Result
Resulting bonus
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
KPI achievement = actual value ÷ target value × 100%. Resulting bonus = base bonus × achievement ÷ 100 — a simple proportional scheme: whatever percentage of the target was hit, that percentage of the full bonus gets paid.
This isn't the only way to structure a KPI bonus, just the simplest common one: some companies cap the bonus at 100–120% of target to limit overachievement payouts, others use threshold tiers (no bonus below 80% achievement, then a steep ramp-up above it), and others compute a weighted bonus across several KPIs with different weights. Check the result against your actual incentive scheme before applying it.
An uncapped proportional scheme can create odd incentives at extreme overachievement (an overly generous bonus for a lucky outcome) or extreme underachievement (motivation dropping to zero well before the period ends) — which is exactly why many companies add thresholds and caps on top of the base proportion.