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With a merit budget of 1%, what do you call it? If you call it a merit increase, the employee who has performed a superior job and only gets a 1% (or possibly less) increase looks at you with disgust when he/she gets it. It feels like a "slap in the face."


Nobody can deny that rewarding performance with a 1% merit budget is a challenge. Some organizations are pooling the available dollars, giving 3-4% to the few top performers and nothing to the rest. It may not be the option your organization would choose, but it is an approach that some organizations have decided to pursue in these tight times.

For other thoughts on this dilemma, see this post about "10 ways to slice a teeny tiny merit budget"...


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About The Author

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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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