Plan for labor compensation adjustments

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Budget Process Owners or users with owner permissions for a Cost Object can account for planned adjustments to labor compensation rates. This can be done for current or planned labor. You can specify a percentage change to base compensation per labor resource, and the date at which the change will become effective.

Before begin labor compensation planning, ensure you enable the labor planning features. For more information, see Edit the Company Profile

Plan for a labor compensation adjustment

  1. In the plan menus at the top right, select a plan, a Cost Object category, and a cost object or cost object group.

    Learn more about navigating in Planning.

    Note: Cost Center Owners can only edit their assigned Cost Centers. For more information, see Manage Cost Object Permissions reference data.
  2. Navigate to Planning > Expenses.
  3. Select the Labor tab.
  4. Select Existing to plan labor compensation adjustments for current labor.
  5. Select Planned to plan labor compensation adjustments for planned labor.
    • In the Adjustment Effective Date cell, enter the date to begin the adjustment. Note that when working with multi-year plans, labor compensation adjustments will apply from the Adjustment Effective Date through the duration of the plan.
    • In the Adjustment % cell, enter an adjustment percentage value. A positive value will result in a compensation increase and a negative value will result in a compensation decrease.
Tip: When working with multi-year plans, current or planned labor costs with no end date, or an end date beyond the plan, dates will extend throughout the plan. Labor compensation adjustments are annually recurring. For example, a 3% increase effective as of April 1 in the current year would result in a 3% year-over-year increase. For more information, see Plan for multiple years.

Setting up Variable Labor Compensation

Note: This feature can be seen only in New Expenses View. The users must have permission to View Sensitive Financials and View Sensitive Columns to view the Adjustment field.
  1. Navigate to Company Profile and enable the Variable Labor Compensation Adjustments option.

  2. Select the periods to establish your organization’s default Compensation Cycles. These settings can be adjusted for each plan individually.

    A Compensation Cycle Period refers to a defined time period which labor compensation adjustments, such as merit increases, are planned and applied within an organization. These periods are typically aligned with an organization’s compensation review schedule to ensure consistent and predictable updates to wages or salaries.

    Once enabled, any newly created plan will include the Variable Labor Compensation Adjustments feature.

    Note: If a plan is created from a baseline, the new plan will inherit either the legacy compensation adjustment model or the variable labor compensation model, depending on what is used in the baseline plan.
  3. Navigate to Plan > Settings.

  4. Select the Compensation Cycle button to see the default periods configured in the Company Profile settings.

  5. You can update the Compensation Cycles to add or remove periods. Only users with appropriate permissions can edit/view the Plan Settings. To know more, see User Permissions.
  6. In Plan Settings, set the compensation adjustment percentage for each labor rate rule.

    NOTICE: The Default Adjustment Rate table is driven by the Labor Rates configured in Reference Data.

  7. Navigate to Expenses > Labor tab, and select New view toggle.

  8. Select the Adjustment for a labor line item to view or update the compensation adjustments.

Note:
  • Users must have permission to View Sensitive Financials and View Sensitive Columns to view generated labor financial line items.
  • Users with the ITPCompensationAdjustmentEdit permission can override the default adjustment percentages for the defined Compensation Cycle periods.
  • Users with the ITPCompensationAdjustmentAllPeriodsEdit permission can edit the adjustment percentages for all periods within the plan.
  • If Variable Labor Compensation Adjustments are enabled, labor adjustments cannot be modified in the legacy view.