1) Structures:

a) Enterprise Structure:
Main Components of Enterprise Structure is Company Code, Personnel Area,
Personnel Sub Area.

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Company Code
A company code represents a legal entity of the organization. It has its own
accounting unit and is primarily used within the financial accounting module. It is
used in the HR module to identify which accounting unit employees belong to. A
company code is made up of a 4-character alphanumeric code.

Personnel Area

A personnel area is a subdivision of a company code and can represent a specific

entity or geographical location within the company. Each personnel area is assigned
to a company code. Similar to a company code, it is a 4-character alphanumeric
code.

Personnel Subarea

A personnel sub-area is a further subdivision which is assigned directly to the

personnel area. It serves as an additional grouping of the employees.

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On the initial screen of transaction code PA20, do the following:

1. Indicate a sample personnel number

2. Select the Organizational Assignment infotype (the green check means that there
is an existing record in the infotype)
3. Click on the details view (the glasses icon) to view the infotype record

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The enterprise structure details are grouped together within this screen as
highlighted below:

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The creation of a new company code in SAP is done via the customizing path below
in transaction code SPRO:

Enterprise Structure – Definition – Financial Accounting – Edit, Copy, Delete, Check

Company Code – Edit Company Code Data

To create a new company code click the New Entries button. Enter the following
information:

1. Company code number (4-digit alphanumeric key)

2. Company name (maximum 25-character legal entity name)
3. City
4. Country
5. Currency
6. Language

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Create Personnel Area

The creation of a new personnel area in SAP is done via the customizing path below
in transaction code SPRO:

Enterprise Structure – Definition – Human Resources Management – Personnel

Areas – Personnel areas

To create a new record, click the New Entries button. Enter the following
information:

1. Personnel area number (4-character alphanumeric code)

2. Personnel area text (description of the personnel area)
3. House number/street
4. PO box (if applicable)

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5. Postal code
6. City
7. Country key
8. Region (if applicable)
9. Country code (if applicable)
10. City code (if applicable)

Next, click on the envelop sign boxed in black above and enter additional contact
details as necessary. Available fields are shown below:

Assign Personnel Area to Company Code

Now that you have a company code and a personnel area, you must assign your personnel
area to a company code. There may be many personnel areas assigned to the same company
code, but you may not assign a personnel area to more than one company code.

This assignment is done via the customizing path below in transaction code SPRO:

Enterprise Structure – Assignment – Human Resources Management – Assignment of

Personnel Area to Company Code

When a new personnel area is created, it automatically exists as a line in this table. Locate the
personnel area you would like to link and enter the following details:
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1. Company code that the personnel area should be linked to
2. Country grouping to indicate which country the personnel area will be used in

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Create Personnel Subarea

A personnel subarea is created directly under the personnel area. Thus a personnel
area should exist prior to configuration of the subarea.

The creation of a new personnel subarea in SAP is done via the customizing path
below in transaction code SPRO:

Enterprise Structure – Definition – Human Resources Management – Personnel

Subareas – Create Personnel Subareas

Select the personnel area under which you would like to create new subareas. To
create a new record, click the New Entries button. Enter the following information:

1. Personnel subarea code (4-character alphanumeric code)

2. Personnel subarea text (15-character description of the subarea)

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Organizational Management:

Objects in SAP Organizational Management

Objects are used to represent organizational entities, such as organizational unit and
position. There are numerous standard object types which have been provided by
SAP. Every object type is designated by a one-character or two-character code. For
example, the code ‘S’ indicates the object type “Position”. Below are, what are
usually considered, the five most important object types in SAP Organizational
Management.

1. Position (S)

This object type is used to represent a post in the organization that can be occupied
by an employee. If you have gone through the Infotypes tutorial in Personnel
Administration, you would have come across this term there. In that tutorial, we
explained that a position is assigned to an employee in the Organizational
Assignment infotype. Hence, before hiring an employee, there must be a vacant
position to which the employee can be assigned.

A position can have any of the below statuses:

 Occupied – A position is considered occupied if there is an employee assigned to it.

 Unoccupied – A position is considered unoccupied if there is no employee assigned to it.
 Vacant – A position can be explicitly marked as vacant and this is mandatory if we want
to trigger the recruitment process.
 Obsolete – A position must be marked as obsolete if it is no longer required in the
organization.

2. Organizational Unit (O)

This object type is used to represent a functional unit in the organization, for
example, a Strategic Business Unit, a department or a project team.

Every position must be assigned to an Organizational unit. Employees are not

directly assigned to Organizational units. However, an employee is indirectly
assigned to an Organizational unit, by virtue of his/her assignment to a position. So,
for example, if an employee is assigned the Position “IT Manager”, and this position
is assigned to the Organizational Unit “Information Technology”, then the employee
is automatically assigned to the Organizational Unit “Information Technology”. The
Organizational unit assigned to an employee can be seen in the Organizational
Assignment infotype.
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3. Job (C)

A job represents a classification of functions in an organization. Several positions

can be linked to the same job. For example, the Positions “IT manager” and “HR
manager” may be linked to the same job “Manager”.

While positions are held by employees, jobs are not directly assigned to employees.
An employee is indirectly assigned to a job, by virtue of his/her assignment to a
position. So, for example, if an employee is assigned the Position “IT Manager”, and
this position is assigned to the job “Manager”, then the employee is automatically
assigned to the same job. The job assigned to an employee can be seen in the
Organizational Assignment infotype.

4. Person (P)

This object type represents an employee of the organization. In other words,

whenever an employee is hired in Personnel Administration, a “Person” object is
automatically created in SAP Organizational Management. The object id of each
Person object in SAP Organizational Management will be the same as the Personnel
number in Personnel Administration.

5. Cost Center (K)

Since Cost centers are created in SAP Controlling, this object type is considered as
an external object type. Cost centers can be linked to either Organizational units or
Positions in OM. If a cost center is assigned at the Organizational unit level, then it is
automatically inherited by all lower-level organizational units, positions, and
consequently, employees, within that Organizational unit.

If a cost center is assigned at the Position level, it is automatically inherited by the

employee(s) holding that position.

Relationships in SAP Organizational Management

Relationships are used to link two objects together. By creating relationships

between objects, you can display various significant structures in SAP
Organizational Management.

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For example, the relationships between organizational units (business units,
departments, groups or teams) result in the Organizational structure. The
relationships between positions (e.g., the Assistant Manager position “Reports to”
the Manager position) result in the Reporting structure.

b) Organizational Structure:

The organizational structure represents the functional structure of an organization.

The relationship of this structure is organizational unit to organizational unit.

Most companies have an organizational chart in place even before they implement
the SAP HCM module. This organizational chart reflects the segregation of tasks in
the enterprise. The level of detail that should be incorporated into the organizational
chart is a strategic HR decision. For example, while some companies use it to depict
the structure of business units and departments, others drill down further to
segregate project teams within a department.

In the sample organizational chart below, we have depicted a simple organizational

structure:

Sample Organizational Structure

Each square in the above figure represents an organizational unit of the enterprise.
The top-most organizational unit, XYZ Ltd., is called the root organizational unit. The
root organizational unit usually represents the parent company. In this example, the
next level depicts the departments of the organization. The lowest level depicts the

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teams within the HR department. Please note that a real organizational chart would
be much more complex.

Now, let us represent the above structure in terms of relationships between

organizational units. We can identify the following relationships:

 XYZ Ltd. is line supervisor of HR

 XYZ Ltd. is line supervisor of Finance
 XYZ Ltd. is line supervisor of Manufacturing
 HR is line supervisor of Talent Management
 HR is line supervisor of Time and Attendance
 HR is line supervisor of Payroll

The corresponding inverse relationships are:

 HR reports to XYZ Ltd.

 Finance reports to XYZ Ltd.
 Manufacturing reports to XYZ Ltd.
 Talent Management reports to HR
 Time and Attendance reports to HR
 Payroll reports to HR

Hence, we see that the organizational structure is nothing but a network of

relationships. Correctly defining these relationships in SAP is of the utmost
importance. For this reason, it is recommended that you whiteboard your
organizational structure before creating it in SAP.

Reporting Structure

The next of the SAP organizational management structures up for discussion is the
reporting structure. The reporting structure leverages position to position
relationships. By creating relationships between positions, we can depict SAP
organizational management structures in terms of A (reports to) or B (is line
supervisor of) relationships.

In the sample organizational chart below, we have depicted a simple reporting

structure:

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Sample Reporting Structure

Each box in the above example depicts a position. The below relationships exist
between these positions:

 HR Executive (2 positions) reports to Manager – HR

 Recruitment Executive reports to Manager – Recruitment
 Manager – HR reports to Chief Manager – HR
 Manager – Recruitment reports to Chief Manager – HR

The inverse relationships are:

 Manager – HR is line supervisor of HR Executive (2 positions)

 Manager – Recruitment is line supervisor of Recruitment Executive
 Chief Manager – HR is line supervisor of Manager – HR
 Chief Manager – HR is line supervisor of Manager – Recruitment

Business workflows will typically be designed such that the approver is identified
based on reporting structure. Consider the basic requirement of leave approval
workflow. In our example above, if the employee holding an HR Executive position
applies for leave, the workflow will determine the approver as the immediately higher
level of the reporting structure. Thus, the approver will be the employee holding
the Manager – HR position.

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Practically speaking, business workflow requirements vary considerably from one
organization to another. Even within an organization, workflows usually vary from
one business process to another. However, if the reporting structure is up-to-date, it
serves as a reliable basis for the design of workflows.

Staff Assignments

Staff assignments are the most detailed of the SAP organizational management
structures. They include the assignment of positions to organizational units as well
as the assignment of people, or holders to positions. Therefore, in a single view, you
can see the hierarchy of organizational units, as well as positions and employees
within those organizational units.

Build this structure by creating position to organizational unit relationships and

person to position relationships.

Position to Organizational Unit Relationships

A position can be assigned to an organizational unit A (belongs to) or B

(incorporates) relationships, depending on whether the relationship is bottom-up or
top-down. The A relationship between a position and an organizational unit can be
interpreted as, “The position belongs to the organizational unit”. The inverse B
relationship between the organizational unit and the position can be interpreted as,
“The organizational unit incorporates the position”.

You can also designate a position as the chief position of an organizational unit by
assigning a particular relationship between them. The A relationship between the
chief position and an organizational unit can be interpreted as, “The
position manages the organizational unit”. The inverse B relationship between the
organizational unit and the position can be interpreted as, “The organizational unit is
managed by the position”.

Person to Position Relationships

The holder relationship is used between a person and a position.

In the sample organizational chart below, we have depicted a simple staff

assignment structure:

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Staff Assignments Example

Here we see the Human Resources organizational unit which has three subordinate
organizational units – Talent Management, Payroll and Time and Attendance.
The Human Resources organizational unit also has one position, Chief Manager –
HR, directly under it. This position is occupied by the person Dirk Dennis.

We can also see that the Talent Management organizational unit has one
position, Manager – Talent Management, directly under it. This position is occupied
by the person Alice Yang.

Likewise, the Payroll organizational unit also has one position, Manager – Payroll,
under it. This position is occupied by the person Kathy Park.

Furthermore, the Time and Attendance organizational unit has one

position, Manager – T & A, directly under it. You can deduct from the structure that
this position is currently unoccupied.

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SAP HR Simple Maintenance allows the creation and maintenance of objects,
relationships and organizational plans with ease and efficiency. It is most suited to
set up the basic framework of an organizational structure, and to create several
objects (e.g. organizational units, positions) and relationships at one go.

To access SAP HR Simple Maintenance in Expert Mode, follow the below menu path
in the SAP Easy Access menu:

Human Resources – Organizational management – Expert mode – Simple

maintenance

This path has been depicted in Figure 1.

Figure 1: SAP HR Simple Maintenance – SAP Easy Access Path

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Creating an Organizational Structure

Assume we want to build a simple organizational plan for a company XYZ Ltd which
has an organizational structure as depicted in Figure 2.

Figure 2: Sample Organizational Chart

Let us see how we can build this structure in SAP. Each box you see in Figure 2 is
basically an organizational unit. By creating relationships between these
organizational units, we can build this organizational structure.

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Now, to create a new organizational structure, double click on the Simple
maintenance “Create” transaction highlighted in Figure 3. Alternatively, you can
directly enter the transaction code PPOC_OLD.

Figure 3: PPOC_OLD: Create

This takes you to the screen depicted in Figure 4.

Figure 4: Create Organizational Unit

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The creation of the organizational structure begins with the creation of the root
organizational unit. Hence, let us begin with the creation of the root organization unit, XYZ
Ltd. Enter the abbreviation (up to 12 characters) and name (up to 40 characters), as well as
the required validity start date, as we have illustrated in Figure 5. Then click on
the Create icon.

Figure 5: Create Organizational Unit XYZ Ltd.

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This will take us to the screen in Figure 6, where we can see the organizational unit
XYZ Limited has been created. You can also see that an 8-digit code has been
automatically assigned to this object. This code is known as the object ID and is
used to uniquely identify the object.

Figure 6: Change Organizational Structure

Next, we need to create the subordinate organizational units. As we can see in

Figure 2, we need to create three subordinate organizational units – HR, Finance
and Manufacturing.

To do this, place your cursor on the root organizational unit under which you need to
create the subordinate organizational units, and click on the Create icon that has
been highlighted in Figure 6.

On doing this, a pop-up screen will be displayed where you can enter the details of
the subordinate organizational units. You can see this in Figure 7. Click on
the Save icon.

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 Figure 7: Create
Subordinate Organizational Units

The three organizational units are then created with automatically generated unique
object IDs, as shown in Figure 8. In addition, the relationships between each of these
organizational units and the root organization unit also get automatically created.
This is the “Is line supervisor” relationship that has been highlighted in Figure 8.

Figure 8: Subordinate Organizational Units Created

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In the same way, let us create the next level of organizational units shown in Figure
2. Click on the organizational unit under which we need to create subordinate
organizational units. So, in this case, click on the “Human Resources” organizational
unit. Then click on the Create icon. In the pop-up that follows, enter the details of the
subordinate organizational units, as shown in Figure 9.

Figure 9: Creating
Subordinate Organizational Units

We have also highlighted the Period button in Figure 9. Use this button if you want
to change the validity of the organizational units or the relationships to be created. If
you do not explicitly change the validity, the newly created objects and relationships
will be assigned the same validity as the superior organizational unit under which
you are carrying out the creation.

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Once you save the data, the organizational units will be visible in the organizational
structure as shown in Figure 10.

Figure 10: New Organizational Units under Human Resources

With this, we have successfully mapped the organizational structure from Figure 2 in
SAP. You can click on the “Structural Graphics” icon that has been highlighted in
Figure 10 to view the organizational structure in the format depicted in Figure 11.

Figure 11: Organizational Structure

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Setting Up Staff Assignments

Let us now try to map the staff assignments within the human resources
organizational unit as shown in Figure 12.

Figure 12: Staff Assignments

To do this, we must first create positions under these organizational units. Double
click on the transaction highlighted in Figure 13. Alternatively execute the transaction
code PPOM_OLD. Note that here we use SAP HR Simple Maintenance “Change’
transaction, as opposed to the “Create” transaction used in the previous section. The
reason being, here we need to make changes to an already existing organizational
structure, while in the previous section, the aim was to create a new organizational
structure.

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Figure 13: PPOM_OLD: Change

The next screen is shown in Figure 14.

Figure 14: Change Organizational Plan

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Select the root organizational unit using the search help as shown in Figure 15.

Figure 15:
Organizational Unit Search Help

Once you select the organizational unit, the object id will be displayed. Click on
the Change icon highlighted in Figure 16.

Figure 16: Change Icon

This takes you to the screen in Figure 17. To proceed with the creation of positions,
you must click on the “Staff assignments” button which has been highlighted in the
screenshot.
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Figure 17: Change Organizational Structure

This takes you to the screen depicted in Figure 18.

Figure 18: Staff Assignments

Now, position the cursor on the organizational unit under which you want to create
positions.

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Let us begin with the creation of the Chief Manager – HR position. To create this,
position the cursor on the “Human Resources” organizational unit. Then click on
the Create positions icon that has been highlighted in Figure 18.

The following pop-up will be seen. Enter the necessary details as depicted in Figure
19. If your organization uses jobs, enter these details as well. Then click on
the Save icon.

Figure 19: Create

Positions

The position is created successfully as can be seen in Figure 20.

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Figure 20: Position Created Successfully

Similarly, create the other positions under the respective organizational units until
you arrive at the structure depicted in Figure 21.

Figure 21: Positions Created Successfully

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Figure 22: Organizational Structure with Positions

Now that we have created positions, we proceed to linking holders to the positions. It
is advisable to assign positions to employees in Personnel Administration,
via personnel actions like Hiring, Transfer, Promotion. The position is assigned to the
employee in the organizational assignment infotype.

However, this can also be done through SAP HR Simple maintenance as explained
below.

In the staff assignments screen, click on the position to which you want to assign a
holder. For example, let us position the cursor on the Chief Manager – HR position.
Click on the Assign holder button that has been highlighted in Figure 23.

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Figure 23: Assign Holder Button

You will see the pop-up as shown in Figure 24.

Figure 24:
Assign Holder Pop-up Screen

Using the search help in the ‘Name’ field, search for the employee Dirk Dennis, who,
as per Figure 12, must be assigned to this position. This is shown in Figure 25.

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 Figure 25: Search
Help

Once you locate the personnel number, assign it in the corresponding field as shown
in Figure 26. Also enter the correct validity period. Click on the Save icon.

Figure 26: Enter

Personnel Number

You can now see the holder assigned to the position as shown in Figure 27.

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Figure 27: Employee Assigned to Position

Similarly, assign the other holders until you see the staff assignments shown in
Figure 28.

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Figure 28: Holders Assigned

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Creating an Organizational Structure

Now that we have gained a basic understanding of the interface, let us proceed to
build an organizational structure using SAP Organization and Staffing. Let’s consider
the same example as in the Simple Maintenance tutorial. Assume we want to build
the organizational structure depicted in Figure 7.

Figure 7: Sample Organizational Structure

We have seen how to create this structure using Simple Maintenance. Now let us
see how we can build this structure using SAP Organization and Staffing.

To create a new organizational structure using Organization and Staffing, double

click on the Organization and Staffing “Create” transaction highlighted in Figure 8.
Alternatively, you can directly enter the transaction code PPOCE.

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Figure 8: Create a New Organizational Structure

This takes you to the pop-up screen depicted in Figure 9.

Figure 9:
Create Root Organizational Unit

Here you should enter the required validity period for the root organizational unit.
Then, hit Enter or Continue. This takes you to the screen in Figure 10.

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Figure 10: Organization and Staffing Create

In the above screenshot, we have highlighted the fields in which you must enter the
abbreviation and name of the organizational unit. You can look at Figure 11 where
we have illustrated this.

Figure 11: Enter Organizational Unit Abbreviation and Name

You can fill in data in the other tab pages as well, if you require to do so. For
example, assume you want to assign a company code, personnel area and
personnel subarea to this organizational unit. You can do this in the Account
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Assignment tab page, depicted in Figure 12. If you have browsed through the tutorial
on Infotype Maintenance in Expert mode, you may recollect that this information is
stored in the Accounts Assignment Infotype (Infotype 1008). This implies that you
can opt to maintain this information using that interface as well.

Figure 12: Account Assignment

Once you enter the desired details, click on the Save icon to save the newly created
organizational unit.

To create the subordinate organizational units, position the cursor on the root
organizational unit and click on the Create icon. The screen in Figure 13 will be
displayed. Here you should choose the appropriate relationship based on whether
you want to create a subordinate organizational unit or position.

Figure 13: Choose Relationship

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In this case, we want to create subordinate organizational units, hence select the first
relationship. This will take you to the screen in Figure 14, where you should enter the
required abbreviation, name and other details for the subordinate organizational unit.

Figure 14: Create HR Organizational Unit

Then, click the Save icon. In the Overview area, you will see the newly created
organizational unit (HR) shown in Figure 15. Similarly, create the other two
subordinate organizational units until you see the structure depicted in Figure 16.

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Figure 15: New Organizational Unit in Overview Area

Figure 16: Subordinate Organizational Units Created

Next, position the cursor on the HR organizational unit to create the next level of the
structure. Follow the same approach until you see the structure in Figure 17.

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Figure 17: Next level of Organizational Units

Setting Up Staff Assignments

Let us now try to map the staff assignments within the human resources
organizational unit as shown in Figure 18.

Figure 18: Staff Assignments

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To do this, we must first create positions under these organizational units. Position
the cursor on the organizational unit under which the position should be created. Let
us start by creating the “Chief Manager – HR” position under the Human Resources
organizational unit. So, we should position the cursor on the Human Resources
organizational unit and then click on the Create icon. Again, this takes us to the
Choose Relationship screen depicted in Figure 13. Now select the second
relationship. This will take you to the screen in Figure 19.

Figure 19: Create Position

In the Overview area, you can see an object “New position” created under Human
Resources. In the Detail area, enter the required abbreviation, name, and any other
details you would like to enter. Click on the Save icon. When you do this, the position
name gets reflected in the Overview area, as illustrated in Figure 20.

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Figure 20: Position Name Updated

In the same way, create the other positions until you see the structure in Figure 21.

Figure 21: Positions Created Along Structure

Next, we proceed to assign holders to the positions. It is advisable to assign

positions to employees in Personnel Administration via personnel actions like Hiring,
Transfer, Promotion. The position is assigned to the employee in the Organizational
assignment infotype. However, this can also be done through this interface as
explained below.
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Click on the position to which you want to assign a holder. For example, let us
position the cursor on the Chief Manager – HR position. Click on the Assign icon
that has been highlighted in Figure 22.

Figure 22: Assign Holder to Position

The pop-up depicted in Figure 23 appears. Here you can search for the employee
who must be assigned to the position.

Figure 23: Search for

Employee

Select the employee from the search results displayed in Figure 24. Click on Enter.

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Figure 24: Search Results

This takes you to the screen in Figure 25. You can assign the required validity dates
as well as the reason for the action.

Figure 25:
Assign Holder

The employee is now assigned to the position, you can see this in Figure 26.

Figure 26: Holder Assigned

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Similarly, assign the other holders to the respective positions until you arrive at the
structure in Figure 27.

Figure 27: Employees Assigned to Positions

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