Help refining calculations for Production bonus for production workers based on efficiency metrics. =) I know this is supposed to be finance.

We lost our director of finance due to refusing market adjustment on his salary. Someone who went from production line to finance controller to director of finance in last 11 years. I bonded with him over our love of trading financial derivatives and being of the same country with similar experiences as immigrants. He immigrated here while I'm first generation. Unfortunately, my HR director ignored my warnings, and insight about this and 2 weeks later director of finance gave notice.

Director of finance had created an equation to calculate bonuses for production employees in the operations plant that he came up in. When he left, nobody could figure out to operate the file that produced these numbers. His direct report was to be terminated a few weeks prior to director giving notice, so there's no trust in that controller. I was told this was potentially a calculus equation, but no other context on that matter.

This bonus applied to a plant that produced medical devices. This bonus ranged from 1%-15% of their gross pay per paycheck, and "based on their efficiency" of how much they produced, a factor of their quality and % rejections, and factoring in a few variables that nobody seems to be aware of. Historically, it was significant amount enough that people were budgeting their finances around it. Around as in knowing they have that extra % coming so higher overall $$. Also, employees were incentivized to work harder, did so, and would come in for overtime almost always when asked because of this. Since I've been approving these numbers for a year and have access to all the previous files, I created a 6 month average for each of these ~600 employees just to have something we could pay them on short notice. As the weeks, went on and employees found reasons to complain about it. To adjust to varying hours, I took the 6 month average over the total hours they worked in the 6 months and found their per hour rate for bonus. That bonus coefficient is multiplied by their total hours in the pay period to pay them more accurately. This has been used for this entire quarter, because my HR director has been too busy with a cluster of other stuff, its been 2 months since we were supposed to have a new equation based on efficiency with an adjustment based on quality. We wanted the quality variable to effectively reduce the overall amount of bonus.

We realized the average total payout per pay period in this quarter was ~20-25%% higher than we were paying in other quarters with similar production numbers and wanted to reduce it. Something like it should be 38-43k for the number of employees, and its around 52-57k.

Anyone work with these finance equations in the past and have any insight or examples? Or resources or books that can help with this?

Thanks in advance