recommendations for an employee if that employee falls within the availability of the guideline. Select one of the availability options:
- Default Guideline - This elects the guideline as the default guideline for the organization.
- Select an OU from the drop-down list to apply the guideline for a specific OU within the organization.
Wage Type - This option determines to whom the guideline applies. The available options are:
- Any - The guideline applies to all employees who meet the availability criteria. Note: While "% of Base" and other custom formula recommendations may be applicable to both Annual and Hourly wage types, be aware that fixed dollar amounts may not be appropriate for both wage types.
- Annual - The guideline only applies to annual employees who meet the availability criteria.
- Hourly - The guideline only applies to hourly employees who meet the availability criteria.
Note: If the Default Guideline option is selected in the Availability section, Any is selected as the wage type and cannot be modified until a different Availability option is selected.
If a user's wage type is changed during a compensation task, adjustment guidelines are applied dynamically to new and existing drafts upon edit. Submitted plans are not affected. Simply opening an existing draft does not apply recommendations from new guidelines. However, if an employee has switched from hourly to annual or visa-versa for a Base Type that is included in Base Salary, the recommendation is updated to reflect the appropriate wage type. The employee's Labor Hours value for the task is used to calculate the equivalencies.
Using the radio buttons, select whether the adjustment is Discretionary or Non-Discretionary. If the adjustment is discretionary, then the adjustment amount can be adjusted by the manager. If the adjustment is non-discretionary, then the adjustment amount cannot be modified.
Specific Amount Options
Note: These options are only available when the adjustment Type is set to Specific Amount in the Details section.
- Percentage - Select the first option to enter a base increase that is a percentage of the user's most recent base salary. One to three decimals may be entered, depending on the decimal precision. The decimal precision for percentages in compensation is controlled by a backend setting.
- Fixed Amount - Select the second option to enter a specific dollar amount. The number of decimal places that is allowed is based on the organization's default currency's (i.e., the adjustment guideline's currency) Default and Hourly Rate Precision settings, depending on the situation.
- If Hourly is selected for the Wage Type, recommendations must be within the Hourly Rate Precision settings. If the number of decimal places for the recommendation amount is less than the Hourly Rate Precision settings, zeroes are added to the end of the value to match the precision settings.
- If Annual is selected for the Wage Type, recommendations must be within the Default Precision settings. If the number of decimal places for the recommendation amount is less than the Default Precision settings, zeroes are added to the end of the value to match the precision settings.
- If Any is selected for the Wage Type, the selected component is a Base Type that is included in the Base Salary, and a Fixed Amount is being recommended, the precision allowed for the fixed amount is the maximum precision between the Default and Hourly Rate Precision settings. In other words, the higher precision value is used for validation.
Fixed amounts are rounded if a lower precision setting needs to be applied during the compensation task.
- If the "Include in Base Salary" option is not selected, the guideline is subjected to the Default Precision settings.
Recommendation Matrix Options
A recommendation matrix enables administrators to determine recommended payouts for the adjustment component based on selected metrics. The administrator can configure the matrix as necessary.
Complete the following fields:
- Matrix Rating out of: - Select the appropriate rating range. For example, if you are planning to use performance review scores as your matrix, and your rating scale is 1 to 5, select 5 in this box.
- Add Metric - Click this option to select a matrix on which to base this employee recommendation. Tip: The most commonly used metrics are Last Competency Avg. Score and Last Performance Review Avg. Score. For example, if you select Last Performance Review Avg. Score, the matrix rating will be based on the most recent performance review completed for this employee. The matrix use percentiles to determine where an employee belongs in the matrix row. If the matrix is out of five, and you are using the Last Performance Review Avg. Score metric, employees whose last performance review score is 3.6 out of 5 would correspond to the 72 percentile, which places them in the 5th row.
- Define Columns - Select the appropriate column. Employees can be placed into columns based on where they fall in their salary range. For example, if you create two columns and the salary range in column one is $50,000.00 to $60,000 and column two is $60,001.00 to $70,000.00, and your employee earns $65,000.00, the appropriate column is column two.
Note: When creating an Adjustment Guideline, the Recommendation Matrix options are only available when the adjustment Type is set to Recommendation Matrix in the Details section.
Editable Recommendation Matrix Options
An editable recommendation matrix enables administrators to completely configure a merit matrix that takes into account where an employee stands in their salary range and their performance score and gives compensation managers a recommended increase range.
- Compa Ratio column widths are fully configurable with the configurable matrix. The configurable matrix does not have the above range or below range options for compa-ratio. The configurable matrix has the option to start from 0.00 compa-ratio and end with a max compa-ratio (infinity). Everything in between is configurable.
- Performance Score range heights are fully configurable with the configurable matrix. The configurable matrix has the option to start from 0% Performance score to 100%. Everything in between is configurable.
The Editable Recommendation Matrix option is available when creating adjustment guidelines for Base, Bonus, or Equity components. Note: Recommendation matrices cannot be created for Target components or Equity components that are allocated in Shares.
Note: Based on the adjustment Type selected in the Component section, the Editable Recommendation Matrix option appears in the Details section.
Custom Formula Options
Note: These options are only available when the adjustment Type is set to Custom Formula in the Details section.
Custom compensation formulas enable administrators to customize the way amounts are calculated in Adjustment Guidelines for any compensation component. Custom formulas can contain conditional statements and perform arithmetic operations using user, compensation, performance, and competency fields. The custom formulas then update compensation fields in real-time during execution of the compensation planning task.
Select this option to activate rules indicating that the manager cannot give a recommendation above the guideline provided by the matrix. If this option is not selected, a manager's adjustment must be on or below the maximum recommendation. Note: This option is not available if the Non-Discretionary option is selected in the Adjustment section. The following options are available:
- On or below maximum recommendation - The manager's adjustment cannot exceed the maximum recommendation.
- May be over maximum recommendation by XX% - The manager's adjustment can exceed the maximum recommendation, but cannot exceed the specified percentage of the maximum recommendation. One to three decimals may be entered, depending on the decimal precision. The decimal precision for percentages in compensation is controlled by a backend setting.
- Click to save the information on this page.
- Click to close this page without saving changes.
|Last Published: 9/10/2021||If you have feedback or suggestions for an Online Help article, please select this link.||© 2021, Cornerstone OnDemand|