Understanding Oracle PeopleSoft Position Management

Posted on May 8, 2012 by Dennis Bortolus There has been a lot of confusion, particularly in the higher education world about Position Management and Commitment Accounting modules in Oracles PeopleSoft HCM suite. A good number of colleges have posed two questions to me lately: 1. How do we go about implementing Position Management? 2. What is Position Management? Position vs. Job Positions are generally associated with budgets. A manager will budget for one or more positions needed to carry out the duties of the department. Positions are classified by a Human Resource specialist. They select the right Job Code, Salary Grade and other attributes that drive how the employee is compensated or receives benefits. A Position, in PeopleSoft terms is sort of like an empty chair. You assign a title and a set of responsibilities to that chair and any person who occupies the chair inherits those attributes. The advantage of using a Position is that you can define the jobs in your department without having people in them. It also means that if one person leaves you can fill that position with a replacement without having to redefine all of those attributes. More advantages:

You can classify and define responsibilities and qualifications and reuse those attributes to recruit for new employees, drive performance reviews and do reporting You can assign a title to the position that differs from the Job Code Description which will reduce the need for so many Job Codes You can assign a Reports-To position as supervisor to each position which helps build your organization charts and more importantly, drive workflow You can budget for positions even when vacant (but there is no budgeting in position management)

A Job, in PeopleSoft terms is an employee assignment. That Job may be assigned to a Position but it also has information unique to the employee such as compensation rate. Upon hire or transfer to a Position, an employees Job record inherits certain attributes of the Position. Others, such as Reports to Position, exist only on the Position. Positions should not follow employees. The position belongs to the department (unless a re-org moves that function to department). The exception being if there is a natural progression for the employee and the position is re-classified. Example: Position title is Administrative Specialist I and you want to want to progress that person to an Administrative Specialist II. Unless you

have another position with that title that is vacant and you plan to replace the first one, you can just re-classify the existing position. Position Management vs. Commitment Accounting Commitment Accounting is a way to tie a budget to a position or a job. Most often, we use positions because the budget can exist even when the position is vacant. The Department Budget table is actually several tables and the word BUDGET is misleading. This is not a budget. It is a definition of where to distribution labor costs. The Budget is configured by defining either an amount or percentage of earnings that are funded by a Combination Code. A combo code is similar to what financial people call a Speed Type in that it represents a set of chart field values that are valid when used together. Advantages of using a Position Budget:

Funding can be tied to the position rather than the employee and is therefore reusable should the employee leave and a replacement is hired. The JOB record in HR does not have accounting information and a job that has complicated multiple funding sources can stay a single job rather than be split into multiple jobs Payroll, as with HR is simplified. A single pay line can be distributed many ways because there is no account data on the pay line Positions can be funded from any source, even combination codes that reference another department, reducing the need for multiple jobs All distribution processing is done Post-Payroll so adjustments and labor transfers are not part of the payroll process Retroactive changes to funding need not go through payroll there is a retro distribution module that will re-distribute a paycheck according to new funding sources

Encumbrance Encumbrance is a word that rarely comes up in the private sector. Most businesses create a budget and managers have to stick to them. In higher education and government, we like to encumber budgeted dollars so we dont spend them twice. Encumbrance is tricky at best. When you hire someone you encumber their salary, perhaps the cost of their benefits (employer share) and employer paid taxes. In the Higher Education world, compensation is paid in various ways that include heavy use of additional pay, which the program does not consider. Fringe benefits also get complicated as many Higher Ed institutions like to encumber (and expense) actual costs of benefits rather than a fringe charge (percentage of earnings).

Encumbrance Basics

Encumbrance is the locking of funds from your budget when you hire an employee. A Pre-Encumbrance is the locking of budget dollars for vacant positions. System uses employee Salary amount divided over specified funding sources to generate encumbrance Budget Cap field on the budget records is used only to restrict total amount distributed for salary and fringe Encumbrance amount on Position used for Pre-encumbrance only and there is an option to encumber by points in the salary grade range instead of using a fixed amount

Distributing Payroll Results The diagram below is a high-level (and yes, simplified, if you can believe that) overview of how Positions, Jobs and Budgets work with Payroll and Commitment Accounting to pay employees and distribute earnings (benefits and taxes work the same way but left out to keep the diagram simple).

Payroll and HR data is simplified while complexity of labor distribution is part of post-payroll processing. Fields in red on Job and Position tables are managed at the position level and inherited by the Job assignment of the incumbent employee.

The HR Accounting Line table can be fed into the Journal Generator if you use PeopleSoft GL. Conclusion The decision to use position management requires asking the right questions up front:

Will positions be used to help HR and Department managers manage their workforce and to help with recruiting? Will positions be used for security and workflow? Will positions be used for budgeting and labor distribution? (Requires Commitment Accounting not a real budgeting tool but can work with budget tools like Hyperion) Does your organization want to encumber position salaries and benefits?

There are more intricacies to position management like multiple headcount positions, employees holding multiple positions, position pools for budgeting, overriding commitment accounting, feeds to the Projects module and position profiles and those are some of the things you will have to cover when you decide that Position Management is right for you.