Oracle Human Capital Management

Enterprise Structures

ANFAL ALQUBISY
Enterprises
An enterprise is a collection of legal entities sharing common control and management.
Every enterprise has three fundamental structures that describe its operations and provide a basis for reporting.
• Legal
• Managerial
• Functional

The key components of the enterprise structure in Oracle Fusion HCM

include:

1. Legal Entity: The legal entity represents the legal organization or company that is recognized by law. It is the
highest level of the organizational hierarchy and is associated with a unique registration number, tax information, and
financial reporting.

2. Business Unit: Business units represent separate divisions, departments, or functional areas within a legal entity.
Each business unit can have its own independent set of employees, jobs, and positions.

3. Division: Divisions are used to group business units that share common characteristics or functions within a legal
entity. Divisions provide a way to further segment the workforce based on business requirements.

4. Department: Departments represent individual departments or teams within a business unit. Departments are
used to organize employees based on their functional roles or assignments.

5. Location: Locations represent physical locations or work sites where employees are based. Each location is
associated with an address and other relevant details.

6. Position: Positions represent specific roles within the organization and are linked to jobs. They define the
responsibilities and requirements for each role.

7. Job: Jobs represent a collection of similar positions that share the same duties and requirements. Jobs provide a
standardized way to categorize roles across the organization.

8. Grades and Steps: Grades and steps are used to define salary ranges and progression within a job or position.
When to Create Multiple Divisions in Oracle Fusion:

• Organizational Structure:
If your company operates in different departments or business units that require separate management but
are still part of the same overarching entity, you might create Divisions. This is useful when you need to
track financials, performance, and resources for specific business functions like sales, operations, or R&D.
• Financial and Reporting Requirements:
When different parts of the business need separate financial management or reporting (such as profit and
loss reporting, budgets, or cost tracking), you create Divisions to organize the data. Each division can be
linked to its own set of reporting codes, accounts, and financial structures.
• Regional or Geographic Separation:
If your company operates in multiple geographical regions or countries but under a single legal entity,
you may set up Divisions to manage region-specific operations. This helps ensure that financials, HR,
and operations are handled according to local needs while maintaining a unified organization.
• Product or Service Line Differentiation:
In cases where your business offers a variety of product lines or services that are managed independently,
you may want to create Divisions to reflect each product or service category. This allows for better
tracking of performance, costs, and revenue by product type.
• Decentralized Management:
When a company has multiple departments that require operational independence but still need to report
to a central authority (like finance or executive management), Divisions provide a way to segment the
business without creating entirely separate legal entities.
• Inter-Departmental Operations:
If there is a need to manage specific operational units (like manufacturing, logistics, or customer service)
separately within the same organization, setting up multiple Divisions allows each to operate with its
own structure, resources, and budget.
When should you create multiple Legal Entities in Oracle Fusion?

• Operating in Multiple Regions or Countries:

If your company operates in different countries or regions, and each country has distinct legal requirements
(such as tax laws, compliance regulations, and financial reporting), you would need to create separate Legal
Entities for each region or country.

• Compliance with Local Regulations:

Each Legal Entity may be required to follow the specific legal and regulatory requirements of its country.
For example, different tax rates, accounting standards, and labor laws across regions require separate
entities to handle local compliance independently.

• Independent Business Operations:

When your organization has multiple independent business operations, divisions, or units that need to be
accounted for separately (such as subsidiaries or departments with distinct financial operations), each Legal
Entity may be necessary for clarity and effective management.

• Multiple Currencies and Taxes:

In cases where different Legal Entities operate with different currencies or have different tax structures, it is
essential to create separate entities. This ensures accurate tax calculations and currency conversions for each
entity.

• Financial Reporting:
To generate financial statements, tax filings, or audit reports for individual business units, creating multiple
Legal Entities helps to structure the financial data properly according to legal requirements.

• Mergers and Acquisitions:

If your organization undergoes mergers, acquisitions, or restructures, each newly formed or acquired
business may be established as a separate Legal Entity within Oracle Fusion to keep operations distinct and
compliant.
When to Create Multiple Business Units in Oracle Fusion:

• Separation of Business Functions:

A Business Unit is typically used to represent a distinct function or operation within the organization. If
you have different departments such as sales, finance, or customer service that need their own sets of
processes, workflows, or reporting structures, you may create multiple Business Units to manage these
separately.
• Geographic or Regional Operations:
If your company operates in multiple regions or countries and requires different configurations (such as
legal, tax, or currency requirements), you may set up different Business Units for each region. This
ensures that each unit can handle local operations, including sales, procurement, and payroll, under the
correct local rules.
• Organizational Structure:
In larger organizations, there may be a need to segment operations based on lines of business (e.g., retail,
wholesale, services). Each Business Unit would represent a different part of the organization, allowing
for more tailored management of financials, HR, and procurement within each unit.
• Multiple Legal Entities:
In cases where the organization needs to operate under multiple Legal Entities, each Business Unit
may be assigned to a specific Legal Entity. This allows you to configure financials, accounting, and
reporting according to the specific requirements of each Legal Entity, even if they operate within the
same larger organization.
• Financial Reporting and Control:
When your organization needs to perform independent financial reporting or manage budgets and
financial controls separately, creating multiple Business Units enables you to segregate financial data.
This helps with cost tracking, revenue reporting, and financial analysis at the unit level.
• Decentralized Operations:
If different departments or units operate with significant autonomy, creating multiple Business Units can
help streamline operations and reduce administrative overhead. For example, each business unit may have
its own procurement and invoicing processes, separate from other units.
 • Complexity in Operations:
If your company has complex operations with different needs for procurement, HR, or project
management, setting up different Business Units allows for customized workflows, approval hierarchies,
and process structures tailored to the needs of each unit.

What is the difference between a Business Unit and a Department

Business Unit
• A Business Unit (BU) is a higher-level organizational structure in Oracle Fusion. It typically represents a
significant business function or segment of the organization. A Business Unit is used to manage operational
processes such as procurement, inventory management, and financial reporting within that unit. Each
Business Unit can have different configurations, such as legal entity assignments, currency, tax rules, and
reporting structures.
• Use Case: A Business Unit could represent different geographic regions, product lines, or major departments
within the company (e.g., "Sales," "Operations," "Manufacturing"). Each Business Unit may also have its own
accounting and financial setup.
• Key Functionality:
o Financial Reporting: It defines how financial data is tracked and reported.
o Procurement: It defines how procurement operations are managed.
o HR and Payroll: It can also define the payroll and HR operations for employees within the unit.
• Example: A company might have multiple Business Units based on geographical regions (e.g., "North
America BU," "Europe BU") or product lines (e.g., "Retail BU," "Wholesale BU").
Department
• A Department is a more specific unit within an organization, typically used for organizational
management and HR purposes. It refers to a functional area within a Business Unit that handles specific
tasks or processes. Departments are used for employee management, job roles, and reporting within a smaller
scope compared to Business Units.
• Use Case: A Department can represent specific functional areas like HR, IT, Marketing, or Finance within
a Business Unit. For example, within the North America BU, you might have departments like "Sales,"
"Marketing," and "Customer Service."
• Key Functionality:
o HR Management: Departments are primarily used for managing employee data, payroll, and
organizational hierarchies.
o Role-Based Reporting: Assigning employees to specific departments allows for role-based security
and access to data.
• Example: Within a Business Unit called "Sales," there might be departments like "Sales Support" and "Direct
Sales."
Reference Data Set
• Reference data sets is a framework used to define and manage reference data values that are commonly used
across the application.
• Reference data sets provide a consistent way to handle data that doesn’t frequently change but is used in various
parts of the system. These data sets simplify data maintenance and ensure uniformity in data entry.
• Examples of Reference Data: Reference data sets encompass data values such as countries, regions, job grades,
compensation bands, legal entities, departments, currencies, ethnicities, nationalities, and other standardized
information that is used as a basis for configuration, reporting, and data analysis.

What are the benefits of using reference data sets in Oracle Fusion
• Centralized Management: Reference data sets centralize the management of common data values,
eliminating the need to duplicate these values across different modules and configurations.

• Standardization: By using reference data sets, organizations maintain standardized data values, ensuring
consistent and accurate reporting and analysis.

• Ease of Configuration: When setting up different parts of Oracle Fusion HCM, such as workforce
structures or compensation plans, you can use reference data sets to easily select and assign appropriate values.

• Support for Multiple Languages: Some reference data sets support multiple languages, allowing users to
interact with the application in their preferred language while maintaining accurate data.

• Data Sharing: Reference data sets can be shared across different business units, departments, or other
segments of the organization, ensuring that consistent data values are used.

• Changes and Updates: When a change needs to be made to a reference data value (e.g., adding a new job
grade or modifying a department), you can update the reference data set, and the changes will reflect across
the system where that data set is used.

• Security and Access: Security settings can be applied to reference data sets to control who can view,
modify, or manage the data values.

• Integration and Reporting: Reference data sets are commonly used in integrations with other systems and
in generating reports and analytics.

• Data Migration: During data migration or system implementation, reference data sets can be loaded or
imported to ensure that the new system starts with accurate and standardized data.
Type reference data sets
• Common Set

The Common Set is a predefined set that enables you to share

reference data across business units.

• Specific Set

A common reference data set is available as the default set, which can be assigned to several business units
sharing the same reference data. For commonly used data such as currencies, you can use the common reference
data set and assign it to multiple business units in various countries that use the same currency. In cases where the
default set can't be assigned to an entity, you can create specific sets. The data set visible on the transactional
page depends on the sharing method used to share reference data.

To work with reference data sets in Oracle Fusion HCM:

• Access Setup: Log in to the Oracle Fusion HCM application with appropriate permissions to access setup
and configuration.
• Navigate to Reference Data Sets: Navigate to the appropriate area in the application where reference data
sets are managed. This could be within the workforce structures, compensation, or other relevant sections.
• Create or Manage Data: Depending on your needs, you can create new reference data sets, modify existing
ones, or manage the data values within those sets.
• Apply in Configuration: When configuring different parts of the system, such as jobs, positions, or
departments, you can use the reference data sets to select appropriate values.
• Save and Review: After making changes to reference data sets, save your changes and review how those
changes affect other parts of the system where the data is used.
• Test and Validate: Before rolling out changes, it’s a good practice to test and validate how the changes
impact various modules and configurations.

Reference data sets play a crucial role in maintaining data consistency, accuracy, and efficiency within
Oracle Fusion HCM. They streamline configuration and ensure that standardized data values are used
across the application

How Business Units Work with Reference Data Sets

https://docs.oracle.com/en/cloud/saas/financials/24a/faigl/how-business-units-work-with-reference-data-
sets.html#Example%3A-Assigning-Sets-to-Business-Units
How You Establish Enterprise Structures Using the Enterprise Structures
Configurator (ESC)
• The Enterprise Structures Configurator is an interview-based tool that guides you through the process of
setting up a basic enterprise structure.
• By answering questions about your enterprise, the tool creates a structure of divisions, legal entities, business
units, and reference data sets that reflects your enterprise structure. After you create your enterprise structure,
you also follow a guided process to determine whether to use positions, and whether to set up additional
attributes for jobs and positions. After you define your enterprise structure and your job and position
structures, you can review them, make any necessary changes, and then load the final configuration.

ESC Benefits
Using the ESC, you can:
• Create all the organizational structures at one time.
• Create multiple configurations to test multiple scenarios.
• Review the enterprise configuration prior to loading it.
• Rollback an enterprise configuration after loading it.

This figure illustrates the process to configure your enterprise using the Enterprise Structures
Configurator.
Establish Enterprise Structures
• To define your enterprise structures, use the guided flow within the Establish Enterprise
Structures task to enter basic information about your enterprise, such as the primary industry.
You then create divisions, legal entities, business units, and reference data sets. The Establish
Enterprise Structures task enables you to create multiple enterprise configurations so that you
can compare different scenarios. Until you load a configuration, you can continue to create
and edit multiple configurations until you arrive at one that best suits your enterprise.

▪ In the Setup and Maintenance work area, select the Establish Enterprise Structures
Enterprise: For each configuration in ESC, you define the high-level structures within the scope of an enterprise. It
consists of legal entities under common control and management.
Complete setup for a single legal entity in a single country
 Continue with the interview to set up more legal entities

Divisions
• A division refers to a business-oriented subdivision within an enterprise, in which each division organizes itself
differently to deliver products and services or address different markets. A division can operate in one or more
countries, and can be many companies or parts of different companies that are represented by business units.

• A division is a profit center or grouping of profit and cost centers, where the division manager is responsible
for achieving business goals including profits. A division can be responsible for a share of the company's existing
product lines or for a separate business. Managers of divisions may also have return on investment goals
requiring tracking of the assets and liabilities of the division. The division manager generally reports to a
corporate executive.

• By definition a division can be represented in the chart of accounts. Companies can use product lines, brands,
or geographies as their divisions: their choice represents the primary organizing principle of the enterprise.

• Divisions are used in HCM to define the management organization hierarchy, using the generic organization
hierarchy. This hierarchy can be used to create organization-based security profiles.
Legal Entities

Automatically Creating Legal Entities

• If you are not certain of the number of legal entities that you need, you can create them automatically. To use
this option, you first identify all of the countries in which your enterprise operates. The application opens the
Map Divisions by Country page, which contains a matrix of the countries that you identified, your
enterprise, and the divisions that you created. You select the check boxes where your enterprise and divisions
intersect with the countries to identify the legal entities that you want the application to create. The
enterprise is included for situations where your enterprise operates in a country, acts on behalf of several
divisions within the enterprise, and is a legal employer in a country. If you select the enterprise for a country,
the application creates a country holding company.

• The application automatically creates the legal entities that you select, and identifies them as payroll statutory
units and legal employers. For each country that you indicated that your enterprise operates in, and for each
country that you created a location for, the application also automatically creates a legislative data group.

• Any legal entities that you create automatically cannot be deleted from the Create Legal Entities page within
the Enterprise Structures Configurator. You must return to the Map Divisions by Country page and deselect
the legal entities that you no longer want.
Business Units

Automatically Creating Business Units

To create business units automatically, you must specify the level at which to create business units. Business units within
your enterprise may be represented at one of two levels:
• Business function level, such as Sales, Consulting, Product Development, and so on.
• A more detailed level, where a business unit exists for each combination of countries in which you operate and
the functions in those countries.
You can automatically create business units at the following levels:
• Country
• Country and Division
• Country and business function
• Division
• Division and legal entity
• Division and business function
• Business function
• Legal entity
• Business function and legal entity
Select the option that best meets your business requirements, but consider the following:
• If you use Oracle Fusion Financials, the legal entity option is recommended because of the manner in which
financial transactions are processed.
• The business unit level that you select determines how the application automatically creates reference data sets.
Manually Creating Business Units
If none of the levels for creating business units meets your business needs, you can create business units manually, and
you create them on the Manage Business Units page. If you create business units manually, then no reference data sets
are created automatically. You must create them manually as well.
• After you select a business unit level, the application generates a list of business units, and you select the ones
you want the application to create. If you select a level that has two components, such as country and
division, then the application displays a table listing both components. You select the check boxes at the
intersections of the two components.

• The business units listed by the application are suggestions only, and are meant to simplify the process to
create business units. You aren't required to select all of the business units suggested. When you navigate to
the next page in the ESC guided flow, the Manage Business Units page, you can't delete any of the business
units created automatically. You must return to the Create Business Units page and deselect any business units
that you no longer want.
If you created business units automatically, then the Enterprise Structures Configurator automatically creates reference
data sets for you. The Enterprise Structures Configurator creates one reference data set for each business unit.
You can add additional sets, but you cannot delete any of the sets that were created automatically. The Enterprise
Structures Configurator creates one reference data set for each business unit. You can add additional sets, but you
cannot delete any of the sets that were created automatically. A standard set called the Enterprise set is predefined.
Establish Job and Position Structures
You also use a guided process to determine whether you want to use jobs only, or jobs and positions. The primary
industry that you select in the Establish Enterprise Structures task provides the application with enough information to
make an initial recommendation. You can either accept the recommendation, or you can answer additional questions
about how you manage people in your enterprise, and then make a selection. After you select whether to use jobs or
positions, you're prompted to set up a descriptive flexfield structure for jobs, and for positions if applicable. Descriptive
flexfields enable you to get more information when you create jobs and positions.
Review Configuration

You can view a result of the interview process prior to loading the configuration. The review results, show the
divisions, legal entities, business units, reference data sets, and the management reporting structure that the application
will create when you load the configuration.
Load Configuration

You can load only one configuration. When you load a configuration, the application creates the divisions, legal
entities, business units, and so on. After you load the configuration, you then use individual tasks to edit, add, and
delete enterprise structures.
This table lists the order of creation of business objects by the Enterprise Structures Configurator

Business Object Task

Location Location Details

Division Manage Divisions

Business Unit Manage Business Units

Set Assignment Override Manage Set Assignments

Legislative Data Group Manage Legislative Data Groups

Enterprise Manage Enterprise HCM Information

Job and Position Flexfield Manage Descriptive Flexfields

Definitions

Legal Entity • Manage Legal Entities

• Manage Legal Entity HCM Information
• Manage Legal Reporting Unit HCM
Information

Organization Tree Manage Organization Trees

For more information

https://www.youtube.com/watch?v=JSdF8ySnK6w
https://www.youtube.com/watch?v=Ax3ldSxY5WA
If you don't use the Enterprise Structures Configurator, then you must set up your enterprise structure
using the individual tasks that correspond to each enterprise component.
We will provide more details in the coming files
Create Division
Create Legal Entity
Create Business Unit
Create Department
Create Location
Create Position
Create Job
Create Grades