To calculate a KPI bonus, you'll first take the number of KPIs the employee reached and multiply that by your bonus rate.
KPI stands for Key Performance Indicator, which, when used regarding employees, refers to benchmarks that a company sets for its employees to see how well they're performing. Many managers, for example, are given bonuses based on how many projects they close on time and under budget.
Each company will have a different formula for how it pays its KPIs, but you could calculate a KPI bonus for a manager in this example by adding up how many projects she closed on time and under budget and multiplying it by your bonus rate.
Say this particular manager closed eight projects on time and under budget, and your company's KPI bonus rate is 50% of the revenue earned from those projects. To calculate the KPI bonus, you'd just calculate how much revenue the company earned on the projects - say it was $8,000 for this example - and multiply it by 0.5 (50%).
The answer would be $4,000, so you'd pay your manager $4,000 in a KPI bonus for those projects.
