Differentiating merit budget allocation

Prior to a salary review, HR set guidelines for allocation of the total salary budget. Groups lower down the pay scale or employees who are performing particularly well can be given an additional increase. Others who have a relatively high salary or are not performing as well as they should, will likely receive a bit less.

Model salary matrix

Differentiating a salary budget can pose a mathematical challenge if it has to be done manually. Using RewardSmarter’s Salary Matrix Calculator Tool, HR and C&B can try out different percentages in a salary matrix and, at the same time, make sure the budget stays on track. The salary matrix tool models how the salary budget should be allocated among the employees, according to their performance and current salary, compared with both their peers and similar roles externally (compa-ratio). The salary matrix also makes it easier for the HR department to answer questions from the company’s managers about recommended pay increases.

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