Table of contents
A. Setting up a compensation template
1. Basic settings
2. Roles
3. Recommendation rules
4. Timeline
5. Notifications
6. Finalize setup
B. Kicking off a compensation cycle based on a template
1. Selecting participants
2. Budget
3. Adjusting the timeline
4. Finalizing the setup
What are Compensation cycles?
Compensation cycles allow you to create a fair and consistent employee experience with flexible compensation, salary, and promotion workflows. They enable managers to make decisions informed by relevant performance and goal completion data based on recommendation rules, which are defined in templates.
This article describes how to set up a Compensation cycle, from creating the template to launching and using the cycle to start a streamlined compensation and promotion process.
A. Setting up a Compensation template
1. Basic settings
To create a new Compensation template (used at any time to launch a cycle), go to 'Compensation' > 'Templates' > 'Actions' > 'Create Template'.
Template type
First of all, you need to decide what process the template is for: salary, bonus, promotion, or shares. You can also choose a combination.
Name and description
The description is optional and can contain context or general guidelines. Super-admin, Compensation module admins, and cycle owners can see and edit this description when editing the cycles in the basic settings.
Template owners
Template owners will have access to the templates they own. By default, the person creating the cycle will be the first owner, and you can add as many owners as you like.
2. Roles
Roles will include all relevant and required stakeholders for the respective salary, bonus, promotion, or share management process. You can view the full access rights of each role here.
Submitting a proposal
By default, the direct manager of an employee will review the proposal and submit it to the selected approver. However, you can also select specific proposer(s) to submit a proposal for a participant if the direct manager is unavailable or not in charge of submitting compensation suggestions. Only one of the proposers can submit a proposal for the participant. Once a proposer submits a proposal, any other proposers listed on the cycle will be unable to submit the proposal or make changes.
Approving a proposal
You can select one or multiple users who will be in charge of approving the proposals submitted by managers or other specified proposers. Only one approver needs to approve the proposal for it to be approved. Another approver cannot change the status of an approved proposal. Therefore, once at least one approval approves the proposal, it is immediately sent back to the proposer to sign off.
Signing off a proposal
By default, it is the employee's direct manager who will sign off the approved proposal after discussing the outcome with the participating employee. If other users were specified as the proposer, then those users would be responsible for signing off on the approved proposal.
Re-opening a proposal
The template and cycle owner can enable the setting 'Allow an approved proposal to be re-opened by the manager' in the 'Roles' section of the template. The function of this setting is to allow a proposal to be reopened when the employee and manager cannot reach an agreement to sign off on the proposal.
3. Rules
Recommendation rules give guidance when submitting and approving proposals. Rules can be defined for salary, bonus, promotion, or share proposals and can be user or team-specific. Recommendation rules can be based on certain input factors like review manager scores, review question/comperency scores, development goal average score, business goal average score, universal increase or custom attributes. You can assign weights to each input factor as well as define date ranges and conditions under which the rules will be applied.
Recommendation rules are optional and are not always applicable if you are not using the Reviews or Goals module in Leapsome, for instance. When recommendation rules are not defined, in an active proposal, we will still show you the relevant context from the employee's profile, such as tenure, level, title, salary, etc., so that the manager can make decisions.
Take a look at this article for more detailed information regarding recommendation rules.
4. Timeline
In the final steps, you will pre-define a timeline for your template. Leapsome will use this timeline to generate each next step in the cycle, and the cycle owner can edit the timeline during the cycle creation.
The actual steps and dates will depend on your cycle setup (i.e., the deadline for submitting and approving proposals as well as signing off proposals). You can edit these steps during the process, so don't worry if you're not sure about the best intervals right away.
The kick-off can be manually triggered using 'Actions' when you are confident with your cycle draft. Currently, the deadlines for the rest of the steps are only soft deadlines for better internal planning. Therefore, moving manually or passing a deadline when the period is complete has no impact on the status of the proposals and will not trigger any notifications.
5. Notifications
All notifications will be sent out by Leapsome automatically. You can customize the text of each message. There are three types of notifications in your compensation and promotion management process:
Kick-off: All proposers will receive a single notification that contains a summary of their open tasks and a link to their tasks list.
Daily Digests: All proposers and the approver with open tasks will receive a 'digest' summarizing their pending to-do's every 3rd day after the task is sent for the first time. Digest notifications are only sent within regular work days.
Following the cycle kick-off, notifications are sent two days after kick-off. All stakeholders with new tasks will be notified. There are no notifications if there are no new tasks.
Proposal status change: Once a proposal is submitted, the approver will receive a notification. And once approval is given, the proposer will receive a notification for the sign-off.
More information on the notifications for each role in a cycle can be found here.
6. Finalize setup
Last step of the template creation is reviewing if all configuration steps have been covered and set up. All that's left is to click on 'Finalize setup' to complete the creation of your template.
B. Kicking off a Compensation cycle based on a template
Once you have finalized your compensation template, you can easily kick off a new compensation or promotion management process by clicking 'Create cycle' from the template, which will sit under 'Active Compensation templates' in the 'Templates' tab.
You will have the option to review each of the steps you set up in the process described above. In addition, you can select cycle owners, add the participants, and confirm the timeline for the cycle.
1. Selecting participants
Participants are the employees that will be evaluated in this cycle. You can add all employees to a cycle or filter by adding or excluding employees using these options:
- By team
- By individual user selection
- By location
- By level
- By custom attribute
You can also exclude based on tenure. For example, you can include employees who have been with the company for a minimum number of weeks so that anyone working with the company for less than that time will not be reviewed.
2. Budget
Assigning a budget within the compensation cycle can help manage how much salary and bonus increases can be allotted for a specific cycle or group of participants based on financial availability. The budget can be set separately for each salary and bonus, and previews will be available to show how much the sum of recommendations for compensation changes for all included participants will compare to the allocated budget of that cycle.
The preview of the budget usage will consider all the recommendation rules when providing the sum of the potential budget distributed to all participants when providing this preview.
Multi-currency compensation cycles
When creating or editing a compensation cycle template, you can also specify the cycle currency. If your team members are spread across different geographies and are paid in various currencies (e.g., euros and US dollars), this feature accommodates these differences.
Once the cycle currency is chosen, you can set conversion rates for other currencies, such as US dollars. This allows for individualized recommendations in each team member's native currency.
Please note, that to maintain consistency in cross-platform and cross-cycle analytics, all data within the compensation module is consolidated into a single currency — the company currency.
For more information on budget management in a compensation cycle, take a look at this article.
3. Adjusting the timeline
When setting up the timeline for the compensation cycle, you'll see a suggested kick-off date, time slot, and subsequent dates based on your settings from the template. Nevertheless, you can still edit each date.
4. Finalizing the setup
In the last step, you'll finalize your setup. The compensation cycle will be kicked off on the chosen date and time defined in your timeline. You can manually proceed and kick off the cycle before the defined time as well.
For more information on running transparent, fair compensation and promotion processes, take a look at Leapsome’s blog for further guides and playbooks.