Creating a Compensation Cycle

Compensation Administrators have access within the Paychex Flex Engage product to create compensation cycles from the left hand menu by selecting Manage Compensation -> Compensation Cycles.

Creating a Compensation Cycle

To create a compensation cycle, you will select the "+ New Compensation Cycle" on the top right corner of the page. After doing so, you will be guided through the compensation cycle builder described below:

Setup:

On the setup page, you will set a name of the compensation cycle, then decide which components you would like to include in your compensation cycle:

• Base Pay
• Bonus
• Equity

After deciding what to include, you will decide if you would like to provide guidance for their base pay based off of a performance score. If no, then you will be asked if you would like to include each employee's performance score as a data point for managers to view while making recommendations.

Performance (if applicable):

If you decide to include performance as a basis for guidance, you will see the performance step next. You will select a performance cycle from the dropdown list which will be the set of scores that will be used. Keep in mind, your list of reviews in the dropdown will be restricted to cycles that are both completed and have scores included. If they do not meet both of those criteria they will not be eligible to include in a compensation cycle.

After selecting a performance review cycle, you will then create a set of score ranges with labels. These labels will be what is shown to compensation recommenders to make it easier to compare rather than the specific number score that is given. 

Participants:

On the participants step, you will decide which employees would you like to be included in the compensation cycle and be eligible to get an increase. You can either manually select a set of users, or upload a CSV of employees. If you select the CSV option, it will provide you the required csv format on the next page and will bring you directly past this phase.

If you select the option to create a list of users, you'll have the option to select a hire date to filter out users that may have just been hired recently. On the next page, it will show you the total remaining eligible employees. Keep in mind, employees that have either partial or missing pay data will be ineligible to be included in a compensation cycle. When viewing your list of total eligible remaining employees, you can either select all by clicking the box to the top left of the participant table or select just the box next to each employees name. You can use any of the available filters to reduce the list down to just a certain set of employees. 

Roles:

The roles step in the compensation cycle builder is the main step where you decide who is making recommendation and approval decisions. By default, each employees direct supervisor will be their recommender. similarly, by default, each recommenders direct manager will approve their recommendations. 

If you wish to override these default settings you will have the option to deselect a certain recommender which will move all of their assigned recommendations to their supervisor. This will also mean that that supervisor who was previously responsible for approvals will now conduct the recommendations and their supervisor will take over the approvals essentially moving all tasks up a level of the hierarchy.

Any employees who do not have a supervisor listed in the platform will have their recommendations conducted by the administrator who creates the compensation cycle. If the CEO is a participant, the compensation admin who creates the cycle will also be responsible for conducting the recommendation for the CEO.

Budgets:

The budgets page is where you make a determination on how much you will be planning to give out as well as how that will be budgeted to recommenders. 

You will see the total eligible employee pay and the option to enter a percentage increase you would like to give out or enter the total dollar amount you want to give out and it will show the corresponding percent.

After setting your total budget, you will decide which method you will use to determine the guidance amount for each recommender. We offer the following methods for base pay guidance:

Tenure Based Guidance: Method that would allow you to determine a percent increase on an employee based on tier ranges of how long they have worked at the business. 

If you select Tenure Based Guidance, you will be tasked with selecting tenure ranges and a corresponding increase for each range. While creating these you will see a real time calculation of how many people are in each range, and how much would be distributed with the current setup to know how close you are to taking up the full budget set above.

Salary Based Guidance: Method that would allow you to determine a percent increase on an employee based on the tier range of how much they make each year as a base salary. 

If you select Salary Based Guidance, you will be tasked with selecting Salary ranges and a corresponding increase for each range. While creating these you will see a real time calculation of how many people are in each range, and how much would be distributed with the current setup to know how close you are to taking up the full budget set above.

Fixed Percent Guidance: basic method that allows you to determine a flat amount as a general guidance percentage to each employee.

No Guidance: No set amount would be given and it managers would have a free detemrination towards making recommendation decisions.

Performance Guidance: This will show up if you selected performance in the earlier step in the builder

If you select Performance Based Guidance, you will be tasked with assigning a increase percentage to each of the tiers you created earlier in the builder.. While assigning values to these you will see a real time calculation of how many people are in each range, and how much would be distributed with the current setup to know how close you are to taking up the full budget set above.

Keep in mind, you will not be able to come up with a situation where you are planning to give away more than the set budget above. For example, you cannot budget a 4% increase and then select a 5% fixed percent guidance. It will give you an error saying that your guidance cannot exceed your compensation increase budget. It is a good idea to sometimes leave some space between the guidance amount and the increase budget to allow for room for some managers who may request more than what is given to them initially.

Distribute:

After creating your overall budget, and then setting an overall guidance method. You may want to make some overrides to what is automatically given to each recommender. The distribute page is where you would be able to decide, does a certain recommender maybe need additional money than what is given automatically based on the guidance or does a certain manager need less than what should be given. If you do reduce someones amount, they will not have enough budget to give people what would based on their guidance so they may need to make some tough decisions on who may need to remove less than the expected amount. 

Bonus Participants:

Similar to selecting participants for base pay, you will once again select participants who you would like to be eligible to receive a bonus. You can either select them manually or import a CSV of employees who should be included. 

If you decide to enter them manually, you will once again select the boxes next to each employee and this time click the button to include in bonus in the top right of the corner of the table. You will then see those user be remove from the excluded list and begin appearing in the included list. 

Bonus Budget: 

After selecting who will be included, you will once again decide how much total you are planning to distribute and how it will be distributed through guidance. If your employees have had bonuses completed in previous compensation cycles in the engage product you will see the total previous amount, if you have not completed anything before it will appear as $0 in Eligible Employee Last Bonus amount. In this case, you will enter a dollar amount as your total budgeted amount. 

After selecting your budget, you will determine if you want to use any of the following guidance methods:

tenure Based Guidance:

If you select Tenure Based Guidance, you will be tasked with selecting tenure ranges and a corresponding bonus amount for each range. While creating these you will see a real time calculation of how many people are in each range, and how much would be distributed with the current setup to know how close you are to taking up the full budget set above.

Salary Based Guidance:

If you select Salary Based Guidance, you will be tasked with selecting Salary ranges and a corresponding bonus amount for each range. While creating these you will see a real time calculation of how many people are in each range, and how much would be distributed with the current setup to know how close you are to taking up the full budget set above.

Fixed Percent Guidance:

If you have not completed a bonus cycle previously, do not select a fixed percent guidance because a 3% increase on $0 will result in guidance being $0 for each employee. If you have done it before, this is a good way to provide a % increase on their last bonus amount.

Min-Max Guidance:

If you select Min-Max Guidance, you will select an amount as the minimum amount and an amount as the maximum amount. While this will be the guidance. the amount budgeted to each recommender will be (budget / total # of participants ) * Number of recommendations. 

Equity Participants:

Equity Budget