KPI weighting: how to set weights

KPI weighting is how you split a bonus across multiple goals. It helps answer: “Which metrics matter most?”

A practical approach

• Pick 3–5 KPIs max. Too many KPIs makes a plan impossible to manage.
• Weights should sum to 100%.
• Give the highest weight to the KPI that best reflects the role’s purpose.

Common weighting patterns

• Revenue-led: Revenue 60%, Retention 25%, Quality 15%
• Customer-led: Retention 40%, NPS 30%, Upsell 30%
• Ops-led: Efficiency 50%, Quality 30%, Safety 20%

Example calculation

Assume a $10,000 target bonus:

• Revenue (60%) achieved at 90% → 0.60 × 0.90 = 0.54
• Retention (25%) achieved at 110% → 0.25 × 1.10 = 0.275
• Quality (15%) achieved at 100% → 0.15 × 1.00 = 0.15

Total payout factor = 0.965 → payout ≈ $9,650.

Tip

If you allow over‑achievement (110%, 120%), be explicit about caps or multipliers so the plan doesn’t create surprise costs.