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KPI-based calculation of bonuses for management personnel

Automating the calculation of bonuses for management personnel based on a KPI system.

Problem, task, challenge:

  • decentralized bonuses calculation in separate files for each department, manual consolidation into a single report resulted in high labor costs and risk of applying different calculation methodologies to different departments;
  • a large number of source data extracted in dissimilar formats from 8 different non-integrated systems;
  • complex KPI methodology that affects various areas and undergoes changes almost every quarter;
  • impossibility to perform KPI and bonuses calculation more than once every quarter as it was time-consuming;
  • lack of user documentation.

It took management staff a total of 3-4 days to perform and check the calculation.

Result (the value received):


 

Centralized calculation for all departments allowed to reduce labor costs of department directors by delegating the calculation of bonuses to one dedicated employee.

 


 

Capability to calculate bonuses every month and reduce the risk of errors through deep automation of business logic.

 


 

Automatic data fetching and consolidation on all KPIs, which reduced labor costs for integration of information from 10 non-integrated data sources. This enables fast update of calculations in case source data change suddenly.

 


 

Calculation flexibility and quick adaptation to changes in KPI system, the list of departments and employees, which reduces labor costs for bonus calculation.

 


 

Centralized management of KPI system and classifications through directories enabled all departments to apply the same logic for bonuses calculation.

 


 

Calculation transparency and structuring, as well as step-by-step instructions allow to transfer the functional responsibility to a new employee without significant costs.

 


 

Persistence of classifications from period to period.

 

Capability to make edits in special manual entry fields to leave an audit trail.

Proposed technical solution:

  1. Calculation centrally performed by one employee for all departments that takes 3-4 man-hours. Final calculation architecture is as follows:
  2. System of directories for the flexible configuration of indicators set, their shares in bonuses amount and target values, as well as data mapping from different systems.

  3. Automatic loading and consolidation of a large amount of data in different formats via buttons provided by the special FIN.by Tools add-in (automatic initial data processing using Power Query technology).

  4. Automatic calculation of key performance indicators for each department.
  5. Automatic reconciliation of target and actual indicators.

     
  6. Automatic bonuses calculation with a breakdown for each employee in one table based on performance of KPI indicators by departments.
  7. Option of manual editing allows to adjust automatically calculated bonuses amounts in unforeseen situations, control over the presence of manual edits.


     

  8. Check system with hints on how to fix errors.


     

  9. Preparation of the upload template for export to the BI system.


     

  10. Detailed User’s manual.

The calendar time for development and implementation at the client is 2 months.

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