Updates for SAP Performance Management and Enterprise Compensation Management in SAP EHP4

Author: Marie Abigail Manlongat, HCM (Human Capital Management) Consultant

When I was a HR practitioner with responsibility for Personnel Development, I raised my concerns to management regarding the number of exit interviews in which the departing staff indicated that they felt overlooked by their line manager.  On reporting back to the management during our Personnel Development meeting and raising this reason as a major problem, the company’s senior management struggled to understand and address this issue and would have probably preferred if I hadn’t raised it.  However, as a HR professional, I had very strong feelings regarding this area and how to address it using whatever tools we could apply.

The personnel development component of SAP HR as recently improved via Enhancement Package 4 (EHP4) promotes a number of ways to maximize employees’ continuous involvement with the company, from having Human Resources become strategic partners of company, to having managers take more initiative and actions that are evident.

Companies that have applied EHP4 can now easily adopt the following points to address employee retention:

1. Educate employees to update their skills; Talent Profile data
2. Educate managers to view and monitor subordinate’s profile; Talent Development and Succession Planning
3. Educate employees to book for courses and managers to book for his/her direct subordinate; Learning Solutions
4. Educate managers to initiate performance appraisal processes; Performance Management
5. Educate managers to process salary reviews, and short and long term incentives; Enterprise Compensation Management

The first three items provide ways to track and update employees’ profiles.  What happens is that an employee maintains his/her own Talent Profile data via ESS.  This may be regarding internal work experience, external work experience, Education, Accomplishments, Career Goals or Mobility.  Once the employee talent profile is maintained, the whole team is ready for manager assessment in MSS.  This also supports managers’ nomination of talents to Talent Groups, participation in Talent Review Meetings, creation of individual development and nomination of successors.  And for qualifications that are not yet fulfilled but are required, managers may book a course for a direct subordinate via the Learning Management service of Learning Solutions.

The last two items, on the other hand, are often left out. These were often at the core of my exit interview findings.

SAP Performance Management helps managers distribute company performance appraisal and allows managers to adapt to company-wide established Performance Management processes.  For companies where company/team goals are normally cascaded to an individual, with the new enhancement, this may be performed by managers in MSS.

With the earlier versions of performance appraisal, appraisees, who are normally direct subordinates, only get to see on-going appraisal forms upon receipt of a notification with a link provided to call the form.  Now participants (appraisers and appraisees) will have the ability to view not only on-going appraisal forms, but also historical forms.

Last, but not the least, my favourite topic (as an employee and as a functional consultant), Enterprise Compensation Management.

SAP Enterprise Compensation Management (ECM) covers budgeting, salary adjustment, short and long term incentives.  Standard budgeting functionality assigns a budget amount to an organisational unit/department for example, where you have 10 direct subordinates and if maximum increase is 10,000AUD for salary adjustment per employee, then you assign 100,000 AUD to your budget amount.  If there is any movement in your organisation during the process, then a budget reassignment is required.  Creation, assignment and reassignment is via BSP application and has roll-up functionality to calculate total budget amount to your root organisational unit.   While this can be an additional administration burden if there is a lot of staff movement during the ECM process, I can tell you that there is something cooking in EHP5 for this an automated process to lighten burden of a Budget Administrator (keep checking our blog for updates as this becomes available!).

ECM is achieved in MSS in two phases. The first phase is Compensation Planning, where a manager can recommend salary adjustments and short and long term incentives (also called Compensation Review Items).  The second phase is Review Planning, where higher level managers may view, edit, approve or reject submitted compensation plans.  In EHP4 SAP has improved higher level (even highest ranking) managers’ involvement in this process by introducing ‘deep approval’ functionality.  This is again simple – an executive manager or CEO may view, edit, approve or reject submitted compensation plans from the whole organisation with visibility of what has been recommended, approved or rejected by every manager within their workforce.  New reports have been developed to provide detailed change information.  Therefore, it’s very straight-forward to make a change in MSS,\ which is recorded in the back-end system.  Budget amounts are displayed on both phases to track how well (or otherwise) you are going in terms of the amount allocated to an organisational unit.  Exciting?  I sure find it exciting!

I have briefly discussed available functionalities that were not available in SAP before last year or indeed in any package some years back.  These functionalities will not only provide measurable rewards, but will also provide justifiable and accurate ways to progress a personnel development plan for a company.  In addition, the functionality makes manager initiatives obvious and will make employees feel that they are valued by the business.

Abigail has recently applied the SAP EHP4 functionality described at a number of customer sites