Calculation of the Performance Factor

The Determine Allocations process calculates the performance factor for organization and group goals. The Calculate Awards process calculates the performance factor for individual goals. The Calculate Awards process also calculates the total performance factor and applies it to the prorated target payout.

The system multiplies these three percentages to calculate the performance factor for each goal:

  • The weighting percentage that you assign to the goal level when you define the plan.

  • The weighting percentage that you assign to the performance goal.

  • The percentage of accomplishment of the performance goal.

The formula for calculating the performance factor for each goal is:

Plan Goal Weighted Percentage × Weighted Goal Percentage × Attainment Percentage = Performance Factor

The Calculate Awards process sums the performance factor of all goals to derive the plan member's total performance factor. It rounds the calculation up to five decimal places.

Example of a Performance Factor Calculation and Award Calculation

This diagram illustrates a performance factor calculation for goals established at three levels, using the formula.

Performance factor calculation with plan goal weight percentages, weighted goal percentages, attainment percentages, and performance factors

Plan Goal Weighted Percentage × Weighted Goal Percentage × Attainment Percentage = Performance Factor

The Calculate Awards process multiplies the prorated target payout by the performance factor to calculate the award.

The following data is used to calculate the quarterly award in this example:

Data Description Data Value

Worker salary

50,000 USD (annual rate)

Plan payout formula

15% of base pay (quarterly)

Proration factor

0.75

Performance factor

0.95 (calculated in the preceding example)

Here is the calculation of the award:

{((50,000 × 15%) ÷ 4) × 0.75} × 0.95 = 1,335.94 USD