Glossary
Annual target salary
Section titled “Annual target salary”The gross annual salary which is taken as a basis to calculate the performance bonus. It is equivalent to the gross annual salary which the employee is paid within a year if he or she is employed under the same terms for the full year excluding targets of the remuneration type with a “variable component” and has achieved exactly 100% of these targets and receives no further payments such as fixed bonuses or Christmas bonus unless these are included in the basis of calculation. In this case: target salary = fixed salary + variable salary
Example:
Employee John Doe is employed with a gross monthly salary of €4,000 and a variable component of 25%. He
is paid 13 monthly salaries and has targets with the remuneration type “Bonus on Top (absolute)” with €400 bonus for
target achievement. However, his variable component is calculated exclusively based on the twelve regular monthly
salaries.
Therefore, the result is an annual target salary of €48,000€ although his annual salary with 100% target
achievement in all targets totals 13 * €4,000 + €400 = €52,400.
Assessment of the degree of target achievement
Section titled “Assessment of the degree of target achievement”Each target achievement level for a bonus curve has one of six ratings. The ratings are:
- Target missed by a wide margin
- Target missed
- Target narrowly missed
- Target narrowly achieved
- Target exceeded
- Target exceeded by a wide margin
Bonus curve template
Section titled “Bonus curve template”Basic type of bonus curve. Defines which numeric bonus parameters need to be specified when defining the target so that a complete bonus curve can be determined from this template.
Example:
- The bonus curve template “Standard Positive“ stipulates
- that there is an upper and lower performance point
- that no performance bonus is paid for target achievement levels below the lower performance point
- that the bonus ratio shows a linear increase between lower performance point and 100% target achievement and between 100% target achievement and the upper performance point.
- In order to determine a bonus curve using the “Standard Positive“ model, the following parameters must be specified
when defining the target:
- Degree of target achievement at lower performance point
- Degree of target achievement at upper performance point
- Bonus ratio at lower performance point
- Bonus ratio at upper performance point
- The interval of the target achievement level between upper and lower performance point is referred to as target spread. The interval of the bonus ratio between upper and lower performance point is referred to as a bonus spread.
- A bonus curve is then derived from the bonus curve template together with these parameters.
Bonus forecast
Section titled “Bonus forecast”Total performance bonus of a target resulting from an assumption made for the entire target timeframe based on the last currently available target achievement level.
Bonus ratio
Section titled “Bonus ratio”Proportion of the bonus for target achievement which the employee receives for an individual target.
Example:
Following a consultation it is agreed that an employee receives a double performance bonus for a target
achievement level of 130%. In this case the bonus ratio is therefore 200%.
Collective targets
Section titled “Collective targets”A target whose performance indicator quantifies the performance or the success of the entire business unit. Therefore, the same performance indicator value is taken as a basis for the remuneration of all the employees with this target. There does not necessarily need to be a collective target for all the employees who have the same level or the same parameters of remuneration.
Correction value
Section titled “Correction value”When creating a performance indicator, a field correction value available can be activated for this performance indicator. The correction value is added to the entered performance value for a cumulative performance indicator, for a non-cumulative performance indicator the correction value replaces the entered performance value.
Degree of target achievement
Section titled “Degree of target achievement”Ratio of actual to target figures or the quotient of the value achieved and the target value.
Delayed payment
Section titled “Delayed payment”Period of time by which payment of the variable remuneration is delayed. This can be useful for cases in which the availability of the values for performance indicators is delayed.
Delay of performance indicator
Section titled “Delay of performance indicator”The time that elapses between the end of a reporting timeframe and the availability of the final value of a performance indicator. The information is expressed as a unit of time (days, weeks, months and years) and an integer quantity of these units.
Example:
Karl Müller makes posters. After each completed order the customer has 10 days to submit an evaluation.
This evaluation serves as a performance indicator for Karl Müller’s target. However, the assessment for a poster
completed on 31 January is not available for certain until 10 February. Therefore “days” is set as the unit and “10” as
the number as a delay in the performance indicator “customer evaluation”.
Employee
Section titled “Employee”Anyone whose employment is managed in maXzie is regarded as an employee.
This includes:
- anyone whose targets are managed using maXzie
- anyone who is able to log into maXzie regardless of whether their role allows them to define targets, view evaluations, input or export data.
Employment history
Section titled “Employment history”The relevant history of employment in the company is recorded for each employee. This includes all the data pertaining to remuneration such as the annual target salary and the variable component of the salary.
Example: Employee John Doe
- Employed from 2005-01-01 with an annual target salary of €48,000 and a variable component of 25%
- Employed from 2012-01-01 with an annual target salary of €60,000 and a variable salary component of 10.000€.
- No longer employed from 2015-01-01.
Employment segment
Section titled “Employment segment”The employment history is divided into periods of employment within which the data of the employment history do not change. These segments must not overlap in terms of time. For each employment segment, one of the following states must be selected:
- Employed: Regular employment state
- Not employed: No longer employed by the company, e.g., due to termination. Ongoing targets are canceled and the final bonus for the previous period is calculated
- Unpaid leave/parental leave: The bonus amount for target achievement is reduced by the specified period on a daily basis. Please note: The target amount is not adjusted. If this is desired, e.g., to adjust the achievability of the target value to the period actually worked, the adjustment must be made manually.
Finalized value
Section titled “Finalized value”For payout all involved performance values need to be set to finalized. The finalization usually happens automatically by importing the values in the following month.
There are various options in the performance indicator settings to modify the period for which values are set to finalized by the import. When values are entered manually, they are finalized immediately.
Fixed salary
Section titled “Fixed salary”The part of the target salary which the employee is paid within a year if he/she is employed under the same terms for the full year having achieved exactly 0% of his/her targets.
Example:
Employee John Doe is employed with a gross monthly salary of €4,000 and a variable component of 25%.
His annual target salary is €48,000, his variable annual salary with target achieved is 25% * €48,000 = €12,000, his
fixed salary is therefore (100% - 25%) * €48,000 = €36,000.
A collection of any number of employees. Employees belonging to the group are members of the group. Groups can also be a member of another group. If Group A is a member of Group B, all members of Group A are therefore also members of Group B.
Group target
Section titled “Group target”A target whose performance indicator quantifies the performance or the success of a group of any size. Therefore, the same performance indicator value is taken as a basis for the remuneration of all the employees in the group that share this target. This does not imply that every employee in the group has this target. If several employees in a group have the same group target, we use the phrase multiple identical targets.
Individual target
Section titled “Individual target”A target whose performance indicator quantifies the performance or the success of an individual employee and therefore is largely independent of the performance or the success of other employees.
Independent sub-targets
Section titled “Independent sub-targets”If the reporting timeframes are each calculated as an independent target, we refer to them as independent sub-targets.
Mode of division
Section titled “Mode of division”Setting whether the sub-targets are to be input as relative (percentage) or absolute (in the unit of the performance indicator).
Payment
Section titled “Payment”The amount of gross salary which maXzie calculates based on the targets and degree of target achievement and other yardsticks.
Payment mode
Section titled “Payment mode”The time when the variable remuneration is paid. The possibilities are:
- At any time: whenever a payment of salary is made, the variable remuneration (including the payment on account) accruing up to that point is paid.
- At the end of a sub-target period: the variable remuneration is paid (where applicable, on account) with the next salary payment after the sub-target period has ended and the performance indicator values are available.
- At the end of a target period: the variable remuneration is paid with the next salary payment after the target period has ended and the performance indicator values are available.
Payment on account
Section titled “Payment on account”Regular payments for targets for which the final performance bonus is not yet established. If the final target achievement level is below the expectations on which the payments on account are based, these payments may possibly be reclaimed or offset against other payments. Payments on account may therefore have loan character.
Payment timeframe
Section titled “Payment timeframe”Timeframe for which salary and/or performance bonus or bonus is paid at the same time. Timeframes are based on the payment schedule, which usually provides for monthly payments.
Performance bonus
Section titled “Performance bonus”Salary that the employee receives depending on the degree of target achievement.
Performance bonus for target achievement
Section titled “Performance bonus for target achievement”The performance bonus paid for a target if the level of target achievement is exactly 100%.
Performance bonus curve
Section titled “Performance bonus curve”A function that maps the degree of target achievement to the bonus ratio and an assessment of the degree of target achievement. Each target can have its own bonus curve, produced from a bonus curve template together with numeric parameters.
Performance indicator
Section titled “Performance indicator”Quantitative parameter providing information on the performance or success of an employee, group, or the company.
Performance value
Section titled “Performance value”A performance value is the value that is assigned to a performance indicator for a specific employee/group/the company in a specific time period. The length of the period is the length of the reporting timeframe of the performance indicator, and the assignment to employees, groups, or companies is defined in the performance indicator settings. The specific employee or group and timeframe are assigned by creating a target corresponding to the chosen performance indicator. All existing performance values can be viewed in the menu item Performance values.
Provisional degree of achievement
Section titled “Provisional degree of achievement”The degree of target achievement that is to be assumed when payment of a performance bonus is to be made before the availability of the performance indicator value of the first reporting timeframe.
Remuneration type
Section titled “Remuneration type”The way in which remuneration for a target is defined. The possibilities are:
- Variable component: in this case the degree of target achievement determines the amount of the variable salary component.
- Bonus: in this case, a further remuneration is paid in addition to the target salary in respect of the relevant degree
of target achievement. There are two subvariants:
- Bonus on top (relative): in this case, the amount of performance bonus for target achievement is expressed as a percentage of the target salary for the timeframe of the target.
- Bonus on top (absolute): in this case, the amount of performance bonus for target achievement is expressed as an absolute amount of money in the currency of the employee’s salary.
Reporting timeframe
Section titled “Reporting timeframe”Timeframe for which a value is provided for the performance indicator and a sub-target must be set. A target/actual comparison is then carried out for each target for each reporting timeframe. Reporting timeframes are derived from the target timeframe together with the report scheduling which is established in the performance indicator.
Scheduling
Section titled “Scheduling”Subdivision of the continuous timeline into regular intervals. A unit of time is defined (either “days”, “weeks”, “months” or “years”), an integer quantity of these units and a reference date on which the reporting timeframe begins.
Examples:
- Example 1:
“Months” is selected as the unit
“3” is selected as the number
The reference date “2000-01-01” is selected.
=> The resulting temporal division is a division into regular quarters - Example 2:
“Month” is selected as the unit
“1” is selected as the number
The reference date “2000-01-16” is selected.
=> The resulting time intervals span from the 16th of each month to the 15th of the following month (each date inclusive). - Example 3:
“Week” is selected as the unit
“1” is selected as the number
The reference date “2018-08-29” is selected (a Wednesday)
=> The resulting time intervals span from a Wednesday to the Tuesday in the corresponding following week.
Sub-target
Section titled “Sub-target”The part of the target value or the absolute value that is to be achieved within a reporting timeframe.
Target
Section titled “Target”Target of an individual employee. If several employees in a group have the same target, we refer to multiple identical targets.
Target period
Section titled “Target period”Period to which the target applies and in which the employee(s) can influence the degree of target achievement.
Target salary
Section titled “Target salary”Target template
Section titled “Target template”An incompletely defined target where not all the necessary parameters have to be defined and which in particular are not assigned to an employee. Targets and target templates can build on target templates. This means that all the parameters set in the basic target template apply and if necessary further parameters are added. Target templates and targets form a tree.
Target value
Section titled “Target value”The value of the performance indicator for which the target is 100% achieved and the full performance bonus is paid.
Target weight
Section titled “Target weight”The proportion of the variable salary component used to determine the degree of achievement of a target. For remuneration with a variable salary to be correct, at all times targets must be defined with a target weight adding up to 100%.
Example:
Karl Müller has an annual target salary of €48,000 with a variable component of 25%, hence a variable
salary component of €12,000 in the event of target achievement. His target with the designation “sales” has a target
weight of 40%. With a 100% target achievement (i.e. a performance bonus ratio of 100%) the performance bonus for this
target is therefore 40% * €12,000 = €4,800.
Update frequency
Section titled “Update frequency”Frequency with which the values of a performance indicator are automatically imported.
Value achieved
Section titled “Value achieved”Performance indicator values, either individual or cumulative, linked to a target.
Synonyms: Actual value
Variable salary component
Section titled “Variable salary component”The (e.g. percentage) variable remuneration proportion of the target salary.
Variable salary
Section titled “Variable salary”The amount of salary that is based on the achievement of targets. The amount is entered in maXzie in the event of a 100% target achievement. The entry can be absolute (e.g. in euros) or relative (e.g.as a percentage of the annual target salary) (see Variable salary component).