Hi, I have a 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
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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
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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 results & 30% on personal appraisal score.
S. K. Bandyopadhyay
From India, New Delhi
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409S. K. Bandyopadhyay
From India, New Delhi
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Thanks for your feedback. The answer to #1 is helpful and clear. I have some follow-up questions.
#2: My employer wants to allocate 60% weightage to business results [sales targets & profits] and 40% weightage to identifying new business areas and creating a business plan. Is this normal?
Please let me know if you need further clarification or have any other questions.
From India, Pune
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#2: My employer wants to allocate 60% weightage to business results [sales targets & profits] and 40% weightage to identifying new business areas and creating a business plan. Is this normal?
Please let me know if you need further clarification or have any other questions.
From India, Pune
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