When creating compensation processes for your company, it would be useful and necessary to understand the budget allocated and used during a compensation cycle. Assigning a budget per cycle can be useful when making financial decisions about compensation. This ensures that users who are in charge of approving compensation changes would be aware of the increase of compensation used from the entire allocated budget when approving those compensation increases.
How to add budget to a compensation cycle
When you create a compensation cycle, the Super-admin/Compensation admin/Cycle owner are able to input and change the budget for the salary and bonus allocated for each specific cycle by going to the 'Rules and budget' submenu within the compensation cycle.
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.
Preview of budget usage
Based on the rules that are added to the cycle as well as the participants involved in the cycle, you will be able to see a preview of the budget that may be used in that cycle. A preview of budget usage shows the sum of all participants’ salary or bonus increases assuming all relevant rules are applied and the budget number, which was set in the earlier step. It will add all the recommended salary/bonus increases and provide that recommendation in a concise preview next to the preset budget, as well as provide a percentage of how much the recommendation compares to the allocated budget. For example, if you set a preset budget of $20,000 for salary increases, and the sum of all the recommended salary increases for the participants in the cycle is $19,500 (based on the recommendation rules input in the cycle), the system will provide the percentage of 97.5% as the usage percentage, as that is how much the $19,500 recommended salary increases will compare to the allotted $20,000 budget that was preset.
Budget preview within a proposal
If a budget is assigned within a cycle, then the approver can see the budget for the cycle, how much of the budget has already been distributed through all participants, and how much of the budget remains. This is so the approver can understand how much the budget will change when approving a compensation change for a participant. Even if the remaining budget amount is less than the proposed increase for that participant, the approver can still approve the proposal.
Overview of budget in the current status menu
In the current status menu of the compensation cycle, an overview of the budget usage can be seen below the cycle's timeline. The amount distributed and the amount remaining will be depicted through a pie chart, giving the super admins, compensation admins, and cycle owners a pie chart of how much of the budget is used and remaining during the timeline of the compensation cycle.
Overview of budget in proposal table
For the super admins, compensation admins, and cycle owners, the budget usage can be seen through filtering by the cycle. When the table is filtered by cycle, you will be able to see the budget assigned for that cycle, as well as the sum of the total increased salary/bonus of all proposals in that cycle. The table will provide the amount of budget used, the remaining budget, and the assigned budget at the bottom of the filtered table. If the budget is exceeded, the remaining amount will be in red, dictating how much more of the budget is exceeded through the sum of the proposed increases in the cycle.
Closing a cycle with a specified budget
When manually closing a cycle with a specified budget, the super admins, compensation admins, and cycle owners will see a warning letting them know that all signed-off proposals will be applied immediately, and any proposals that are not signed off will not be applied. It will also show how much of the budget was distributed based on the proposals that were signed off and how much of the budget remains or is exceeded by the proposed compensation increases.