Manager Topic

Compensation Plan - Budget Summary Graph - Use Case - Average Increase

The following budgets are set for the compensation task:

Organizational Unit (OU) Merit Increase Budget by OU Cost of Living Budget by OU
Division A 3% 5%
Division B 4% 4%
Division C 3.5% 3.5

The following users are in the compensation plan:

User OU Current Salary/Hourly Rate
User 1 Division A 10,000 USD
User 2 Division B 20,000 GBP (30,000 USD)
User 3 Division C 30,000 USD
User 4 Division A 40 USD/hour; 2080 hours/year (83,200 USD Annualized)

The decimals of precision that are used for percentages in compensation is 2.

The following allocations are given in the compensation plan:

User Merit Increase Cost of Living
User 1 3% (300 USD) 4% (400 USD)
User 2 4% (800 GBP; 1200 USD) 5% (1000 USD; 1500 USD)
User 3 3.5% (1050 USD) 3% (900 USD
User 4 2.5% (2080 USD) 2% (1664 USD)
Total 4630 USD 4464 USD

The average budget increase is calculated by dividing the total allocations by the total original salaries. The following average budget increases result from the compensation plan:

Division Merit Increase Cost of Living
Division A (Users 1 & 4) (300 + 2,080) / (10,000 + 83,200) = 2.55% (400 + 1,664) / (10,000 + 83,200) = 2.21%
Division B (User 2) 1,200 / 30,000 = 4.00% 1,500 / 30,000 = 5.00%
Division C (User 3) 1,050 / 30,000 = 3.50% 900 / 30,000 = 3.00%
Overall (300 + 1,200 + 1,050 + 2,080) / (10,000 + 30,000 + 30,000 + 83,200) = 3.02% (400 + 1,500 + 900 + 1,664) / (10,000 + 30,000 + 30,000 + 83,200) = 2.91%

 

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