This article outlines all the steps admins need to perform to set up, launch and end the compensation review cycle. 

Before you start

A compensation admin can set up and run a compensation cycle. A cycle admin can:

• Create, edit, and delete a cycle in the draft state
• Grant and revoke cycle manager and cycle viewer access.
• Close, complete, and archive cycles and update salaries
• View generated reward letters if view rights to the relevant document category are given. 
• Edit the effective date for an entire cycle or individual employees via the Worksheet or People list.

To access the Compensation area and manage a Compensation Review Cycle, you must have the necessary permissions.

To set up the permissions:

1. Go to Settings.
2. In the People section, click Roles & permissions.
3. Click the relevant role.
4. Click Compensation Management.
5. Next to the Edit column, select All.

Note
Employees with editing rights for the Compensation area can view salary information for all eligible employees.

Set up a compensation review cycle as an admin

Create a new compensation review cycle  

1. Click Compensation in the main navigation bar.
2. Click Create cycle.
3. Enter a unique cycle name. You can rename the cycle via the three dots in the left-hand corner before starting it.
4. Fill out all the review cycle settings, described in detail below.
5. When everything is ready, click Launch cycle. 

Set up your job architecture before starting a compensation cycle to ensure salary bands are visible in the Worksheet.

Add participants to the compensation cycle

After creating the cycle, select your eligible employees. To be eligible, an employee must:

• Be active
• Have an assigned supervisor
• Have a monthly salary. Employees on an hourly salary cannot take part in a compensation cycle.

Selected employees

With this option, you can select specific employees to include in or exclude from your compensation cycle. Follow the steps below:

1. Go to the Participants list. Check the box in the top left to select all employees. To select only specific employees, check the box to the left of the relevant employees' names. To exclude employees from the cycle, leave them unmarked. 
2. Switch to the Ineligible employees tab to review all ineligible employees. Refer to the Reason tab to see why the employee is ineligible. If you update missing information in an employee profile, restart the compensation cycle to include any ineligible employees.
3. Click Next to continue with the next steps.

Selected group

Using this option, you can create a group of all eligible employees. Follow these steps:

1. Click Modify list.
2. To narrow down the filter, select Employment type, Legal entity, Department and Workplace.
3. Fill out the Start date after and the Start date before fields for the group.
4. Fill out the Date of last salary increase after and Date of last increase before fields if you want to narrow down employees who haven't received a base salary increase within a specific timeframe.
5. Click Apply and Next to continue with the next steps.

Note:
Before selecting all your eligible employees, ensure all salaries are up-to-date in the employee profiles. Once the list of eligible employees is set, any changes to employee salaries will not be reflected in the review cycle.

Set approval chain

You can select the supervisors to propose and approve salary increases. When you remove a supervisor, their direct and indirect reports are automatically assigned to the next supervisor in the approval chain.

Once the supervisor is excluded, they will not be able to:

• View the compensation cycle in the cycle list
• Access the worksheet in the cycle
• View salary proposals for their direct reports
• Receive any notifications

To exclude the supervisor in a compensation cycle, follow the next steps:

1. Go to the Approvers list.
2. Unselect the toggle next to the name of the supervisor to be excluded.
3. Click Next to continue with the next steps.

Note:
If an employee is added to the eligibility list, subsequently their supervisor will also be added to the approval flow. The newly added supervisor is enabled in the approval automatically. However, when an employee is added to the eligibility list and their supervisor was previously removed, that supervisor stays removed from the approval flow of that compensation cycle.

You can also revert the changes by following the above steps and selecting the toggle in front of the supervisor’s name. The changes can be reverted only as long as the cycle is in the draft state. You cannot change the approval flow once the cycle is started.

Performance ratings

In Performance rating, specify if supervisors in your company can see information about employees' performance when proposing salary increases. If yes, follow these steps:

1. Download the template file.
2. Fill in the performance rating column for each eligible employee. The download file is available in .csv format. 
3. Elaborate on the performance rating in 40 characters.
4. Upload the edited template file to see the full list of eligible employees with their performance ratings.
5. Click Next to continue with the next steps.

Note:
If you delete the list of eligible employees, you will also lose the imported data on employee performance ratings.

Compensation types

In the Compensation types section, you can specify the effective date for base salaries, target goal bonuses, or one-time compensations to decide when salary changes apply. Follow these steps:

On-target earnings

Base salary

1. The base salary is automatically preselected. You can’t make changes, since the base salary is the base of the compensation cycle.
2. Select a specific Effective date.
3. Click Next or select another compensation type.

Target goal bonus

In Target goal bonus, define whether supervisors can propose changes in amounts or add a goal-based compensation bonus for their employees. If yes, follow these steps:

1. Go to Target goal bonus.
2. Activate the toggle.
3. Select a specific Effective date.
4. Click Next or select another compensation type.

Note:
Note that variable bonuses are not supported as a compensation type.

Other compensation types

One-time compensation

When reviewing their employees' salaries, supervisors can choose a single one-time compensation type per employee. In One-time compensation, define if supervisors in your company can grant employees a one-time compensation component, in addition to the salary increase. If yes, follow these steps:

1. Go to One-time compensation.
2. Activate the toggle.
3. Select the relevant one-time compensation type, or create a new one.
4. By default, the name of the cycle will be added as a comment to the one-time compensation type that is visible through Employee profile > Salary tab > One-time compensation, once the compensation review cycle ends, the salaries get updated. You can edit the comment to add a custom comment.
5. Select a specific Effective date.
6. Click Next to continue with the next steps.

Note:
Recurring compensation types and Additional pay are currently not available for selection. It is also not possible for supervisors to select more than one one-time compensation type per employee in the Worksheet.

 

Exchange rates

Set up your cycle's main currency and exchange rates

Follow these steps to set up the currency settings for your compensation cycle:

1. Under Cycle’s main currency, review the automatically selected main currency (for example, EUR).
2. Under Exchange rates, enter the conversion rate for each currency.
3. Click Next to continue with the next steps.

Budget and guidelines

Add a budget to your cycle

You can add a budget to your cycle. The budget will be set in the relevant cycle currency. You can set a budget only for the base fixed salary. The calculated budget is based on FTE or effective salary.

To run a cycle with a budget, follow these steps:

1. Click Set.
2. In Calculate budget based on, choose between Full-time salaries (100%) and Effective salaries (Part-time salaries).
   • Full-time salaries: the budget is calculated based on the full-time equivalent of eligible employees’ annual salaries. If an employee has a monthly salary, the annual salary will be calculated by multiplying the monthly salary by 12.
   • Effective salaries: the budget is calculated considering the employee's work schedule. For example: if someone only works 80% and their full-time salary is 100,000 euros, then the employee's effective salary is 80,000 euros.
3. In Set a budget using, choose between Guidelines and Fixed total raise budget. Both options are described below.
4. Click Save and Next to move to the next steps.

Set budget using guidelines 

If the budget follows the guidelines, the admin creates one or more guidelines to allocate the total budget to employees. Based on these set guidelines, supervisors see a suggested raise per employee in their worksheet.

Guidelines are based on workplace, department, or performance ratings. The admin can also set several guidelines that are added together.

For example, all Munich-based employees get an evenly distributed 2% increase. A second guideline states all the employees with Outstanding performance ratings get a 5% increase. Thus, the suggested raise for an employee named John, who is based in Munich with an Outstanding Performance rating, is a total of 7%.

If you select Guidelines, follow these steps to create a budget based on the guidelines:

1. Click Set budget using > Guidelines.
2. Click Add Guidelines and choose an attribute you want to set up a guideline for. You can set up a guideline for one, two, or all three attributes.
3. For each row, enter the percentage or amount of increase.
4. You can view the total Budget amount in the Subtotal section.
5. Click Save.

Note:
You will be able to edit the list or delete the budget and start the budget setup process again, as long as the cycle has not been started. If you would rather not start the cycle right away, you can always save and exit the cycle, and start it at a later point in time.

Set budget using Fixed total raise budget

You can set the budget as an average raise percentage or a global absolute amount. If you add a global budget amount, the system calculates the average percent increase for all eligible employees automatically based on the total budget amount and the sum of all their salaries.

If you enter the budget amount, the percent is calculated by dividing the total sum of the eligible employee's salaries (Base, yearly, FTE) by the budgeted amount.

If you enter a percent, the budget amount is calculated by applying the percent to the total sum of the eligible employee's salaries (Base, yearly, FTE).

If you select Fixed total raise budget, follow these steps:

1. Select if you want to enter a percentage or an amount by using the Set by % toggle. When you enter the percentage in the Average raise field, you can see the amount automatically populated under Budget Amount.
2. Select the Display budget to supervisors option if you want the supervisors to view the budget based on the combined base salaries of their eligible direct and indirect reports.

Note:
If you set a budget before defining the list of eligible employees, the calculations will be done once the list has been created. You will be able to edit the list or delete the budget and start the budget setup process again, as long as the cycle has not been started. If you would rather not start the cycle right away, you can always save and exit the cycle, and start it at a later point in time.

Once you have defined the cycle, click Back to Cycles to get back to the cycle list. The list includes all current and past cycles:

• Current cycles include all cycles with a Draft or Open status.
• Past cycles include all cycles with a Closed or Completed status. 

Worksheet attributes

Customize worksheets

You can customize the worksheet by selecting which attributes to include and arranging them in your preferred order. This customization helps you tailor the worksheet to fit the specific needs of your organization and employees. To adjust the worksheet template, follow these steps:

1. Go to Selected attributes.
2. Select the desired attributes and rearrange them as needed.
3. Click Save.

Launch a compensation review cycle as an admin

1. Start a compensation review cycle 

Click Start cycle to start the cycle.

Once you start the Cycle, supervisors will be able to suggest updates to their direct and indirect reports’ salaries via their dedicated worksheets. They can view and edit their direct and indirect employees’ base salaries, even if they have no access to the salary information in the employees’ Salary tab.

If attributes relevant to the employee’s eligibility have changed (example: currency), then these changes need to be reviewed. Employees might need to be marked as ineligible before being able to start the cycle.

Note:
Once the Cycle has been started, you will not be able to delete it, nor to change its settings (Cycle name, eligibility, or budget). However, you will be able to archive it so that it no longer appears on the Compensation Review Cycles page, and will no longer be accessible. This action cannot be reverted.

2. Review and edit the supervisors' salary increase proposals

As an Administrator, you can both review and edit salary increase proposals after the supervisors have submitted their Worksheets. You can view the supervisors' total allocated budget for all of their reports.

To review the supervisors' proposals, follow these steps:

1. Click Compensation in the main navigation bar.

2. In Compensation review cycles, select the respective open cycle and click Manage cycle > Worksheet overview to see the progress on the supervisor's end, and to review their salary increase proposals. The supervisors are listed following the hierarchy of the Personio Org Chart. By clicking on a supervisor, you will see the supervisors below them. The status shows whether the status is still Pending or if the worksheet has been Submitted. If you only want to see the Pending worksheets, you can use the filter to customize your view.

   Tip:
   Both the Worksheet overview and the Employee list show the Company budget and indicate how much of the budget has been spent across the company for both salary increases and one-time compensations. If no budget has been set for this cycle, you will see the total amount of proposed salary increases once they are submitted. Click on the Over budget filter to see submitted worksheets that are over budget.

3. Scroll down to a specific supervisor, and click on Worksheet to access their individual worksheet, and see a detailed view of their proposed salaries for both their direct and indirect reports. There, you will also find the supervisor's Org budget (for their direct and indirect reports) and the supervisor's Direct report budget (for their direct reports only).

To edit the supervisors' proposals, follow these steps:

1. Click Compensation in the main navigation bar.
2. In Compensation review cycles, select the respective open cycle and click Manage cycle > Employee list to access to an overview of all employees who are eligible for the cycle, and to actually edit their proposed new salaries. The list displays all the employees whose salaries are being reviewed, and so it also includes the supervisors who are managed by other supervisors.
3. Scroll down to a specific employee, and review the value for the different columns.
4. Once you have finished the review process, click Submit worksheet. You must enter a value (an increase or a zero) for every eligible employee to submit your worksheet.
5. The widget above the table shows the total salary increase given for the supervisor's reports. You will also see if the budget is based on full-time salaries (100%) or effective salaries (part-time salaries). Even if the budget is based on effective salaries, you will still see the full-time salary in the Current salary (100%) column for the employees who work part-time, as salary proposals are submitted based on full-time salary.
6. Finally, in Compensation review cycles, select the respective open cycle and click Review to access to My Worksheet. Here, you will be able to propose salary increases for your actual direct reports as an Administrator (for those who are eligible for a salary increase in this cycle).

7. Additionally, you can also add a note to the supervisors' worksheet to provide more context for your adjustments to the initial salary increase proposals. You can edit and delete these notes until you click Submit Worksheet.

8. Once you have edited all the relevant salaries, click Submit Worksheet. 

Once you have reviewed and edited the supervisors' proposals, you will be able to download a file with a summary of the salary increase proposals:

1. Click Compensation in the main navigation bar.
2. In Compensation review cycles, select the respective open cycle and click Manage cycle > Employee list.
3. Click on the button next to the Monthly – Yearly switch to download a .csv file. This file contains a summary of the salary change proposals (current fixed salary, increase in %, new fixed salary, performance ratings, etc.), as well as the additional notes left by both supervisors and Administrators. The file also contains data on the current effective salary, new effective salary, and full-time salary. This file allows you to report on insights, and to share them with other colleagues in the company, such as your Finance department. This file can also be downloaded once the Compensation Review Cycle has been ended and/or completed.

3. Submit a worksheet on behalf of a supervisor 

If a supervisor is unable to submit their worksheet, you can submit the worksheet on their behalf: 

1. Click Compensation in the main navigation bar.
2. In Compensation review cycles, select the respective open cycle and click Manage cycle > Worksheet overview.
3. Scroll down to a specific supervisor, and click on the icon next to Worksheet to edit the worksheet on behalf of the supervisor.
4. Confirm the submission, so that the worksheet status changes to Submitted.

5. Click Worksheet to review and edit the salary increase proposals on behalf of the supervisor. 

   Notes:
   Submitting a worksheet on behalf of a supervisor has the following consequences:
   
   ▶︎ All saved proposals by the original owner of the worksheet will be submitted.
   ▶︎ The original owner will lose edit access to the worksheet, but can still view the worksheet. 
   ▶︎ The salary proposals for the indirect reports of the original worksheet's owner will be either empty if no proposal has been saved by the lower level manager(s), or filled in with value saved or submitted by the lower level manager(s).

End a compensation review cycle as an admin

1. Close a compensation review cycle

Once all supervisors have completed and submitted their worksheets, you can close the compensation review cycle. Closing the compensation review cycle will remove the editing access from supervisors.

They will still be able to view their worksheets in a read-only format, but they will not be able to enter salary proposals or submit their worksheets anymore. 

To do so, follow these steps: 

1. Click on Compensation in the main navigation bar.
2. In Compensation review cycles, select the respective open cycle and click Manage cycle.
3. Click Close to Supervisors. 
4. Tick the checkbox to confirm and click Close cycle. 

Note:
If worksheet submissions are still pending, you can still close the cycle nonetheless. In this case, all worksheets, that have not been submitted, will be submitted with any saved salary proposals that have been entered by the supervisor. 

2. Complete the compensation review cycle 

Completing the compensation review cycle will lock all the proposed salary increases, and will remove the editing access from Administrators. You won't be able to make any further adjustments to the salary proposals. Supervisors will still be able to view their worksheets in a read-only format. 

To do so, follow these steps: 

1. Click on Compensation in the main navigation bar.
2. In Compensation review cycles, select the respective open cycle and click Manage cycle.
3. Click Complete cycle. 
4. Tick the checkbox to confirm and click Complete. 

3. Update salaries once the compensation review cycle is completed

As an Administrator, you can transfer the updated salary data to the relevant employees' profiles.

This way, the new salary information will automatically appear in the employees' Salary tab. 

To do so, follow these steps: 

1. Click on Compensation in the main navigation bar. 
2. In Compensation review cycles, select the respective open cycle and click Manage cycle.
3. Click Update salaries.

4. Confirm that you want to send the cycle’s data and click Update salaries. Once the salaries have been updated, you cannot make any further adjustments to this cycle. 

   Tip 
   Alternatively, you can also update the employee salaries via the Employee list or via the Import functionality, by uploading the .csv file previously downloaded through Compensation Review Cycle > Employee list.

5. Click on the button next to the Monthly – Yearly switch to download a .csv file. This file contains a summary of the salary change proposals (current fixed salary, increase in %, new fixed salary, etc.). This file allows you to report on insights, and to share them with other colleagues in the company, such as your Finance department. This file can also be downloaded once the Compensation Review Cycle has been ended and/or completed.

Open the .csv file with Excel or Google Sheets

Follow the instructions below to open the .csv file with either Microsoft Excel or Google Sheets.

With Microsoft Excel

• Select your file and click right > Open with > Microsoft Excel.
• In Excel, select column A.
• Go to Data > Convert Text to Columns.
• Choose the Delimited option and click on Next.
• Select Comma, click on Next, and then click on Finish.

With Google Sheets

• Open a new spreadsheet.
• Go to File > Import > Upload and select your export file.
• In the pop-up window, under separator type, select Comma.
• Click on Import data.

4. Create reward letters

As a Personio-Administrator, you can create rewards letters for employees, once a cycle is completed. Create a template using compensation placeholders beforehand and upload it to the document template section in Personio. Once uploaded, follow the next steps:

1. Click on Compensation in the main navigation bar.
2. In Compensation review cycles, select the respective open cycle and click Manage cycle.
3. Click on the Employee list tab to see all employees chosen in the cycle.
4. Select all employees for whom you want to create reward letters via the checkbox and click Create rewards letters.
5. In the document's preview under Templates, select the template, language, make necessary edits and click Next.
6. See which Variables are prefilled based on the persona's data for each attribute and click Next.
7. Under Details, insert a Name, File type and optionally a Document date before you click Next.
8. If the e-signature feature is activated, select the document signer, Email language, and optionally enter an Email message under Signature and click Next.
9. The final preview shows you the created document. Choose if you want to notify employees about the created document. Click Create documents to submit. 

Note:
As soon as reward letters are created, they will immediately be shared with the employees and can be found under the respective document category in the employee profile. If reward letters should be shown after salary conversations, we recommend deactivating the view rights for all employees for the respective document category and choose not to actively notify employees about the newly created document in the creation flow to prevent confusion. 

Tip:
Learn how to manage document categories and templates and refer to our article sample document templates to download to find examples about the usage of document templates, or use the sample reward letter attached in this article.

5. Archive the compensation review cycle 

Archiving the Compensation Review Cycle will remove the cycle entirely from the Compensation review cycles page. You will not be able to access it anymore. This action cannot be reverted.

To do so, follow these steps: 

1. Click on Compensation in the main navigation bar.
2. In Compensation review cycles, select the respective open cycle and click Manage cycle.
3. Click Archive cycle. 
4. Tick the checkbox to confirm and click Archive.