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.


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.


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

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.


Guidelines provide calculating methods for the compensation administration process.