** Guidelines**

Definition

Guidelines determine how compensation awards are distributed. Guidelines are values of a range for compensation. Ranges can be a percentage, an amount, or a unit. Guidelines determine when to distribute the award, for example, the number of months between awards.

**Use**

Compensation awards are decided by
the manager. *Compensation Management* allows you to set
guidelines for compensation calculations, or set limits for the
manager’s recommendations.

**Structure**

Guidelines are defined in three different ways in the SAP R/3 System:

- Fixed
- Martix
- User-defined

**Fixed
Guidelines**

Compensation awards are calculated using a fixed percentage, fixed amount, or a fixed number.

**Matrix
Guidelines**

Compensation awards are calculated using matrices, or one or more criteria. Matrix guidelines are one dimensional, two dimensional, or three dimensional.

A one-dimensional matrix calculates the compensation award based on length of service. A three-dimensional matrix calculates compensation awards based on length of service, performance, and pay grade

**User-Defined
Guidelines**

These allow you to distribute compensation awards based on company policies that are not covered by fixed and matrix guidelines.

**Integration**

Guidelines provide calculating methods for the compensation administration process.