Merit Increase Process | Meaning and Definition

What is the Merit Increase Process?

The merit increase process involves a technique of determining how often a company should offer merit increases to employees, its percentage, and the qualification criteria for the merit increase. A data-driven merit increase procedure entails the need to evaluate the merit eligibility of the employee, establish a merit distribution allocation regime, and assess internal and external value.


Strategies to streamline merit increase process

HR professionals can employ the following tactics to implement a merit increase process that not only aligns with the budget but also regards external market value and an internal company of employees.

  •   Craft a compensation policy: Preparing and abiding by an official compensation policy ascertains that the merit process in an organization is established on consistent and standard methods. Keeping the compensation philosophy in writing enables a company to remain stick to it and ensures that each merit increase fortifies the company in return.


  •   Decide criteria to procure merit increase: A dynamic and solid performance review system facilitates HR to assess the progress, weaknesses, and strengths of individuals. Based on this data, HR managers and leaders can come together and develop challenging yet achievable goals for the employees. These objectives will push them to perk up their performance and productivity at work.


  •   Peruse the merit systems: Compensation managers and HR professionals can collaborate to decide the kind of merit matrix that best suits their company. They must understand whether the merit matrix should solely be performance-based or can it rely on employee position inside their pay range, or by what percentage the salaries should be raised, and so on.


  •   Pick a merit matrix: The company’s strivings and regimes to reward its employees manifest its priorities. HR leaders need to regard the message conveyed by the merit matrix system to employees. For instance, proposing higher merit-increase to top-performing employees may inspire and encourage low-performance ones to upgrade their work ethics. 


  •   Engage employees: HR leaders must communicate the standards of merit increase and merit allocation regime to employees effectively. Being transparent in such matters equips employees with the necessary information which propels them forth in their careers.


A comprehensive merit increase process is a critical part of the company ecosystem. Thus, much attention must be paid when preparing a proper merit increase strategy. The merit increase process allows companies to reward high-performing and productive employees, which boosts engagement and retention.

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