Calculation of wages when implementing KPI
Posted: Sat Jan 18, 2025 8:40 am
After the implementation of KPI in the organization, the salary amount should change. In the new conditions, employees strive not only to follow instructions, but to achieve high results. This is possible due to the division of the salary into two parts:
Salary. It is paid every time, regardless of the actual value of the indicators. When implementing KPI, the salary must be maintained at the same level, otherwise employees will resist the innovations.
Bonus. It is directly related to successful performance of work. To receive it, the employee must achieve planned indicators. Its size should provide good motivation.
Calculation of wages when implementing KPI
Source: shutterstock.com
It is customary to set the shareholder data package bonus several times higher than the salary. The ratio of the constant and variable parts can be 30 to 70%.
For example, a specialist's income is 60 thousand rubles. Of this, 18 thousand rubles (30%) is the salary, and the bonus for full implementation of the indicators will be 42 thousand rubles (70%). If the plan is fulfilled by 90%, the employee will receive 37.8 thousand rubles (42,000 * 0.9) in addition to the salary, or a total of 55.8 thousand rubles. The manager may refuse to assign a bonus if the employee does not reach the minimum threshold for fulfilling the plan.
Next, let's look at how the salary is calculated when there are several indicators. First, you need to specify the planned figures. Usually, these are the minimum, optimal and desired values. The bonus amount is determined by the following formula:
Bonus part = X * (weight of KPI 1 * C + weight of KPI 2 * C)
Where:
X is a fixed bonus amount.
C is a coefficient characterizing the fulfillment of the plan.
KPI weight is the share of the indicator from the total. It is calculated by dividing one by the number of KPIs or is set by the manager for each indicator.
For example, a sales manager receives a salary of 90 thousand rubles, including a bonus of 50 thousand rubles. The amount of earnings is determined taking into account two KPIs, for each of which 25 thousand rubles are accrued. When calculating wages, the company is guided by the following principles:
if less than 80% of the plan is completed, the coefficient is 0;
when the plan is completed by 80-100%, the coefficient is 1;
when the norm is exceeded, the coefficient reaches 1.5.
In November, the manager fulfilled the first KPI by 70%, and the second by 105%. Thus, the corresponding coefficients are 0 and 1.5. Each indicator has a weight of 0.5. From this, we can determine the manager's salary: 40,000 + 50,000 * (0.5 * 0 + 0.5 * 1.5) = 77,500 rubles.
A new calculation is made each month. For certain types of positions, indicators for the year or quarter can also be entered. Based on the results of work for the specified periods, additional accruals are made.
How to achieve multiple growth in traffic and sales from your website?
Alexey Boyarkin
Dmitry Svistunov
Head of SEO and Development
Read more posts on my personal blog:
I have always been concerned about the issue of moving to a fundamentally new level. So that the indicators would grow not by 2 or 3 times, but by several orders of magnitude. From a thousand visits to ten thousand or from ten thousand to a hundred thousand, if we are talking about a website, for example.
And I know that such leaps are always the result of painstaking work in five areas:
Technical condition of the site.
SEO.
Collection of site semantics.
Creating useful content.
Working on conversion.
And at the same time, every manager needs an increase in sales and the number of applications from the site at the moment.
To get this growth, download our step-by-step template for increasing sales from the site:
Download template
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Salary. It is paid every time, regardless of the actual value of the indicators. When implementing KPI, the salary must be maintained at the same level, otherwise employees will resist the innovations.
Bonus. It is directly related to successful performance of work. To receive it, the employee must achieve planned indicators. Its size should provide good motivation.
Calculation of wages when implementing KPI
Source: shutterstock.com
It is customary to set the shareholder data package bonus several times higher than the salary. The ratio of the constant and variable parts can be 30 to 70%.
For example, a specialist's income is 60 thousand rubles. Of this, 18 thousand rubles (30%) is the salary, and the bonus for full implementation of the indicators will be 42 thousand rubles (70%). If the plan is fulfilled by 90%, the employee will receive 37.8 thousand rubles (42,000 * 0.9) in addition to the salary, or a total of 55.8 thousand rubles. The manager may refuse to assign a bonus if the employee does not reach the minimum threshold for fulfilling the plan.
Next, let's look at how the salary is calculated when there are several indicators. First, you need to specify the planned figures. Usually, these are the minimum, optimal and desired values. The bonus amount is determined by the following formula:
Bonus part = X * (weight of KPI 1 * C + weight of KPI 2 * C)
Where:
X is a fixed bonus amount.
C is a coefficient characterizing the fulfillment of the plan.
KPI weight is the share of the indicator from the total. It is calculated by dividing one by the number of KPIs or is set by the manager for each indicator.
For example, a sales manager receives a salary of 90 thousand rubles, including a bonus of 50 thousand rubles. The amount of earnings is determined taking into account two KPIs, for each of which 25 thousand rubles are accrued. When calculating wages, the company is guided by the following principles:
if less than 80% of the plan is completed, the coefficient is 0;
when the plan is completed by 80-100%, the coefficient is 1;
when the norm is exceeded, the coefficient reaches 1.5.
In November, the manager fulfilled the first KPI by 70%, and the second by 105%. Thus, the corresponding coefficients are 0 and 1.5. Each indicator has a weight of 0.5. From this, we can determine the manager's salary: 40,000 + 50,000 * (0.5 * 0 + 0.5 * 1.5) = 77,500 rubles.
A new calculation is made each month. For certain types of positions, indicators for the year or quarter can also be entered. Based on the results of work for the specified periods, additional accruals are made.
How to achieve multiple growth in traffic and sales from your website?
Alexey Boyarkin
Dmitry Svistunov
Head of SEO and Development
Read more posts on my personal blog:
I have always been concerned about the issue of moving to a fundamentally new level. So that the indicators would grow not by 2 or 3 times, but by several orders of magnitude. From a thousand visits to ten thousand or from ten thousand to a hundred thousand, if we are talking about a website, for example.
And I know that such leaps are always the result of painstaking work in five areas:
Technical condition of the site.
SEO.
Collection of site semantics.
Creating useful content.
Working on conversion.
And at the same time, every manager needs an increase in sales and the number of applications from the site at the moment.
To get this growth, download our step-by-step template for increasing sales from the site:
Download template
Already downloaded
15