Worksheet: Draw the payout line and straighten it

This sheet is for a business with a written bonus, commission or share plan; the check asks this row only then. It draws what the bonus pays at each level of performance and removes the kinks. It builds the Competent step of the check:

The payout line runs straight from a floor to a cap, with something paid at the threshold rather than nothing.

Step 1. Today's line

Performance against target	80%	90%	95%	100%	105%	110%	120%
Payout today (% of target bonus)

Mark every kink: a cliff where the payout drops to nothing, a step, a cap.

Step 2. The new line

Point	Performance against target	Payout (% of target bonus)
Floor (threshold)	e.g. 95%	e.g. 50%
Target	100%	100%
Cap	e.g. 110%	e.g. 200%

Pay in a straight line between the points.

Step 3. The hurdle and the target

Question	Answer
Business-level hurdle before any individual payout (profit, cash or safety)
Is the target the budget number?
If so, the evidence for a target set apart from the budget

An all-or-nothing bonus on the budget ends the year in the third quarter for anyone behind. It also pays people to argue the budget down.

Done when: the payout line runs straight from a floor to a cap, and something is paid at the threshold.

Adapted from our own incentive workshop (Kearney era, 2001).