Bonus Distribution Calculator
Distributes a bonus pool across employees using configurable weights for performance rating, tenure, salary band, or department. Includes an equity check to ensure the distribution is fair relative to contribution and an allocation summary for finance sign-off.
HR - Bonus Distribution Calculator.xlsx
Excel (.xlsx) — No macros — Works in Excel, Google Sheets, LibreOffice
What This Spreadsheet Solves
- Bonus distribution is ad hoc with no consistent methodology
- No way to verify that bonus amounts are fair across the organization
- Performance ratings do not proportionally influence bonus amounts
- Finance cannot audit how the bonus pool was allocated
- Managers distribute bonuses based on gut feel rather than criteria
Who This Is For
- Compensation managers designing bonus programs
- HR directors overseeing annual bonus cycles
- Finance partners auditing bonus pool allocation
- Department heads recommending bonus amounts for their teams
Inputs
- textEmployee Name / ID
- #Performance Rating (1-5)
- #Tenure (Years)
- $Annual Salary
- textDepartment
- $Total Bonus Pool
Outputs
- Bonus amount per employee
- Bonus as percentage of salary
- Weighted score per employee
- Department allocation totals
- Equity check: bonus-to-salary ratio variance
How Calculations Work
Each employee receives a weighted score based on configurable weights for performance rating, tenure, and salary band. The bonus pool is distributed proportionally to each employee's weighted score as a fraction of the total weighted score. The equity check compares bonus-as-percentage-of-salary across employees and flags outliers beyond a configurable threshold.
Example Use Case
Scenario: A $50,000 bonus pool for 5 employees. Weights: performance 60%, tenure 25%, salary band 15%. Employee A: rating 5, 7 years, $100K. Employee B: rating 3, 2 years, $80K.
Result: Employee A weighted score: 4.45, bonus: $14,200 (14.2% of salary). Employee B: score 2.55, bonus: $8,100 (10.1%). Equity check passes: max variance between bonus-to-salary ratios is 4.1%, within the 10% threshold.
What You Get — 5 Sheets
Technical Details
Frequently Asked Questions
How do the weights work?
Weights determine how much each factor influences the bonus. A 60/25/15 split means performance rating counts for 60% of the score, tenure 25%, and salary band 15%. Weights must sum to 100%.
What does the equity check flag?
It flags employees whose bonus-as-percentage-of-salary deviates from the group average by more than the threshold set in CONFIG (default 10%).
Can I add custom weighting factors?
Yes. Add a column on the INPUT sheet and a corresponding weight in CONFIG. The LOGIC sheet includes the new factor in the weighted score calculation.
What if the bonus pool changes after I calculate?
Update the total bonus pool value on the INPUT sheet. All allocations recalculate automatically since they are proportional.
How do I handle employees who joined mid-year?
Prorate their eligibility by entering their actual tenure in years (e.g., 0.5 for 6 months). The weighted score will reflect their shorter tenure.
Download Bonus Distribution Calculator
Ready to use immediately. Enter your data in the INPUT sheet, see results in OUTPUT.