Set up annual hours and pay grades
Configure shared annual hours for financial calculations and dated pay grades and ranges for job codes.
Updated September 11, 2026
In this article
Compensation setup is included in Workforce Planning.
Annual hours support labor budget, actual compensation, and Forecast calculations. Pay grades and ranges provide reference information for job codes; they do not set employee pay. Position Control can use ordinary Currency custom fields, but they do not receive actual compensation access protections or participate in compensation calculations.
Before you begin
Annual hours require the Manage position setup permission. Pay grades, ranges, and other global pay setup require the Manage labor budgets permission for all departments. Actual employee compensation remains separate and requires the View actual compensation or Manage actual compensation permission.
Annual hours
Annual hours let FTE Tree compare or annualize an hourly amount. Enter the number of hours your organization uses for the applicable date; FTE Tree does not assume a value.
For an hourly unit rate, the basic annual calculation is:
Hourly rate × annual hours per FTE × assignment FTE
Example: hourly annualization
An employee has a $30 hourly rate, annual hours are 2,080, and the assignment is 0.7500 FTE.
$30 × 2,080 × 0.7500 = $46,800 annual cost
If annual hours are missing for the selected date, FTE Tree cannot complete this hourly calculation. It shows that the information is not available instead of assuming 2,080.
An hourly employee can have more than one assignment, but annual hours describe one full-time-equivalent year for the organization and date. FTE Tree multiplies the hourly rate by annual hours and then by each assignment’s FTE. Do not reduce annual hours to match a part-time assignment because assignment FTE performs that scaling.
Add a later dated value when the policy changes. Correct an existing value only when the recorded value or date was wrong. Work schedules can control adjustment eligibility; they do not replace the organization’s annual hours per FTE.
Example: a later policy change
The organization uses 2,080 annual hours through December 31 and 2,088 beginning January 1. Add a new value beginning January 1. Do not replace the earlier value, because past calculations must continue to use the hours that applied then.
When a value was entered incorrectly, use the correction action and record why. Remove a value only when it should never have existed.
Example: two part-time assignments
An employee has a $25 hourly pay entry, one 0.6000 FTE assignment, and one 0.2000 FTE assignment. Annual hours per FTE are 2,080.
The assignments have base annual costs of $25 × 2,080 × 0.6000 = $31,200 and $25 × 2,080 × 0.2000 = $10,400. The organization still records 2,080 annual hours, not separate values of 1,248 and 416.
Pay grades and ranges
Pay grades organize named compensation ranges. A range can include minimum, midpoint, maximum, basis, availability, and the date it begins. Attach the appropriate pay grade to the job code history when your organization uses them.
The minimum, midpoint, and maximum should be in ascending order and use the basis approved by your organization. A dated range allows a future policy to begin without rewriting an earlier range.
Example: dated pay range
The Analyst II grade has a $60,000 minimum, $72,000 midpoint, and $84,000 maximum through June 30. A revised range begins July 1 at $63,000, $75,000, and $87,000.
Add the July 1 range as a new dated period. A June report continues to use the earlier policy, and a July review can use the later range.
Pay grades describe ranges. They do not set a position budget rate or replace an employee compensation record.
Keep compensation concepts separate
| Information | Where it belongs |
|---|---|
| Annual hours used to annualize an hourly amount | Compensation setup |
| Named pay grade and dated range | Compensation setup and the applicable job code history |
| Planning rate for approved position capacity | Labor budget |
| Protected amount for an employee or assignment | Actual compensation |
| Reusable premium, stipend, or calculation policy | Pay adjustment rules, then a dated applied adjustment for compensation |
| Position FTE, department, job code, or work schedule | Position control |
Do not copy an employee’s amount into a pay grade, job code note, position field, or labor budget rate. Those areas have different audiences and meanings.
Set up compensation safely
- Confirm the organization policy and first effective date.
- Add annual hours before calculating hourly labor budget rates or actual compensation, including Forecast proposals that need hourly conversion.
- Create pay grade names that match the approved compensation program.
- Add dated ranges with the correct basis and ordered values.
- Make each grade available for the dates when it can be selected.
- Connect grades to job code history when your organization uses that relationship.
- Test one hourly and one annual example.
- Review access before adding protected employee amounts.
Position setup administrators can maintain annual hours and general position setup. Managing pay grades and ranges requires all-departments labor-budget management, and protected employee compensation still requires its separate financial permission.
Review after a change
Confirm the new value on its effective date, review any message about affected labor budget, compensation, or Forecast results, and check activity when you need to confirm who changed setup.
Review a date before and after the change. For annual hours, recalculate one hourly assignment independently. For a pay grade, confirm the expected range and job code connection. If results are updating, wait for the completed result before comparing totals.
Open Issues after an annual-hours change. A missing-annual-hours item clears only after a completed calculation confirms that the required dated value is now available. Then run a new Actual Compensation Snapshot for the affected date and verify the position result.