Merit Increase

Have you ever questioned why you didn’t receive your merit increase?

Have you even questioned why you did?

Even when the company has a tremendous year, and you’ve achieved your annual goals it can result in a 0% increase.

Then sometimes you get a surprise 3% pop, when you didn’t expect it.

The reality is that merit increases can be extremely confusing and often frustrating.

But the good news is that you can start thinking about your merit increase differently.

You can change your approach to your merit increase so that you:

  • Are more likely to get your full merit increase
  • Stop worrying whether it’s going to happen or not
  • Feel more comfortable because you’ve got the language and tools to speak about your merit increase more effectively

A Merit Increase Definition that No Longer Works

The popular definition of merit increase is a “higher wage rate paid to an employee on the basis of agreed upon criteria such as efficiency and performance”.

This definition might have worked in the 1950’s, but it doesn’t work anymore.

It assumes that your merit increase is based upon attaining your goals in your annual review.

But how many times have you nailed your annual goals and received partial or none of your merit increase?

If you’re like most employees I’ve talked to, this probably has happened plenty of times throughout your career.

The Merit Increase Dilemma

When you get a merit increase is it really based on your previous performance?

Most employees would answer “yes”.

But I don’t agree.

Although a bonus and merit increase are typically positioned as a reward for past performance they’re actually based on….

…your future performance and the projected performance of your company.

What’s in the kitty for bonuses and merit increases is based on how the company performed from a cash flow perspective, but how much of that is doled out is really based how the company thinks they’re going to do following year.

If the company projects a big year, they’ll be more likely to pay out big; if they project lots of uncertainty they’re going to hold back and take a more “wait-and-see” approach.

The other element of your merit increase is your own future performance.

If a company identifies you as a “high performer” with a high future value, or you’ve got a crucial project coming up the next year that they really need you to deliver on then you’re more likely to get the merit increase.

Your merit increase is an incentive for future performance, not a reward for past success.

On the other hand, if you’ve been identified as a “status quo” employee, then you’re more likely to get status quo treatment when things are tight at the company, which means little to no merit increase.

The status quo employee is someone who does their job well and then packs it up and goes home. They don’t challenge the system, don’t take risk, and aren’t up for leading a game-changing project.

3 Strategies to Get Your Merit Increase

So it’s not an exact science, but there is a way to significantly increase the likelihood of obtaining a merit increase every year.

Consider working these three strategies:

1.) Elevate Your Current Market Value

Recognize it’s always about “next” by lining up big projects on the horizon.  I’m not saying this is right but it is reality in the short-term delivery requirements in Corporate. It really helps to develop of a pipeline of big ideas and projects that are “yet to come” and then consistently refer to it and share it with others.

You’re project pipeline is actually your “current market value” within your own company.

For example, if you’ve got a future project pipeline of $5MM then your value is going to be significantly higher than someone that shows $1MM pipeline or someone that doesn’t have clear pipeline at all.

2.) Prioritize Projects and Tasks based on Bottom-line Impact

Avoid getting sucked into the trap of focus on non-bottom line tasks and projects.

Maintain laser focus on what is quantifiable.

Your guide can be the numbers that drop to the bottom-line.

That’s where the highest level of visibility and leverage are.

3.) Transform Yourself into a “Challenge the Status Quo” Employee

Even if you’d describe yourself as a toe the party line employee, it doesn’t have to mean that you act like one.

Start small by asking open ended questions in your weekly staff meeting.

“What if we thought about this problem differently?”

“What if we stood in a place of possibility on this challenge before making the decision we always do?”

“I know things can be better. Are you willing to pitch-in and help?”

Which of these merit increase strategies resonates most with you?

Now take that strategy and work it into your annual plan.

To Your Merit Increase!


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