Compensation settings
Overview
Compensation settings control how FTE Tree turns FTE, wage rates, adjustments, and pay ranges into planning cost. The main settings are annual hours per FTE, pay grades, and pay ranges.
Annual hours per FTE converts FTE and wage rates into annualized position and assigned cost. Pay grades provide salary or wage ranges that can be attached to job codes and used when reviewing position or employee wage rates.
Access needed
| Activity | Access needed |
|---|---|
| Configure annual hours per FTE | Configure position settings |
| Configure pay grades | Manage pay grades |
| Attach pay grades to job codes | Manage job codes |
| Review compensation output | View positions, View employees, or Run reports depending on the page |
| Access setup | See Permissions and roles. |
Annual hours per FTE
Annual hours per FTE controls how hourly wage rates become annualized costs. Most organizations use one of two setup patterns.
When configuring FTE Tree to calculate annual position costs based on an hourly wage rate, choose how many hours FTE Tree should multiply by the base hourly wage to arrive at an annual total. A common value is 2,080 hours, representing 40 hours per week for 52 weeks. In a leap year, your organization may choose 2,088 hours if that matches your compensation or budgeting policy.
If your source data stores annual rates, enter the annual wage rate as the base wage rate and set annual hours per FTE to 1. This makes the base wage rate behave as the annualized amount. For this setup, enter position adjustments using the same annual-rate basis.
Annual hours per FTE is effective-dated. Enter a new row only when your organization's annualization policy changes. Report allocation is separate: reports allocate the already annualized cost across the selected date range using the selected cost allocation method.
Annual hours examples
| Setup | Base wage rate | Annual hours per FTE | Annualized cost before FTE |
|---|---|---|---|
| Standard hourly setup | $30.00 hourly |
2,080 |
$62,400.00 |
| Leap-year hourly setup | $30.00 hourly |
2,088 |
$62,640.00 |
| Annual-rate setup | $80,000.00 annual |
1 |
$80,000.00 |
After annualization, FTE applies to the cost. A 0.5000 FTE position using a $62,400.00 annualized rate produces $31,200.00 before adjustments.
If annual hours changes during a report period, reports can split the period and apply the correct annual hours to each portion of the period.
Pay grades
Pay grades define salary or wage ranges that can be attached to job codes. They support pay-range comparison by showing where a position or employee base wage rate falls within the expected range.
Each pay grade has effective-dated range entries. A range entry includes a minimum value and maximum value. Use new effective-dated entries when a pay range changes over time rather than overwriting the old range.
To use a pay grade, attach it to the appropriate job code historical details. When a pay grade is assigned, FTE Tree can display range penetration for the position or employee base wage rate when wage and pay-grade data are available.
Pay grades do not set the position wage by themselves. They provide a comparison range. The wage source still comes from the position, assigned employee, or job-code default according to the calculation being reviewed.
Pay range review
Pay range review helps users answer questions such as:
- Is the position or employee wage below the configured minimum?
- Is the wage above the configured maximum?
- Where does the wage sit within the range?
- Did the expected range change on a different effective date?
Keep pay-grade entries effective-dated when ranges change. Do not overwrite an old range if users still need reports or Activity history to explain earlier decisions.
Setup order
A practical compensation setup order is:
- Confirm annual hours per FTE for the organization's compensation policy.
- Create pay grades and effective-dated range entries.
- Create or update job codes.
- Attach pay grades and default wages to job-code historical details when applicable.
- Configure position adjustment types.
- Review a sample position and assigned employee before importing large data sets.
This order helps calculations, reports, and pay-range comparisons use complete setup from the beginning.
How these settings affect calculations
Annual hours per FTE, position wage rates, employee wage rates, job-code default wage rates, pay grades, pay ranges, and adjustments all affect different parts of compensation review.
FTE is entered on the position. Annual hours affects annualized cost. Wage sources determine the base rate used for position cost or assigned cost. Pay grades do not replace a wage source; they provide a range for comparison. Position adjustments can then modify FTE, wage rate, or annual cost depending on the adjustment type.
For worked examples of hourly setup, annual-rate setup, effective-dated hours, wage-source priority, adjustments, and report allocation, see Position cost math and examples.
Common checks
If compensation output looks unexpected, review:
- Whether the selected effective date has an annual hours row.
- Whether the base wage rate is hourly or annual in your source data.
- Whether the position has its own wage rate.
- Whether the assigned employee has an active wage rate for the date being reviewed.
- Whether the job code has an effective default wage.
- Whether the pay grade range is attached to the job code for the effective date.
- Whether position adjustments apply to FTE, wage rate, annual cost, or total cost.