Workforce Planning, Is It Right For Me?

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January 18th, 2012


Considering Hyperion Planning for Budgeting but still have to manually plan employee salaries and benefits?  Do economic conditions require you to constantly revise Headcount planning in your organization?  Do you want out-of-box solution with pre-built Logic, Web forms and calculations for Planning Salaries, Merit Pay, Bonus and Tax? Do you have a limited budget and/or time to implement an HR solution and must be able to justify ROI?

Whether you already use Hyperion Planning or want a low risk, first-time Planning application, Oracle Hyperion Workforce Planning can take the pain off budgeting for Payroll expenses and enhance your investment in Oracle EPM suite.

Application Overview

For most companies, workforce and workforce related expenses make up one of the biggest line items on their P&L company-wide.  In the current economic conditions, salaries and salary related expenses are even more scrutinized as companies are constantly challenged to cut operating expenses or more importantly get a better read on what makes up employee related costs and how best to forecast future trends.  This effort is often left to accountants and financial analysts who possess little insight into the HR function and employee costs other than the high level expenses booked to the general ledger.  The detail behind salaries and compensation expenses are often buried in the HR silos, disconnected spreadsheets and sub-ledgers in the hands of the operational managers and HR specialists.  To further complicate things, once they have consolidated all salary and associated workforce expenses, they still have the burden of integrating that data with general expense plans.

Thus, planners need a single financial planning solution that satisfy both general expense planning and detailed workforce-related expense plans.  In other words, Workforce Planning must be easily integrated with Operating Plans.  Additionally, a solution that can incorporate human resource information is better suited for making strategic planning of workforce and workforce related expenditure.

Oracle Hyperion Workforce Planning offers an out-of the box solution to integrate with other plan types, in Hyperion Planning architecture.  The term ‘out-of-the-box’ may be a misnomer, since no two companies or industries for that matter structure their planning application the same, in fact dimensionality of Planning application is highly customized for most companies.  Having said that, Workforce Planning offers a universal and pre-packaged set of Human Resource and Workforce drivers, measures and attributes.   For example, merit increases, categorization of employees (Regular, Temporary or Contractor), Overtime rules, payroll taxes and health plans are all common variables in any workforce budget.  The usual 80/20 rule applies here, if you can start with the framework already at 80%, the rest is a matter of customizing the application to suit the company’s business model.  Workforce Planning application, once installed is pre-loaded with a set of dimensions, accounts, web forms and business rules to calculate salaries and benefits.  A company might choose to add a Project dimension or a Brand dimension to meta-data or add and subtract input metrics for measuring performance or granting bonuses.

Key Features

  • Pre-built Dimensions, Menus, Member Formulas, Smart Lists, Business Rules and Web Forms
  • Headcount and Employee Expense
  • Modify existing employee Rates, Grades and other information
  • Add or plan for New and Open positions – To-be-Hired
  • Manage Headcount using Smart Lists to change Status of employees
  • Transfer employees and reconcile changes
  • Plan for benefits, merit raises and bonuses globally or using drivers
  • Pre-built common Payroll/HR metrics and Drivers
  • Status
  • Hire Date
  • FTE
  • Exempt/Non-exempt
  • Salary/Hourly
  • Tax Rates (FICA/FUTA/SUTA)
  • Decision Criterion on Customization

This perhaps is the most critical step in the implementation of any package software, and particularly true with regard to Workforce Planning.  Stakeholders and project coordinators must spend quality time defining the goals and then match them to requirements for a Workforce Planning implementation. A cost-benefit analysis is critical in determining how much customization is the right mix for each implementation, for example, carefully consider adding dimensions, as it impacts all web forms and calculations or if you’re not planning payroll taxes to the nth degree, there is no need to include these accounts.  There are some companies that may forgo Workforce Planning altogether and build it from ground up, but here is a bonus if you own Workforce, you can always reverse engineer member formulas and some other unique features of WFP to build your own Employee planning application!

Considerations, What-ifs and Other Brainstorming

  • Source data in HR applications, how is it structured
  • How much data cleansing is needed for HR data, for example, are job codes consistently applied
  • WFP does not replace the HR application, some summarization of employee groups, functions and positions always required
  • How are salaries budgeted for new hires, by default WFP uses midpoint by Grade level
  • Headcount, definition and how is accounted for?
  • Is Turnover budgeted for?  What are the formulae for turnover calculation?
  • Employee transfers – this is key feature in WFP – Business process around transfers must be defined
  • Merit increase and bonuses
  • Health Plans and the business rules around them
  • Financial calendar – WFP is built on a 12 month calendar, member formulas must be revised for others

About TopDown Team

The TopDown Team includes members of TopDown Consulting who want to let the community know about webcasts, conferences, and other events. The team also conducts interviews on various EPM industry topics.

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