Example: Increase Guidelines Based on Length of Service and Performance Ratings

The company might have a compensation increase policy that is based upon employee length of service as well as performance appraisal ratings. For example, assume that employees who have been employed between 0 and 24 months and have a performance appraisal rating of 80 or higher are eligible to receive an increase of between 5500 and 6500. Employees who have been employed between 24 and 60 months and have a performance appraisal rating that is between 65 and 80 are eligible to receive an increase of between 3500 and 4500.

To help administer this policy, you can set up an increase guideline table that defines the types of raises that employees are eligible to receive based on their length of service and their performance appraisal ratings.

Using this increase guideline table helps to ensure that each employee receives the proper increase. For example, you can determine what the compensation increase should be for an employee who has been employed for 48 months and has received a 78 on the most recent performance appraisal. Using the previous example, this employee is eligible to receive an increase of between 3500 and 4500.

The factor that you use as the column factor or the row factor does not matter. Changing these factors does not affect the outcome of the table information; only the way that the information appears on the table affects the outcome. If you change the appearance of the evaluation factors, the table displays the information differently. However, an employee who has been employed for 48 months and received a 78 on the most recent performance appraisal is still eligible to receive an increase of between 3500 and 4500.