Recommendation Logic

This article will walk you through setting up Recommendation Logic.

• Context: What are Recommendations?
• How does Recommendation Logic work?
• Salary Raise Recommendations
• Proration
• Salary Raise for Promotions
• Market Adjustment
• Variable Raise
• New Annual Bonus
• Spot Bonus
• Equity Refresher
• Equity Promotion
• Equity Performance
• FAQs

Context: What Are Recommendations?

Recommendations are suggestions for planners for how much an employee should get in a raise/grant that is based on a variety of factors, defined by the company’s compensation philosophy. In the UI, they appear as floating text above the column that they apply to (see screenshot). They can be viewed in local currency or company currency, or even as a percentage (for pay recommendations).

These recommendations help anchor managers on sensible amounts to give employees that are in line with company guidance.

How does Recommendation Logic work?

• Choose the pay type that you want to set up logic for
  • If you don’t see a pay type yet, this is because we only display pay types that have associated columns in the cycle. If, for example, the cycle doesn’t have the equityPromotionShares column, you will not see that option show up in the recommendations.
  • The following pay types are currently available (as long as the relevant associated column exists in the cycle)
    • Salary Raise
    • Salary Raise for Promoted Employees
      • Recommends in promotionCashRaise if that column exists, otherwise falls back to salaryRaise if an isPromotion column exists for promoted employees
    • Variable Raise
    • New annual bonus
    • Equity Refresher
    • Equity Promotion Shares
    • Equity Performance Shares
• Click the 3 dots on the right and then click Start Configuration
  
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• Answer the questions in the Philosophy step. This is important because this sets up the rest of the flow based on your answers. Note: the specific questions themselves will vary based on pay type.
  
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• Proceed through the rest of the flow using the Continue button and test at the end.
• To remove recommendations for a specific pay type, simply click Remove Configuration on logic that has already been set up.

Salary Raise Recommendations

This sets up salary recommendations for non-promoted employees only. You can have the same or different logic for promoted employees, you just have to set it up separately.

• After answering the philosophy questions, you need to set up your performances. Your recommendation logic will be based on this. 
  

• If you selected Performance and Range Penetration or Performance and Compa Ratio, you will have to set up range groups for those values as well.

• Alternatively, if you selected Performance and Country, you can set up country groups to give the same recommendation for a collection of countries.

• Next you need to fill out the table and click Save. Then, test in the Compensation Planner!

• You can turn off recommendations for specific employee groups using the eligibility checkbox on the left.

Proration

Proration is all about proportionally adjusting recommendations for employees based on either a) when they started or b) when they received their last compensation adjustment.

The proration date is the point from which to start measuring how much proration the employee qualifies for backwards. We prorate by the number of days from the employee’s start date or last compensation adjustment date to the proration date, divided by 365. This determines a proration factor, that is then multiplied by the recommendation amount to get the final recommendation.

You can choose between the employee’s start date or their last salary change date as the date to use to determine the proration factor. If you pick start date, the formula looks like this:

proration factor = ({proration date} - {start date} (in days)) / 365 bound by 0 and 1

The proration factor can never be less than 0 or greater than 1.

For example, as a company, if you wanted to start prorating employees who started after 1/1/22 - the proration date would be 1/1/23. If an employee then started on 7/1/22, they would see 184 days of proration ⇒ proration factor = 0.504. If an employee started on 4/1/22, they would see 275 days of proration ⇒ proration factor = 0.753.

Salary Raise for Promotions

There are 3 ways you can start configuring salary recommendations for promotions:

1. By performance
   1. This means you can give promoted employees who received different performance ratings different sized increases
2. Flat recommendations
   1. All employees who get promoted will get the same % increase or get taken to the same point in their promoted band
3. Inherit logic from salary recommendations for non-promoted employees
   1. This utilizes the exact same recommendation behavior as for non-promoted employees

Market Adjustment

There are 3 ways you can configure market adjustment recommendations for employees:

• Different % increase recommendations based on metro area (from HRIS data)
• Different % increase recommendations based on country (from HRIS data)
• Flat market adjustment % increase for all employees

If you select Metro area or Country, you have the option to group multiple countries/metros together so that all countries/metros in the same group receive the same recommendation.

Variable Raise

There are 3 ways you can configure variable raise recommendations for employees:

1. Maintain the current pay mix between salary and variable pay for your employees
2. Use variable pay percent from bands to decide the pay mix
3. Maintain current pay mix for non-promoted employees, but use variable pay percent  on promotion bands for promoted employees
   • This is especially useful for companies that want to start standardizing pay for employees as they move between roles

New Annual Bonus

There’s only one option here - it’s all about maintaining the current bonus % for employees as they receive salary increases

Spot Bonus

Spot bonus logic always uses a combination of a bonus target, company performance multipliers (optional) and individual performance multipliers (optional). The IM needs to upload target bonus amounts as a currency column with the key targetOneTimeBonusCash.

The formula for computing the recommendation then is as follows:

targetOneTimeBonusCash for employee * company performance multiplier * associated individual performance multiplier

For example, with the above table configured, an employee who has a target bonus of $10,000, their company performance set as 125% and received an “Exceeds expectations” performance rating, they would be recommended $10,000 * 125% * 150% = $18,750.

You can also set it up so that there is no company modifier and only individual performance matters on top of the bonus target.

In this case, someone with a $10,000 target bonus and a performance rating of “Exceeds expectations” would get recommended $10,000 * 150% = $15,000.

Equity Refresher

Employees whose start dates fall within any of the configured eligibility windows (inclusive) will qualify for a recommendation where the target % specified in the logic table is multiplied by the target equity on their current band.

Equity Promotion

There are two options for promotion equity (note these only apply to employees who are getting promoted):

1. A percentage of target equity for promoted band
   1. Target % specified in logic table multiplied by target equity on promoted band
2. Delta between promoted band and current band
   1. Recommends the difference between target equity for the promoted band and for the current band (if non-negative)

Equity Performance

Any employee who receives one of the eligible configured performances will receive a recommendation equal to target % from logic table * target equity for the employee’s current band.

FAQs

• Can I set up a mix of range and target recommendations? (e.g. exactly 0% for some and 3-5% for others)
  • Yes, choose a range of recommendations, and in the table, make sure to specify min and max values that are equal (e.g. both $0)
• What happens if I go back and change something in an earlier step?
  • All data beyond that point will clear for now. In the future, we’re looking to make this smarter so that only dependent data gets cleared.
• When do my selections save?
  • At the end of the flow for a specific pay type (i.e. when you click Save)
• What happens if I leave the page before saving?
  • You will lose the changes you made. We will have an alert to reduce the chance that this happens, though.
• Can I revert back to an earlier configuration?
  • Not yet!
• What information does the audit log display?
  • When every change was made to a pay type and who the author of that change was. 
• How do I set no recommendation for a group?
  • Turn the Eligible? toggle off for that row.