An effective merit pay system awards salary increases to employees based on
their level of job performance and links closely to the employer's performance
management system and salary grade/range system. The merit pay process is driven
by the employee's salary position within the salary range, the current
merit budget and job performance under the performance management system. A
merit matrix tool allows the employer to tweak these elements and determine
appropriate increases for all employees.
Important features of a merit matrix include the following:
Understandable and manageable system for all employees, supervisors
and managers.
Recognizes performance differentials with merit increase
differentials.
Simple, but functional process that links to the employee's
performance review and the employees position in the salary range.
Links
to the salary grade/range structure.
Recognizes high performers.
Flexible and can be adjusted annually
as company performance, economic and business conditions vary.
Legally defensible
and compliant with federal, state and local regulations.
Able to be closely
coordinated with your annual merit budget.
Can be applicable to both exempt
and non-exempt employees together or separate matrices for each classification.
The Human Resource Department (THRD) works with the Manager of Human Resources
and/or key Managers within your organization to design the merit matrix. A
THRD project manager will help you determine desired features of a merit pay
delivery system and how they will link to the performance review process. The
project manager may also conduct employee interviews and/or employee focus
groups to gather additional information and input. The merit matrix system
will then be designed, tested and reviewed with the organization. The merit
matrix is structured so that it can easily be modified annually depending on
merit budget.
To discuss a merit matrix for your organization, please contact
us.
