What is compensation plan in SAP PA-CM - Compensation Management?

SAP Term: compensation plan

• Component: PA-CM

• Component Name: Compensation Management

• Description: A key entity within the Compensation Administration component used for calculating the new amount or quantity of a salary component following a review. Compensation plans can be assigned one of the the following compensation categories: salary adjustment, regular bonus, off-cycle payment or LTI grant.

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• Key Concepts: 
  A compensation plan is a set of rules and guidelines used to determine how employees are paid. It is a part of the SAP PA-CM (Personnel Administration - Compensation Management) component, which is used to manage employee compensation and benefits. The compensation plan includes information such as salary ranges, bonus structures, and other incentives. 
  
  How to use it: 
  The SAP PA-CM component can be used to create and manage compensation plans. This includes setting up salary ranges, bonus structures, and other incentives. The system also allows for the tracking of employee performance and the calculation of bonuses and other incentives. 
  
  Tips & Tricks: 
  When creating a compensation plan, it is important to consider the needs of both the employer and the employee. It is also important to ensure that the plan is fair and equitable for all employees. Additionally, it is important to review the plan regularly to ensure that it remains up-to-date with changing market conditions. 
  
  Related Information: 
  The SAP PA-CM component can be used in conjunction with other SAP components such as HR (Human Resources) and FI (Financials). Additionally, there are a number of third-party tools available that can be used to manage compensation plans. These tools can provide additional features such as analytics and reporting capabilities.