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Variable pay structure for small company heads/business heads - What are the different KPIs on which variable pay is measured?


Hi, I have few questions regarding how the variable pay of small company heads /business heads is designed.
1. In general what is the ratio of variable pay to fixed pay?
2. What are the different KPIs on which variable pay is measured? Are these only revenue & margin or could there be something else?
3. How are the weights given to different KPIs?
Regards,
From India, Pune
In practice, I have noticed it is usually 70:30 or 80 :20 fixed pay : variable pay.
One simple formula for KPIs for measuring variable pay may be 70% on business result & 30 % on personal appraisal score.
S K Bandyopadhyay
From India, New Delhi
Thanks. Answer to #1 is helpful and clear. I have follow up questions
#2 : My employer wants to allocate 60% weightage to business results [~sales targets & profits] and 40% weightage to identify new business area & business plan. Is this normal ?
From India, Pune
There is no specific rule for formulating KPIs for variable pay. It always varies from organization to organization based on type of business activities.
To my opinion the proposal is ok.
S K Bandyopadhyay ( WB, Howrah )
From India, New Delhi
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India, Pune
24 January 2021 10.52.41 AM
Views: 839 Replies: 3 Appreciations: 0
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