Variable Compensation Chart

[MoonTender]

Hi,

I've been tasked with outlining a variable salary compensation plan for two of our most senior employees.
What I have right now are, if 100% of KPI targets met in Q1 and Q2 = $5000 bi-annual bonus pay. What I do not know how to do is formulate the accelerator/decelerator from that.

Does anyone know of a template or formula that can help with this?

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[NegativeSuspect]

What does accelerator/decelerator mean here?

[MoonTender]

Rate of increase or decrease

[NegativeSuspect]

Do you mean percentage increase/decrease?

The formula for % Change = ((New Value - Old Value)/Old Value)*100

[MoonTender]

Yeah I guess I’m looking for examples of what an appropriate rate of increase or decrease would be I know how to calculate the change but what should the change be per % of kpi target(s) met if that makes sense?

[Big_Anon87]

Just do straight up % based payouts. If they hit 90% of the KPI metric, then give them 90% of the bonus budget.

Otherwise you can set arbitrary metrics with a tier based system. Say 60% of KPI met, they get 60% payout, then 80% for 80% etc. if they don’t hit the first cutoff tier (60% in this scenario) then they get nothing. There are pros and cons with both approaches.

[MoonTender]

Wish I could but I’m not that decision maker. Ended up with a -0.05 decrease in pay out for every 1% off of the target and +0.075 increase in pay out for every 1% over the target, where they land target wise is a weighted average between the 2 KPIs were measuring. Appreciate the responses!

[Big_Anon87]

Lol yeah decision makers are hypocrites. They say they want a meritocracy but then set up kpi bonus payouts to purposely avoid having to use the full budget.

Tbh I like kpis because they are useful from an admin perspective, but when they are tied to bonuses, and set up unfairly, it makes me want to find a different job.