When setting up acar allowance plan(or any allowance/compensation plan in Workday), you must ensure that it is tied to payroll through the correctcompensation element.

Here’s the breakdown of the options:

Maintain Compensation Elements✅

This task is where youcreate, configure, and manage compensation elements.

Everycompensation plan(like salary, allowance, bonus) must be associated with acompensation element, which then links topayroll earningsfor processing.

For acar allowance, you would create a new compensation element (type = allowance) so that payroll can recognize and pay it.

Maintain Compensation Element Groups

This is used to group multiple compensation elements together for easier administration, reporting, or eligibility rules.

It does not create the element itself, so it’s not the right task here.

Map Compensation Elements to Payroll Earnings

This step is necessaryafterthe element exists, to map the element to the correctpayroll earning code(so payroll knows how to pay it).

However, you can’t map something that hasn’t been created yet.

Edit Tenant Setup HCM

This is a higher-level tenant configuration task for broad HCM settings (security, defaults, integrations, etc.).

It is not used for creating compensation elements.

????The correct first step to create acar allowance compensation plan that can be processed by payrollis to use the taskMaintain Compensation Elements.

References (Workday Pro Compensation knowledge & training):

Workday Pro Compensation Training:Compensation elements are the foundation for linking plans to payroll. The “Maintain Compensation Elements” task is where new elements are created.

Workday Community – Compensation Element Setup Guide:Clarifies the difference between creating (Maintain Compensation Elements), grouping (Maintain Compensation Element Groups), and mapping (Map Compensation Elements to Payroll Earnings).

Workday Payroll & Compensation Integration Documentation:Requires elements to be defined before they can be mapped to earnings.