Human Capital Management

Part I

(Function, Structure, and Master Data)

EGN 5622 Enterprise Systems Integration
(MSEM, Professional)
Fall, 2013

Human Capital Management

Part I
(Function, Structure, and Master Data)

Concepts & Theories

Human Resources Management

Manage

requirements for human resources

to support company current needs and
future growth, including:

Planning,
Hiring/assigning,
Training, and
Evaluating employees

Human Resources Management

Typical HR Functions:
Planning and job analysis,
Recruitment and selection,
Training and development,
Performance management,
Compensation and benefits, and
Employee and labor relations.

HCM Process in the Employee Lifecycle

Leveraging HCM for Organizational

Performance Improvement

Human Capital Management

SAP Implementation

SAP Module View

Financial
Accounting

Sales &
Distribution
Materials
Mgmt.

Controlling

R/3

Production
Planning

Human
Resources
Quality
Maintenance

Fixed Assets
Mgmt.

Integrated Solution
Client / Server
Open Systems

Plant
Management

Project
System
Workflow

Industry
Solutions

Human Capital Management

Human

Capital Management (HCM) modules in SAP

R/3 incorporates HCM concepts and practices,
enabling managers to perform transactions pertaining
to the HRM cycle of events.
HR modules in SAP R/3:

Organizational management
Personnel management,
Payroll
Time management
Training and event management,
Travel management,
Managers desktop
Environment, health and safety

Organizational Management
It

provides the basis for structuring personnel

planning and development processes, and is
necessary for personnel administration.

Using

this application, an organizational structure,

including departments, jobs, positions, and tasks,
can be created.

Work

is further defined and described through the

process of job analysis: the cornerstone of HRM.

Organization Management
Organizational
Expert

mode
Info system
Tool
Setting

Plan

Personnel Management
Personnel

administration
Recruitment
Personnel development
Benefits
Compensation management
Personnel cost planning
Management of global employees

Personal Administration
Facilitates

the management of HR master

data, personnel files, and relational data
bases.

Maintaining

accurate and confidential

employee records is critical to this function.

Personnel Administration
HR

master data

Personnel actions
Personnel files
Info

system

Report
Employee
Organizational entity (Headcount changes, headcount
development, salary accounting to seniority, assignment to
wage level)
Age/gender

Setting

Define organizational unit

Define positions
Define jobs

Recruitment and Selection

Transactions

enable the advertising of position

vacancies, the identification of recruitment sources,
and the hiring of employees.

Additionally,

qualifications required of vacant positions

can be matched with the qualifications of applicants to
facilitate decision making in the selection process.

This

functionality in SAP R/3 relates to recruitment

and selection in HCM.

Personal Development
Pertains

to performance appraisals, career and

succession planning, and career development.

Performance

appraisals help facilitate decisions

regarding promotions, merit pay, and terminations.

Transactions

in SAP R/3 relate to the typical HCM

practices associated with performance
management systems.

Benefits
Benefits

pertains to flexible spending

accounts, 401(k) plans, health care accounts,
as well as mechanisms to track costs of
benefits.

SAP

R/3 extend far beyond the typical benefits

required by law.

Compensation Management
It

is essential in promoting internal equity and

external competitiveness.

Features

of this application include job pricing,

reviewing salary surveys, and creating policies
and budgets.

HCM Process: Compensation & Benefits

Compensation

once was

is not the cut-and-dry subject it

Past consisted of an employee's base salary or, at

most, a base salary and commission.
Today - looked at as compensation packages; including:

salaries, stock options

employee stock ownership plans
pay-for-performance plans
bonuses, profit sharing
commissions, non-cash rewards
variable pay, and much more.

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

19

HCM Process: Compensation

Management
The

balancing of company interests to operate

within the company's fiscal budget and fairly paying
employees
key component of attracting, developing, retaining, and
rewarding high quality staff through wages and salaries
which are competitive in the labor markets

Compensation

Management is comprised of the

following components:

Job Pricing
Budgeting
Compensation Administration
Long-term Incentives

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

20

HCM Process: Benefits Administration

benefits

today are offered as a part of an employees

overall compensation package
this component allows a company great flexibility in
creating and maintaining individual packages for your
employees
Six international Plan Categories

Allows

for detailed company reporting

Benefit Plan Participation

Health Plan Costs
Employee Demographics
Benefits Election Analysis

Country

Specific Settings available

FSA, COBRA (US examples)

HIPPA Certificates

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

21

Payroll
Release

payroll
Start payroll process
Check payroll
Correction
Simulation
Follow up
Tax
Overpayment recovery
Bank transfer

HCM Process: Payroll

Administration
SAP

contains an international payroll driver

that is modified for each country
payroll is released for individual payroll areas
the run is for a specific group of employees and a
specific period of time
upon release all affected personnel records are
locked

will

generate an payroll results, and earning

statement, bank transfers and check
payments

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

23

HCM Process: Payroll

Administration
Payroll

Process

Determine Gross Amount

base pay and any other additional payment
overtime, sick pay, Christmas bonuses, special pay

Determine Deductions (Net Amount)

processes garnishments, deductions, taxes, and
benefits for employees
Federal/State Income Tax, Insurance (Health, Life),
Loans

Integration with Financial Accounting &

Controlling
G/L postings, payments processed, reports
available
January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

24

Overview of the Payroll Process

Payroll Accounting

Calculation of Remuneration Elements

Time Management
Shift

planning
Administration
Time data
Time evaluation
Work schedule
Incentive wages
Time sheet

28

HCM Process: Time

Management

supports

planning,
recording, and
evaluation of internal
employee time data
time data that would be
gathered and evaluated

hours worked
leave
illness
overtime
substitutions
business trips
conference, training

January 2007 (v1.0)

2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore
Group, LLC

29

HCM Process: Time Management

There

are multiple methods for data collection:

Time Administrators

Time Managers Workplace

Time Terminals

Cross Applications Time Sheet

Employee Self Service
Mobile Technology

January 2007 (v1.0)

2007 by SAP AG. All rights reserved. SAP University Alliance. The Rushmore
Group, LLC

30

HCM Process: Time Management

Time

collection will be used for:

payroll accounting
personnel cost analysis
internal cost allocations
invoicing
performance analysis
capacity availability
shift planning

January 2007 (v1.0)

2007 by SAP AG. All rights

reserved. SAP University Alliance.
The Rushmore Group, LLC

31

Time Management Process

Training and Event Management

It

involves the management of employee activities

associated with training, workshop attendance,
and other business-related events.

Information

on descriptions of programs,
prerequisites, and cost factors can be generated.

This

functionality in SAP R/3 relates to training and

development in HCM.

Travel Management
It

enables organizations to monitor the

controllable expense associated with travel,
training, and entertainment.

Employees

frequently travel on business, so

managing this expense is essential

Managers Desktop
It

is a tool which enables managers to access

employee information at a managers fingertips,
i.e., managers do not have to access menu paths
or transaction codes to retrieve employee
information. Rather, through decentralization of HR
tasks and responsibilities, managers can easily
access HR data of subordinates, both directly and
indirectly supervised, to perform administrative
and organizational tasks, and to make strategic
decisions

Business Process Integration

MM

Data
Master

FI

Rules

Org Data

FI MM HCM SD PP

FI

FI

MM

MM

PP

PP
SD
HCM

PP

SD

SD
HCM

CM

January 2008

H Alliances and
SAP AG - University
The Rushmore Group, LLC 2008. All
rights reserved.

36

Business Process Integration

Data
Master

Rules

Org Data

HCM

HCM

HCM

HCM
January 2008

SAP AG - University Alliances and

The Rushmore Group, LLC 2007. All
rights reserved.

37

Organizational Data in HCM

A

hierarchy in which the organizational

units in an enterprise are arranged
according to task and functions

Are
The

static data and are rarely changed

definition of organization units is a

fundamental step, it is a critical factor in
how the company will be structured

Structures of HCM
Enterprise

structure
Personnel structure
Organization structure

Structures of HCM

Enterprise Structure

Personnel Structure

Organizational Structure

Enterprise Structure
This

structure makes up the legal identity of the

company
Every employee in an organization is included in
the structure of his or her enterprise. The
Enterprise Structure sub-divides organizations
and employees according to factors relevant to
time management and payroll.
The Enterprise Structure is made up of the
following elements:

Client
Company Code
Personnel Area
Personnel Sub-area

Enterprise Structure (-continued)

Client

is the major organization criterion in

the system, and is a self-contained unit.

Client has technical structure feature

Personnel

data entered in a client can only be

accessed in that client.

Data
If

cannot be exchanged among clients.

employees change clients, data have to be recreated in that new client.

Enterprise Structure (-continued)

Company

code is an independent
accounting unit, and is also selfcontained.

set of accounts can be developed in the

company code, and financial statements such
as balance sheets and profit-and-loss
statements are created at this level.

Enterprise Structure (-continued)

Personnel

area represents the company and

country version for payroll view.

It

used primarily in personnel administration, is

unique within a client, and is a sub-division of the
company code based on locations or divisions.

It

serves as a selection criterion for reporting,

constitutes a unit in authorization checks, and
allows one to generate default values for data
entry, e.g., for the payroll accounting area.

Enterprise Structure (-continued)

Personnel

sub-area represents the location and

public holiday calendar view.
It is subdivision of a personnel area (such as a
department), and identifies groupings of employees
assigned to a particular personnel area or company
code.
It is the level at which the primary organizational
aspects of human resources are controlled. Its
functions include specifying a country grouping, setting
groupings for time management so that work schedules
can be set up for individual personnel sub-areas,
generating a default pay scale type and area for basic
pay.

sub-area must be unique to a company code

Enterprise Structure

Enterprise Structure

Enterprise Structure: Global

Bike Group
Global Bike Group

Global Bike US

Marketing & Sales

Administration

Security

Global Bike
Germany

Aministration &
Financials

Financials

Operations

Personnel Structure
This

structure sub-divides organizations

and employees according to factors
relevant to time management and payroll.

The

Personnel Structure is made up of the

following elements:
Employee Group
Employee Subgroup
Payroll Area

Personnel Structure (-continued)

Employee

group is the highest level, and

defines the relationship between an employee
and a company in terms of work, i.e., active
employees, pensioners, and early retirees.
These groups can be differentiated further. For
example, an active employee may also be a
trainee, an hourly wage earner, a salaried
employee, etc.
The principal functions of the employee group
include generating default values for payroll
accounting area and basic pay, serving as a
selection criterion for reporting, and serving as a
unit in authorization checking.

Personnel Structure (-continued)

Employee

sub-group enables distinguishing

among employees specifically with regard to
their status. For example, active employees may
be classified as a trainee, hourly wage earner, non
pay-scale employee, salaried employee, etc.

Functions

include allowing different payroll

procedures for different employee subgroups,
controlling the validity of wage types on an
employee sub-group level, and defining the
validity of work schedules, attendance and
absence quotas.

Personnel Structure

Personnel Structure: Elements

Payroll

Area

It groups employees together that are paid the

same (time)
Weekly, Bi-Weekly, Monthly

The payroll area is determined from a

combination of the Employee Group and
Employee Subgroup
number of employees in the payroll run
specific dates of the payroll run

Organization Structure in HCM

The

organizational structure and plan is the

comprehensive model of the structural and
personnel environment in the enterprise, with
hierarchies and reporting relationships clearly
defined.
Hierarchies and reporting relationships are
determined once object types are created.
Typical object types include

organizational units,
jobs,
positions,
tasks, and
persons.

Organizational Structure
Using organization and planning, you can get a clear picture of
your organization at any point in time: past, present or future.
With this information, you can be proactive in planning for future
human resource needs.

Organizational Structure: Pen Inc

Organizational Units

Position

Person

January 2007 (v1.0)

Organization Structure (-continued)

Organizational

units reflect the various

business units or departments in the
enterprise.
Several organizational units can be created, and
they must be related to one another in an
organizational plan. They can be defined as
functional, divisional, or geographical departments,
or as project groups.
An example of a functional structure would include
accounting, sales, human resources, and
manufacturing departments.

Organization Structure (-continued)

Jobs

reflect the tasks, duties and

responsibilities of the work being performed
in the organization.

Typically,

they are grouped in terms of the

similarity of tasks being performed, and are more
generic in nature. Some examples include analyst,
specialist, manager, and supervisor.

Organization Structure (-continued)

Positions

are more specific than jobs, and all

of the information stored in a job is inherited
by all of the positions created from the job.

Positions

reflect individual employee assignments,

and are occupied by persons.

Examples

of positions include Accounting Analyst,

Logistics Specialist, Compensation and Benefits
Manager, and Production Supervisor.

Organization Structure (-continued)

Persons

are assigned to positions in the

organizational structure, and generally
represent the employees in the company.

For

example, Ross Quarles may be the Accounting

Analyst, Fawzi Noman may be the Logistics
Specialist, Kathy Utecht may be the Compensation
& Benefits Manager, and High Asa Kite may be the
Production Supervisor.

Organization Structure (-continued)

Tasks

are the individual duties and

responsibilities undertaken by employees in
their positions, as reflected in their job
descriptions.

Examples

of tasks include prepares accounting

reports, maintains warehouse inventory,
reviews salary surveys, and oversees
production scheduling.

Organizational Structure

Integration of Org. Mgt. with Personnel

Admin.

Integration of Org. Management with

Personnel Admin.

HCM: Master Data

Master

data is relatively fixed

Record that contains all the necessary information to

conduct business transactions
Information within a master record can and will change, our
hope is that it does not change frequently.

Before

making the master data

configurations, you must have completely
defined the organizational structures

HCM: Master Data Master Data

A vast amount of HR data can be maintained in SAP R/3.

Personnel data provide the basis for various HR transaction
processing and reporting. Hence, its accuracy, timeliness,
relevance, and completeness are crucial.

While most data may be housed in an HR departments

information system, it is important that data that pertaining
to an overall HR information system be included.

Typically, the data pertains to employee information which

is entered into the system using

infotypes (types of information) and

HR Master Database which stores Infotypes.

HCM: Master Data (-continued)

Infotypes

categorize information and enable

data input, i.e., they are data entry screens
which allow the entering of various types of
information into data fields.

Similar

types of information can be grouped by

content to facilitate data entry.

Infotypes

can be processed individually or through

the fast entry mode (entering specific data for
several employees at once).

HCM: Master Data (-continued)

Processing

of infotypes may include creating

(creating a new record with beginning and end
dates), changing (changing or correcting a record),
copying (using the initial record as a template),
delimiting (upon entering a delimitation date,
records valid for that date are selected, and then
setting the end date for that record to the day
before the delimitation date), and displaying
(viewing but not changing records).

There

are over 600 HR infotypes used to maintain

employee and applicant data, and the number,
types, and settings of infotypes can be customized
to fit the business requirements of the company

HCM: Master Data (-continued)

HR

Master Database is where HR data are

stored. Typically, employee information is
stored in a personnel file which can be
accessed by entering the employees
assigned personnel number (usually generated
internally by the system).

Several

records of information on an employee can

be reviewed, such as organizational assignment,
basic pay, addresses, travel preferences, planned
working time, etc.

HCM: Master Data (-continued)

Information

can also be retrieved in a relational

database format by accessing specific infotypes.

For

example, if a manager wants to review the basic

pay of an employee, the manager does not have to
access the personnel file and review all of the records
until basic pay is reached. Rather, the basic pay
infotype (i.e., 0008) can be accessed directly so that
only that information is retrieved.

HCM: Master Data - Employee Data

Information

must be recorded and

maintained effectively for every employee
Infotypes (Information Types) are units of
information that aid in the entry of master data
and group like information together

Status

of the Employee will determine

what information should be gathered
Active vs. Intern
Exempt vs. Non-exempt

Employee Data: Infotypes

Numerous infotypes will be created for each employee
Organizational Assignment must be the first infotype recorded

Employee Data: Infosubtypes

Certain

data that is entered in an infotype can

trigger the need for a infosubtype
ex. Family Member/Dependents

If you enter that you are married or have children it will

generate the need for a spouse/child infosubtype to capture
the information about the spouse or child(ren)

Subtypes

also allow you to account for time

constraints

Different addresses may be current at the same time

Permanent Residence
Temporary Residence
Home address

Employee Data: Personnel Actions

Personnel

actions are a series of

predefined infotypes that are grouped
together to speed the data entry process
Hiring, Firing, Reassignment, Retiring would
all be examples of procedures that could be
represented by a Personnel action

Personnel

Actions enable users to enter

information about an employee without
having to access each individual infotype

Personnel File
Information maintained about an employee is stored in their
Personnel File

HCM: Employee Lifecycle

Birth

Death (Retire)

Work

January 2007 (v1.0)

Taxes

HCM: Process/Functions
Hire
Employee

Recruitment

Training and
Development
Cost Planning
Reporting

ESS
Employee
Self-Service

Payroll
Administration

Manage Work
Time (CATS)

Compensation
& Benefits

SAP GBI Client, Userid, Password

SAP Exercises HW7 & HW8:
Description: SAP BASEL Fall 2013
Application server:

basel.cob.csuchico.edu

Instance number: 26
System ID: BAS

Client: 270
Userid: gbi-012 to gbi-050
Initial password: SAP4US

Exercises: (due date 10/5/2013)

HCM
HCM
HCM
HCM
HCM
HCM
HCM
HCM
HCM
HCM

1: Display Organization Plan.

2: Display personnel master record
3: Create positions
4: Create Career
5: Define requirement
6: Hire employee
7: Display organizational plan
8: Post job advertisement
9: Enter applicant master data
10: Prepare hiring