← HR Metrics·Compensation & Benefits
Merit Increase Amount
Dollar value of the merit increase for an employee.
How it’s computed
base_salary * merit_increase_rate
What the evidence shows
Evidence (effect sizes, priors, validity) is syncing from Principia.
Run it on your data
This metric is computed in the People Analytics Toolbox on your own numbers. See pricing — posted, no quotes.
sources: toolbox:metrics-catalog
What the literature says
The measurement literature behind this signal — sourced, so you can defend it.
“These may be step increases, whereby the pay ranges are divided into a number of pay rates with increases related to length of service. The step increase concept is used most commonly for nonexempt employees, and there are several different approaches to this concept:The first…”
— Worldatwork Handbook Compensationmatch 62%
“Furthermore, because increases for all employees are determined at the same time, appraisal ratings for all employees can be collected and relative performance can be factored into the decision more easily. If the merit budget is based on business-unit performance, the linkage…”
— Worldatwork Handbook Compensationmatch 58%
“In some companies, however, each cell of the matrix is occupied by only a single number. Basing merit increases on performance alone ignores internal pay comparisons. Within a performance class, higher-paid employees receive greater absolute increases, even though the merit…”
— Worldatwork Handbook Compensationmatch 57%
Resources: Worldatwork Handbook Compensation