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I'm curious how others determine what the remainder of the matrix should contain. Meaning, what is the tipping point for meaningful differentiation between rating and position in range? Myself, I typically start out by shear guestimate and see where that takes my budget. For example,if my anchor is set for achieveing - middle range is 4%, I may put 3% for achieving - high in range and 5% for achieving - low in range. I like to factor those by 150% for the high achievers, and give much less to minimal achievers. What'd everyone else's approach as a starting point to vet against budget?


Thanks for the comment.

You might find Hay's research on merit pay differentiation among Fortune's "most admired" companies to be of interest - see my post on it here http://compforce.typepad.com/compensation_force/2007/04/pay_differentia.html

Once I've set my anchor, my approach to completing the rest of the matrix is a somewhat "organic" one, moving through box by box. This is what I'd like to cover in my next "chronicles" post.

The process you mention also sounds like a reasonable one - sound guestimation with a careful eye on the budget.


Can you please tell us why your merit planning does not start with the groups of employees that surveys show are the furthest behind their market comparators and perhaps need the largest pay increases. Isn't that a more logical starting point---taking care of the groups with the greatest needs first? Not sure myself which approach is best, just would like to hear your thoughts.

Perhaps you cover that in later posts on this topic.



I think of the merit increase matrix as being the general tool used for tying salary increases to employee performance, regardless of what position the employee holds. Jobs - or job groups - that are significantly behind market pay practices, to my mind, represent a separate pay issue than the design of the general merit matrix and are typically address through a separate process. Unless you are going to put in a different merit matrix for different job groups, depending on their competitive position - but I don't see a lot of that in practice.

Open to other perspectives and experience. Frank? Others?

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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