An Enterprise might have a set of child Organizations attached to it. Similarly, it might have operations in more than one country with the expanded business. In these cases, each entity, which operates with its own business rules, is called an Organization. Again, there could be internal and external Organizations. Internal Organizations are the divisions and departments inside the enterprise. Externals are the ones that are not directly under the enterprise umbrella; however peripheral entities with which our enterprise deals on a frequent basis. For an example, a Life Insurance Provider might be an External Organization.

Organizations are stored in HR_ALL_ORGANIZATION_UNITS, with ORGANIZATION_ID as the primary key. It’s a DATE_TO Enabled table. The Type of the Organization informs us whether it’s an Organization / Department / Division.

To understand it better, let’s take an example of an enterprise that manufactures car tyres. In the enterprise, there will be a registered executive office that manages all the judicial and legal relations of the firm. Then there will be big departments / pillars that are focused into one type of activity / business for the firm, like sales, marketing, manufacturing, systems etc. Now each of these big departments will have smaller departments / divisions and further those departments divide further into smaller sub-divisions. This might go on and on to the most granular level of the firm. If we sort them graphically, that will look like an inverted tree, wont it? This is known as Organizational hierarchy and the structure in them, like our divisions, sub-divisions are known as Organizations.


Organizations are not essentially Internal. There will be clients and vendors that are connected to the firm by a business Channel; and if we need to capture information of them, we should define them as Organizations as well.

Organization Classification

Organization classification is like a tag attached to the Organizations that specify the purpose and usage of the Organization in the application. Let’s take an example. We have our Manufacturing Department. Which is an Operating unit, because it has its own set of managers managing it, a Company Cost centre, because it maintains its own ledger books for costing, and an Inventory Organization, as it maintains its own inventory structure. Now the same organization is classified as three different types of classifications and the classifications tell us more about the organization.

But why need classification? Simple, we need classification to capture Information. For an Example, if we have to make an organization, a Legal Entity, we will have to store the name of the CEO, the Remuneration head’s name, the tax id number, the Employer id number etc. and we need all these because of the Government requirements. Because our Seeded reports and interfaces that are sent to the Government/ tax entities will look for Information like that in our system, and we must store them. Again, we do not need these details for all the Organizations. We just need the details for the Organizations that are legal entities.

The simplest way, one can think of, is to create a classification named “Legal Entity” and add an EIT to it, and then just add the classification whenever necessary so that we can capture the information. If we have four different legal entities in the firm, we will have to attach it to the four different organizations. Oracle has designed it the same way.

Legal Entity was just an Example, there are many such classifications that need specific information to be stored, in order to get the system working as expected.

Configuring an organization

Now, let’s create an organization. See Figure 2.7 – Defining Organizations.

Responsibility: Super HRMS Manager

Navigation: Work Structure -> Organization -> Description


Figure 7 Defining Organizations

(Figure 2.7 – Defining Organizations)

The Organization table has a DFF that can be used to store more information that we are unable to store with in Organizational Attributes. This is time to add Classifications. A normal firm needs a different set of classifications based on the localization. Like if our firm is in UK, we must have an “Education Authority”; if we are in India, we must have a PTO (Professional Tax Organization) etc. So based on our localization, we must choose our classifications.


For the list of required organizations for a particular Localization; please refer to Oracle documentation.

Let’s discuss the mandatory classifications that are needed for every HRMS set up: like Operating Company, Business Group, Legal Entity, HR Organization, Operating unit etc. Let’s discuss them one by one.

Business Group

Business group is an entity that represents an instance of the enterprise. A business group enables us to group and manage data in accordance with the rules and reporting requirements of each enterprise model, and to control access to data. Business Groups are also a type of Organization. They are stored in the same HR_ALL_ORGANIZATION_UNITS table.

A Business Group is like the backbone of the firm. This is the classification that uniquely identifies the firm in one particular country / localization. For an Example, if we have XYZ Corp. in India, Poland and UK, we should have three different entities with us, isn’t it? So that each entity deals with the legal compliance with the Government of each of the countries we operate in. Those entities will manage the reporting, data management and rules of the country. That entity is known as Business Group. In this case we will create three Organizations with business Group as a classification added to them.


Each localization should, however not necessarily hold its own Business Group. Creation of business group entirely depends on the design of the HR Organization structure.

Almost all the details that we store in our system can be classified based on Business Groups. The system looks at the business group we are working in, and then filters the set up and data based on that while in use.

The Business Group EITs / BG EITs hold a lot of set up attributes. These set up are used by the system, based on the business group we are using. For an example, in XYZ, Poland, we may not want the employee numbers to be generated automatically, but in UK, we want it to be generated automatically whenever there is a new employee created; based on the last number used. This can be added in the BG EITs, and later can be referred by the system. Not only that, there are a lot of defaults that can be used in BG EITs.

Once we have added Business Group as a Classification in an Organization (The one that we want to use as a BG); click on others and we will see a lot of EITs in there. Those EITs store the default values. Here are the some important ones:

Business Group Info EIT

1. Employee number Generation – Automatic / Manual.

2. Applicant number Generation – Automatic / Manual.

3. The KFF names of Job, Position, Grade, People Group, Cost allocation and Competency.

4. The Legislation code: defines the Government it should report to.

5. The Currency to be used in the BG.

6. The start of the Fiscal Year.

Benefits defaults EIT

1. Default Payroll name.

2. Do we want to create the benefits assignment or not.

PTO Balance Types

1. Balance type: date earned / date paid: this is where we instruct our system to pick the date, based on which the accruals will be calculated in Payroll. Don’t worry about accruals and payroll now; we have an entire chapter based on it. : )

Pay slip Information

1. If there is some balance/information that is not appearing on the Pay slip and we want it to be added on to it, this is the EIT where we need to do it.

SOE Information

1. Same as the Pay slip EIT, however this manages the SOE- Statement of Earning.

Self Service preference

1. This is a place to configure some details on our SSHR. Like the following questions.

2. Do we need paper pay slips / online pay slips / both?

3. Do we want to have the pay slip available based on date paid / pay slip view date?

4. Do we want the Address on pay slip to be the address from Legal Entity or the HR Org?

There are many more to it; however we are discussing some basic ones that are used most frequently.

We can associate our business group with the responsibility we are using, so that the data and configuration filtration can happen accordingly.

Legal Entity

A legal entity is a representation of an employer. A Country knows each and every legal entity as independent Employers and the various rules and regulations are attached to this entity. So If XYZ Poland, has a Marketing team, that operates parallel to the Manufacturing team, however is considered a separate employer, then manufacturing team will be a separate legal entity. On the flip side, if we are employing in a country, we must have a legal entity.

The Legal Entity has EITs as well; however most of them are based on the localizations. Let’s discuss the most important one: Tax Information. In this EIT we specify the Company tax Reference number, Registration number, the Trade classification: telling the system the type of trade our company does etc. We might also need to key in the Income tax Number for the tax departments (IRS/ ITD / SARS etc) based on the localization.

HR Organization

This is the entity that is assigned to the employees. This is the actual organization that appears on the assignment screen; so all departments, divisions, subdivisions etc are actually HR Organizations. We must create all the internal organizations (Departments, Pillars, and Verticals) with this classification on them.

Operating Unit

An Operating unit classification is used in a case, where we have a Multi-Org application. In that case, a set of operating units operate like independent units that works under an umbrella of a big organization. Usually each Operating unit is also classified with the HR Organization. So that employees in that HR Organization or below are considered part of that Operating unit. Although the Operating unit does not relate a lot to HRMS, it has a very vital role in Finance and SCM modules.

Organization Hierarchy

Every firm follows a hierarchy. It is the structure with which the Departments, Divisions and sub divisions are sorted in the firm. It is the reporting structure that looks like an inverted tree. Once the organizations are created, we create a hierarchy, which can be called as Primary Reporting Hierarchy. This is the basic way with which the entire reporting has to work. However we can create a number of secondary hierarchies to support other laterals of the business.

Question, is this just to make sure that the reporting is defined? Or are there other usages of Organizational hierarchies?

There are many. However let’s focus on the two important ones here.

  • Security: In many security profiles, we use the parent organization name, and all the children Organizations are considered automatically. For an Example HR-Global is our parent Organization for HR, and there are other HR children Organizations like, HR-New York, HR-Philadelphia, HR-SFO, HR-Colorado etc. Now, we do not want the Colorado HR people to see the data of HR-New York. So we will create a security profile just based on HR-NY and add that to HR-NY responsibility. Similarly we will create one for each of the Organizations. But what about the HR-Head of our Organization, he needs to be able to see everything. Here, we will create a new security profile called: HR-Global, and use the same in Hr-Head’s responsibility. As HR-Global is the parent and all others are children, HR-Head can now, access all children organization data as well. It is similar to the Folder structure, where one folder when locked, locks all the subfolders accordingly.
  • Reports: While running reports to include all children organizations we can just key in the Parent Org along with the hierarchy, and it does it all. For example, if we want to run a report for all HR data, we can just run it on the HR-Global and all children organizations will be included automatically.

So those were the two additional advantages of Organizational hierarchies. Let’s see, how to define and control one.

Creating a Hierarchy

Responsibility: Super HRMS Manager

Navigation: Work Structure -> Organization -> Hierarchy


  • · Create a new hierarchy; add a name in the name field
  • · Mark it as primary
  • · Add the Version number (Initially one), from date and to date
  • · Save the changes
  • · Now in the Organization field, query for the top most Organization
  • · And in the subordinate block, keep on adding the organization reporting to the parent one
  • · Save the changes
  • · Now query one of the secondary organizations (Organizations reporting to the top Org) and keep on adding its child organizations
  • · Likewise, keep on establishing the relationship between the organizations
  • · The up and down buttons can be used to move an Organization up or down in the hierarchy.
  • Let’s say, our Organization hierarchy changes after two years, and then we do not have to create a new organization all over again. We can just create a new version.
  • · Query our primary hierarchy; populate the end date and save it.
  • · Click on the version number, and press the down arrow to go to the next record.
  • · Now add the new version number with new start and end dates.
  • · We know the rest of the steps, keep on adding the organizations.
  • · Else we can just copy the hierarchy using the copy hierarchy button and then structure as per our requirement.

Using Diagrammer

This is a screen where we can go and see the hierarchy in a tree like structure for better understanding. The screen also has search settings to search for the particular organization.

Responsibility: Super HRMS Manager

Navigation: Work Structure -> Organization -> Diagrammer


  • · Query the name of the Organization hierarchy.
  • · Go on to the next record, until we find the correct version number with start and end dates.
  • · Click on Open editor.
  • · This will show us a diagrammatic representation of the Organization hierarchy.
  • · We can use the find button to look for the organizations and their child ones.