The size of a manager's salary is determined by the quality of his work, which is a powerful incentive to achieve outstanding results. The manager's remuneration consists of two main components:
Permanent part. This is a guaranteed income for performing the duties of a top manager. As a rule, it is approximately 40% of the total salary of the manager.
Variable part. It depends on the results measured through KPI. The higher the specialist's achieved indicators, the greater the reward he is paid.
To calculate the salary of a top manager, it is necessary to determine the planned figures, which may include one or more values: minimum, optimal and desired.
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Alexander Kuleshov
Alexander Kuleshov
General Director of Sales Generator LLC
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Example of calculating the manager's salary taking into account KPI
Let's look at a specific example of such a calculation. Let's assume that the basic salary of the manager is 500,000 rubles. In this case, 200,000 rubles is a fixed part, and 300,000 rubles is a bonus paid upon achieving the set goals. In addition, the manager has two KPIs, each of which is worth 150,000 rubles. The following calculation rules are established:
if the plan is completed by less than 85%, the coefficient is 0;
if the plan is completed by 85–100%, then the coefficient is equal to 1;
100–130% – coefficient 1.5;
more than 130% – coefficient 2.
Let's assume that the manager's results for the first KPI are 90%, and for the second - 120%. To get these indicators, the planned figures were divided by the actual ones. After that, the result was multiplied by 100%.
Let's look at the formula for calculating the bonus portion of the salary:
Bonus part = X x (weight of KPI 1 x C + weight of KPI 2 x C),
Where:
X is the specified amount of the variable part. In this case, it is 300,000 rubles.
C is a coefficient that depends on the top manager’s performance. For KPI 1, the coefficient is 1, and for KPI 2, it is 1.5.
The KPI weight is calculated as follows: 1 divided by the total number of indicators. In this case, it is 0.5. However, an organization can choose another method for determining the KPI weight.
Now let's do the calculation^
Bonus part = 300,000 x (0.5 x 1 + 0.5 x 1.5) = 375,000 rubles.
Then we need to add the fixed part to this amount. As a result, the total salary will be 575,000 rubles.
Such calculations must be performed every month. At the same time, a top manager may also have annual and quarterly indicators, the achievement of which will lead to additional bonuses.
Case: VT-