← HR Metrics·Compensation & Benefits
Merit Increase Rate
Merit increase as a fraction of base salary, from the merit matrix lookup on performance rating × comp-ratio (or location) bucket.
How it’s computed
merit_matrix[performance_rating][comp_ratio_bucket]
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.
“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 72%
“Designing a Merit Increase MatrixAlthough the design of a merit increase matrix is sometimes centralized and performed by compensation specialists or experts, many organizations will request that HR generalists help develop merit guidelines or adjust an overall matrix to meet…”
— Worldatwork Handbook Compensationmatch 68%
“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 67%
Resources: Worldatwork Handbook Compensation