Salary Budgeting
Using Oracle Human Resources, you can set up human resource budgets for headcounts and full time equivalents at various levels of the organization.
See: Human Resource Budgets
Most enterprises need to add salary estimates to these headcount budgets to provide salary budgets. Oracle Human Resources provides you with the key information you require to define your salary budgets:
- headcount or FTE budget for a defined period of time
- valid grades for jobs and positions
- grade rates or pay scale rates to show salary values
However, the detailed process of salary budgeting varies from one enterprise to another according to the enterprise size, type, and culture. This topic looks at three types of enterprise to suggest different ways in which you could use the information held in Oracle Human Resources to derive your salary budgets.
Note: The calculation of actual salary values happens during the payroll run. To help you compare planned versus actual spending, Oracle Payroll provides the following information:
- actual pay values for each assignment in the payroll run
- balances to show to date totals
- costs accumulated to the cost centers and project codes you set up in the Cost Allocation Flexfield
A typical government agency has a rule-based structure based on organizations, positions, and grading structures. In this type of enterprise, salary budgets are usually set for each position, then rolled up to the organization level.
Starting from the position definition, you can extract the list of valid grades and the grade rate values for each of these grades. If you use grade scales, you can use the midpoint value from the range defined for each grade.
To calculate the salary budget for each position, you multiply the position headcount by one of the values for the grade. Typically you would use the value for the middle grade. However, you might choose the lowest grade if you are making entry-level assignments to new positions.
When you have established the relationship between these various items in the database, you can automate the budgeting through the creation of a standard reporting view, using SQL*Plus.
The company with a centralized management structure has a more flexible approach to roles, frequently using jobs rather than positions. There is more emphasis on recruiting the 'right people' and on individual responsibility and initiative. Reward systems are usually performance related.
Salary budgets are typically set for each organization, based on a headcount budget for jobs and organizations. The budget for each organization is calculated from the midpoint grade rate value for the valid grades for each job multiplied by the planned headcount for each organization and job combination.
In this type of enterprise, local managers are expected to decide on the composition of their own workforce in response to market requirements, and to set their staff's compensation levels, within an overall budget. Control is exercised through the allocation of a budget, but administration of the budget is left to the discretion of the local manager.
Current expenditure in each organization is used as the starting point for budgeting. This cost is projected on the basis of plans for expansion or reduction, with some inflationary factor added.
One approach to budgeting in this environment is to download current salary values from Oracle Human Resources to a spreadsheet. You can use Oracle Glue to create an interface from Oracle Human Resources to your spreadsheet system. The spreadsheet facilities are well suited to the application of various percentages to try out salary and headcount change proposals.
See Also
Using Oracle HRMS with Spreadsheets
