Operational rank
The operational rank is an evaluation method within the scope of the concept of indexed operational performance measurement . The operational rank is the percentile rank of a key figure of comparable companies, so-called peer companies . In the indexed operational performance measurement, the operational rank is used to make financial indicators universally comparable and to represent them independently of external effects. In the more general usage of the word, the graphic representation itself (see below) is also referred to as the operational rank.
example
The figure below shows the Operational Rank. The operational rank of the EBIT margin is shown as an orange line. In addition to the median (also known as the operating index ) of the comparable companies as a blue line, the first and third quartile limits (limits of the blue shading) are also entered in the graph . The blue areas therefore show the EBIT margins of 50% of all comparative rsp. Peer company .
Bonus targets based on the operational rank
Bonus targets can be set using the operational rank in order to reduce external influences in the performance measurement (see performance-related remuneration ). An example of indexed bonus targets is the bonus index, which Zurich-based financial research company Obermatt publishes annually for the operational ranks for the German HDAX companies and the Swiss SMI and SPI companies. On this basis, bonus multipliers are calculated with the following formula: Bonus multiplier = 4 * (operational rank) - 1. The bonus multiplier is understood to be the factor by which the expected average bonus (also called target bonus; corresponds to the bonus amount typically paid out in the past) is multiplied by calculate the bonus earned in a given period. The following graphic illustrates the assignment of bonus multiplier to operational rank:
With an operational rank of 50 (corresponds to a performance that is better than 50% of the competitors), the bonus index is the typical bonus amount, rsp. the target bonus earned. At a rank of 75, the double bonus is paid out. With this rank the company is better than 75% of all competitors. Below the Operational Rank of 25, nothing is paid out and the maximum bonus multiplier for the bonus index is three times the target bonus.
Cross references
swell
- ^ Hermann J. Stern : Benchmarking in the supervisory board for corporate management . In: Journal for Corporate Governance ZCG. December 2007 Article as PDF ( Memento of the original from August 28, 2008 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ Stern, Hermann, "Making Bonus Systems Fair and Crisis Proof", March 11, 2009. Article as PDF in SSRN and Stern, Hermann, "A bonus in the recession? - Yes, provided it is market-oriented!", In: CFO Aktuell, December 2008 Article as PDF ( Memento of the original from October 11, 2014 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ HDAX bonus index: Börse Online, May 7, 2009, page 11; SMI / SPI bonus index: Finanz & Wirtschaft, April 29, 2009, page 25; Online sources: Free download of the bonus indices from www.obermatt.com ( Memento of the original from May 18, 2009 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ More on the methodology of the bonus index: Information on the bonus index at www.obermatt.com ( Memento of the original from May 18, 2009 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
